Item 1. Business
We
are a Delaware blank check company incorporated on August 6, 2020 formed for the purpose of entering into a merger, share exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more target
businesses. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region
although we currently intend to focus on target businesses in the life sciences, biotechnology and healthcare sectors.
Our Management
Team
We
are led by our Chairman and Co-Chief Executive Officer, David Rosenberg, who is the Co-Chief Executive Officer and Co-President
of Ladenburg Thalmann & Co. Inc., or Ladenburg, our Co-Chief Executive Officer, David J. Strupp, Jr., who is
the Head of Healthcare Investment Banking at Ladenburg, and our Chief Financial Officer, Steven Kaplan, who is Head of Capital
Markets at Ladenburg. Our management team collectively has over 80 years of experience in the financial services industries,
with a substantial portion of that time focused on the healthcare industry. The team has worked together at Ladenburg
since 2012.
Ladenburg
is a growth focused, boutique investment bank with experience providing capital markets and advisory services to public and private
life sciences companies, blank check companies (working with management teams during the initial public offering process, and later
in the course of their initial business combinations) and other emerging growth enterprises. Over the last five years, Ladenburg
has completed over 300 capital market transactions, raising over $34.5 billion in capital for its clients. Over this same period,
Ladenburg developed a market-leading practice in advising life sciences companies in reverse merger transactions and acted as an
advisor on 13 such transactions – six of which closed in 2020.
Since
May 2012, when Mr. Strupp joined the Healthcare Investment Banking Group at Ladenburg, his team has emerged as an industry leader
in the reverse merger space, successfully advising on more life science reverse mergers than any other investment bank. Under Mr.
Strupp’s leadership, his team has executed 17 reverse merger transactions for both private and public companies, including
five of the last nine life science reverse mergers that have been consummated. Furthermore, Ladenburg’s reverse
merger transactions have been supported by significant concurrent private financings from top-tier healthcare investors to help
generate enough cash runway to provide the company with support through respective value inflection points. Out of the 17 reverse
merger transactions advised by Ladenburg, all but one had a concurrent capital raise. In total, investors provided $766 million,
or an average of $45 million, in concurrent financing to support the Ladenburg-advised reverse merger transactions.
In
addition to our reverse merger experience, our management team members have extensive capital markets experience, assisting our
healthcare clients in a broad range of equity, equity-linked and debt capital markets transactions. In the past 5 years, our management
team has overseen in excess of 150 capital markets transactions for biotechnology, pharmaceutical and medical device companies,
helping raise over $9.5 billion in capital. They have also advised on a wide range of matters including corporate finance, restructuring
and capital structuring.
Furthermore,
Steve Kaplan has led Ladenburg’s efforts to become one of the leading, most experienced underwriters of SPACs in the United
States. Ladenburg has participated in over 55 blank check offerings raising over $9.0 billion since December 2005, leading Ladenburg
to being ranked among the top underwriters in terms of offering proceeds and issuances. In addition to their experience with SPAC
IPOs, Ladenburg has been active in evaluating and structuring numerous SPAC merger processes.
Notwithstanding
the foregoing, past performance of our management team is not a guarantee either (i) that we will be able to identify a suitable
candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate. You
should not rely on the historical performance record of our management team as indicative of our future performance. Additionally,
in the course of their respective careers, members of our management team have been involved in businesses and deals that were
unsuccessful. In addition,
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our officers
and directors may have conflicts of interest with other entities to which they owe fiduciary or contractual obligations with respect
to initial business combination opportunities. For a list of our officers and directors and entities for which a conflict of interest
may or does exist between such persons and the company, as well as the priority and preference that such entity has with respect
to performance of obligations and presentation of business opportunities to us, please refer to the table and subsequent explanatory
paragraph under “Item 10 — Conflicts of Interest”.
Our Competitive
Advantages
We
believe that our management team is well-positioned to locate and consummate an attractive business combination for the following
reasons:
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Track Record of Success and Deep Knowledge of Reverse Merger Processes
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Our management team members
have earned reputations as leading advisors in healthcare capital raising and merger transactions. For instance, Mr. Strupp, through
his experience as the Head of the Healthcare Investment Banking Group at Ladenburg, has established a reputation as one of the
leading advisors for life science reverse merger transactions. Since joining Ladenburg in May 2012, Mr. Strupp has advised 13 public
companies and four private companies in their reverse merger transactions, more than any competitor in the life-science space.
Mr. Strupp’s tailor-made approach towards each reverse merger helps navigate through a client’s complexities and includes,
but is not limited to, the initial outreach criteria, communication between prospective counterparties, handling of legacy assets
and concurrent financing advisory.
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Process-Oriented Approach
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Our management team has developed
and refined a unique process through their broad experience in reverse mergers. Over the past decade, they have developed effective
methods for successful reverse mergers allowing for a broad outreach to interested merger partners, all while staying focused on
a formalized and rigid timeline. This approach drives multiple parties simultaneously through a competitive and rigorously scheduled
bid process, allowing for greater transparency into transaction certainty, timing certainty, and competitive pricing tensions –
all of which our management team believes are the markings of a successful reverse merger. We believe that our management team
will distinguish itself amongst other life sciences-focused blank check companies by employing this process-oriented approach that
has been refined through their execution of 17 life sciences reverse merger transactions.
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Breadth of Outreach and Extensive Transaction Sourcing
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Our management team has in-depth
experience in making broad and extensive outreach to life sciences companies on a global basis. Their process begins by making
outreach to individuals or organizations that they believe will have either first or second-hand knowledge of companies that would
have interest in a going-public transaction in the form of a reverse merger. These individuals or organizations may include venture
capitalists, healthcare-focused investment groups, private equity funds, lawyers, accountants, investor relations groups or any
other groups or individuals who our management team believes will have access to target-identification ideas. Our management team
has amassed a wide network of contacts and relationships through the transactions they have been involved with over their careers.
They also have access to a wide range of opinion leaders that they may contact to assist in our evaluation of target businesses.
As a result, we believe our management team will be able to generate a significant number of potential target businesses to that
can be considered for a potential business combination.
One of the key advantages of
our management team’s approach to reverse mergers is the speed in which a successful transaction is completed. By taking
this process-oriented approach to the execution of a transaction, our management team members have successfully executed their
transactions in a timeframe that is significantly shorter than comparable transactions.
We believe our management team may be able to apply their experience to assist us in consummating a business combination well within
the timeframe we are allotted.
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Deep Relationships Across the Biotechnology Ecosystem
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Our management team maintains
widespread relationships with senior business development and scientific leadership across our target sectors, which we believe
not only provides important access to high quality deal flow but also to top level talent and significant insights into industry
trends. We believe that these relationships will be attractive for any target business we focus on as they may provide access to
direct communication with senior leadership throughout the industry, providing targets with high quality, up-to-date
insight into their markets and their technology.
Industry
Opportunity
We
believe the life sciences, biotechnology and healthcare sectors offer significant capacity for potential target acquisition opportunities.
We believe these sectors represent tremendous opportunity for investment returns as innovative breakthrough technologies, modernized
payment systems and greater access to treatment have the potential to deliver tangible value to society through improved quality
of care and patient outcomes.
With
the discovery and development of revolutionary medical technologies, the aging population, as well as improvements in healthcare
related services, these sectors are oriented for significant growth in the coming years. According to the CMS, U.S. national
healthcare expenditures reached $3.6 trillion in 2018 and accounted for 17.7% of national GDP and is expected to grow at an average
annual rate of 5.4% through 2028. In 2020, healthcare spending is expected to account for approximately 18% of total U.S. Gross
Domestic Product. According to Evaluate Pharma, worldwide prescription drug sales accounted for approximately $871 billion in revenue
in 2019, 3.7% more than in 2018. According to IQVIA, U.S. branded drug sales totaled $271 billion in 2018. Worldwide
prescription drug sales are expected to reach over $1.4 trillion in 2026 driven by an aging population, increased prevalence of
chronic diseases and greater access to healthcare.
Largely
driven by the advancement of innovative medicines and growing access to affordable healthcare, physicians and hospitals, the global
life expectancy has steadily increased over the past few decades. As a significant portion of aggregate healthcare expenditure
corresponds to diseases associated with age, the continued aging of the population will generate increased healthcare consumption
in the future. Additionally, in developing nations the expansion of healthcare utilization through improved services, accessibility,
insurance and infrastructure has led to an increasing contribution to global healthcare expenditures. The biotechnology sector
is also entering a new phase of creation and approval of novel technologies, benefitting from advances of underlying technologies
such as DNA sequencing, genome editing tools, and computational power, as well as a favorable FDA environment.
We
believe recent IPO activity has actively demonstrated the demand for private companies in our target sectors to go public. In 2020,
over 95 life science companies went public (vs. 59 in 2019 and 74 in 2018), with an average
offer to current appreciation of 102.4%. Overall, the aggregate gross proceeds raised in all IPO and follow-on transactions
for our target sectors in 2020 amounted to approximately $80.4 billion, compared to $38.8 billion in 2019.
Despite an uncertain market due to the ongoing COVID-19 pandemic, our management team believes 2021 is poised to be a
record setting year for biotechnology company IPO pricings as the pandemic has shifted investor focus towards the importance of
healthcare.
Based
on our management team’s experience as active participants in private financings, IPOs and reverse mergers, we have confidence
in locating an attractive target business and providing it with a fast and efficient path to going public. Our team believes that
at certain stages of development, companies in our target sectors see material benefits from being publicly traded, including but
not limited to greater access to capital, liquidity and exposure to a greater set of investors. Despite the current level of IPO
activity, according to IBISWorld, in 2017 there were estimated to be over 9,600 biotechnology companies globally, only a fraction
of which are publicly traded. Furthermore, based upon our management team’s experience as advisors for publicly traded companies
looking for reverse merger partners in the life sciences sector, there has been a significant increase in the level of interest
of private companies looking for non-traditional means of entering the public market.
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We
believe that with our experienced management team who are well-known and respected by life sciences leaders and institutional investors,
we can offer privately held target businesses a quicker, more efficient and more certain path towards reaching the capital markets
than a traditional initial public offering. Furthermore, we believe the ability to consummate a concurrent private placement in
connection with the consummation of our initial business combination would provide target businesses with the financing
they need to operate and grow their business.
Our Acquisition
Criteria
Our
acquisition strategy is designed to rigorously assess prospective target businesses to ultimately select one that will deliver
risk-adjusted equity returns for our stockholders. We intend to leverage our management team’s network of both private and
public companies. Our management team’s approach of conducting a rigorous process, evaluating numerous potential opportunities,
establishing competitive tension and ultimately negotiating a deal with a chosen merger partner has been refined over the past
decade of them working as advisors to numerous companies in reverse merger transactions. Our management team has developed a unique,
focused approach towards each transaction which has resulted in proprietary knowledge of the market and up-to-date information
on potentially interested candidates. We intend to take a similar approach to locating a target business for our initial business
combination. We expect to conduct intensive diligence of a potential target, including but not limited to deal structure,
financial forecasting and scientific viability using our management team’s expertise combined with the opinions of key industry
leaders in their network of relationships.
We
have identified the following criteria to evaluate prospective target businesses, although we may decide to enter into our initial
business combination with a target business that does not meet these criteria:
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Accessibility to Committed Capital
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We believe it will be important
to identify a target business that can demonstrate the ability to attract committed financing in connection with the consummation
of a transaction. We believe this is the main factor in determining whether a reverse merger transaction results in stockholder
appreciation or is unsuccessful. Furthermore, we will aim to focus on companies that have the ability to attract additional outside
investors rather than solely focus on insiders from the existing platform, which tends to yield even greater results.
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Scientifically Differentiated / Diversified Product Pipeline
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We will seek target companies
that have multiple late-development stage or commercial-stage assets, or potentially earlier stage-assets which may be in certain
areas of high unmet needs. We will look to avoid riskier, early-stage companies that have a higher probability of clinical failure
and companies with single-asset pipelines without risk diversification.
We believe a key component of
stockholder appreciation is the generation of value-driving milestones and inflection points in the 12-24 months following completion
of a transaction. We will seek to avoid companies that may have a “news-vacuum”, and will also avoid companies that
will have make-or-break data readouts shortly before and after the closing of a transaction.
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Attractive Equity Returns for Shareholders
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As we conduct diligence on prospective
parties, we will aim to evaluate a company based on its ability to reach product commercialization following regulatory approval.
We will look to identify candidates with favorable risk-adjusted revenue potentials and strong pipeline growth potential.
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Experienced Management Team
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We intend to seek target
businesses that have a public-ready management team with the experience and leadership skillset necessary to bring a product candidate
to commercialization. We will also look for a management team that can benefit from our industry knowledge and advice from key
opinion leaders.
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Alternative
Path to Becoming Public
We
believe our structure will make us an attractive business combination partner to prospective target businesses that desires to
become a publicly listed company. A merger with us will offer a target business an alternative process to a public listing rather
than the traditional initial public offering process. We believe that target businesses may favor this alternative, which we believe
is less expensive and takes less time, while offering greater certainty of execution than the traditional initial public offering.
Furthermore, once a proposed business combination is approved by our shareholders and the transaction is consummated, the target
business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability
to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public, we
believe the target business would have greater access to capital and additional means of creating management incentives that are
better aligned with shareholders’ interests than it would as a private company. A public company can offer further benefits
by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented management. With
public company corporate governance standards, a target business may become attractive to the public investors.
Strong and
Stable Financial Position with Flexibility.
With
funds in the trust account of $57.5 million as of March 31, 2021 available to use for a business combination, we offer a target
business a variety of options such as providing the owners of a target business with shares in a public company and a public means
to sell such shares, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet
by reducing its debt ratio. Because we are able to consummate our initial business combination using our cash, debt or equity securities,
or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the
consideration to be paid to the target business to fit its needs and desires. However, since we have no specific business combination
under consideration, we have not taken any steps to secure third party financing and there can be no assurance that it will be
available to us.
Effecting a
Business Combination
General
We
are not presently engaged in any substantive commercial business. We intend to utilize cash derived from the proceeds of our initial
public offering and the private placement of private warrants, our capital stock, debt or a combination of these in effecting a
business combination which has not yet been identified. Accordingly, investors in our initial public offering invested without
first having an opportunity to evaluate the specific merits or risks of any one or more business combinations. A business combination
may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires
to establish a public trading market for its shares. These include time delays, significant expense, loss of voting control and
compliance with various federal and state securities laws. In the alternative, we may seek to consummate a business combination
with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous
business combinations with more than one target business, we will likely have the ability, as a result of our limited resources,
to effect only a single business combination.
Sources
of Target Businesses
While
we have not yet selected a target business with which to consummate our initial business combination, we believe based on our management’s
business knowledge and past experience that there are numerous potential candidates. We expect that our principal means of identifying
potential target businesses will be through the extensive contacts and relationships of our sponsor, initial stockholders, officers
and directors. While our officers and directors
are not required to commit any specific amount of time in identifying or performing due diligence on
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potential target businesses,
our officers and directors believe that the relationships they have developed over their careers will generate a number of potential
business combination opportunities that will warrant further investigation. We also anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private
equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses may
be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These
sources may also introduce us to target businesses they think we may be interested in on an unsolicited basis.
Our
officers and directors must present to us all target business opportunities that have a fair market value of at least 80% of the
assets held in the trust account at the time of the agreement to enter into the initial business combination, subject to any fiduciary
or contractual obligations. While we do not presently anticipate engaging the services of professional firms or other individuals
that specialize in business acquisitions on any formal basis (other than EarlyBirdCapital as described elsewhere in this report),
we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee or
other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. In no event, however,
will our sponsor, initial stockholders, officers, directors or their respective affiliates be paid any compensation prior to, or
for any services they render in order to effectuate, the consummation of an initial business combination (regardless of the type
of transaction that it is) other than the $10,000 per month administrative fee, the payment of consulting, success or finder fees
in connection with the consummation of our initial business combination, the repayment of loans and reimbursement of any out-of-pocket
expenses. Our audit committee will review and approve all reimbursements and payments made to our sponsor, officers, directors
or our or their respective affiliates, with any interested director abstaining from such review and approval.
We
have no present intention to enter into a business combination with a target business that is affiliated with any of our officers,
directors or sponsor. However, we are not restricted from entering into any such transactions and may do so if (i) such transaction
is approved by a majority of our disinterested independent directors and (ii) we obtain an opinion from an independent investment
banking firm, or another independent entity that commonly renders valuation opinions, that the business combination is fair to
our unaffiliated stockholders from a financial point of view.
Selection
of a Target Business and Structuring of a Business Combination
Subject
to our management team’s fiduciary obligations and the limitations that a target business have a fair market value of at
least 80% of the balance in the trust account at the time of the execution of a definitive agreement for our initial business combination,
as described below in more detail, and that we must acquire a controlling interest in the target business, our management will
have virtually unrestricted flexibility in identifying and selecting a prospective target business. We have not established any
specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating a prospective target
business, our management may consider a variety of factors, including one or more of the following:
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financial condition and results of operation;
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brand recognition and potential;
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experience and skill of management and availability of additional
personnel;
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stage of development of the products, processes or services;
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existing distribution and potential for expansion;
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degree of current or potential market acceptance of the products,
processes or services;
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proprietary aspects of products and the extent of intellectual property
or other protection for products or formulas;
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impact of regulation on the business;
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regulatory environment of the industry;
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costs associated with effecting the business combination;
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industry leadership, sustainability of market share and attractiveness
of market industries in which a target business participates; and
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macro competitive dynamics in the industry within which the company
competes.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be
based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting
a business combination consistent with our business objective. In evaluating a prospective target business, we will conduct an
extensive due diligence review which will encompass, among other things, meetings with incumbent management and inspection of facilities,
as well as review of financial and other information which is made available to us. This due diligence review will be conducted
either by our management or by unaffiliated third parties we may engage, although we have no current intention to engage any such
third parties.
The
time and costs required to select and evaluate a target business and to structure and complete the business combination cannot
presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce
the amount of capital available to otherwise complete a business combination.
Fair Market
Value of Target Business
Nasdaq
listing rules require that the target business or businesses that we acquire must collectively have a fair market value equal to
at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our initial
business combination. Notwithstanding the foregoing, if we are not then listed on Nasdaq for whatever reason, we would no longer
be required to meet the foregoing 80% fair market value test.
We
currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business
or businesses. We may, however, structure our initial business combination where we merge directly with the target business or
a newly formed subsidiary or where we acquire less than 100% of such interests or assets of the target business in order to meet
certain objectives of the target management team or shareholders or for other reasons, but we will only complete such business
combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or
otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of
the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue
a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target.
In this case, we could acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial
number of new shares, our stockholders immediately prior to our initial business
combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less
than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80%
of trust account balance test.
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The
fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted
by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The proxy solicitation
materials or tender offer documents used by us in connection with any proposed transaction will provide public stockholders with
our analysis of the fair market value of the target business, as well as the basis for our determinations. If our board is not
able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an
unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions, with
respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an investment banking firm as to
the fair market value if our board of directors independently determines that the target business complies with the 80% threshold.
Lack of
Business Diversification
We
may seek to effect a business combination with more than one target business, although we expect to complete our business combination
with just one business. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future
performance of a single business operation. Unlike other entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business
combination with only a single entity, our lack of diversification may:
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subject us to numerous economic, competitive and regulatory developments,
any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a
business combination, and
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result in our dependency upon the performance of a single operating
business or the development or market acceptance of a single or limited number of products, processes or services.
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If
we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for
each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and
due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business.
Limited
Ability to Evaluate the Target Business’ Management
Although
we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business
combination, we cannot assure you that our assessment of the target business’ management will prove to be correct. In addition,
we cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of our officers and directors, if any, in the target business following a business combination
cannot presently be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior
management or advisory positions with us following a business combination, it is unlikely that they will devote their full-time
efforts to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after
the consummation of a business combination if they are able to negotiate employment or consulting agreements in connection with
the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and
could provide for them to receive compensation in the form of cash payments and/or
our securities for services they would render to the company after the consummation of the business combination. While the personal
and financial interests of our key personnel may influence their motivation in identifying and selecting a target business, their
ability to remain with the company after the consummation of a business combination will not be the determining factor in our decision
as to whether or not we will proceed with any potential business combination. Additionally, we cannot assure you that our officers
and directors will have significant experience or knowledge relating to the operations of the particular target business.
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Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do recruit
will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, we will either (1) seek stockholder approval of our initial business combination
at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for
or against the proposed business combination or don’t vote at all, into their pro rata share of the aggregate amount then
on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares
to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share
of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described
herein. The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders
to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his,
her or its shares rather than some pro rata portion of his, her or its shares. In that case, we will file tender offer documents
with the SEC which will contain substantially the same financial and other information about the initial business combination as
is required under the SEC’s proxy rules. Whether we seek stockholder approval or engage in a tender offer, we will consummate
our initial business combination only if we have net tangible assets of at least $5,000,001 either immediately prior to or upon
consummation of such business combination and, if we seek stockholder approval, a majority of the outstanding shares of common
stock voted are voted in favor of the business combination. We have no specified maximum percentage threshold for conversions in
our amended and restated certificate of incorporation and even those public stockholders who vote in favor of our initial business
combination have the right to convert their public shares. As a result, this may make it easier for us to consummate our initial
business combination.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under
the Securities Act of 1933, as amended. However, if we seek to consummate an initial business combination with a target business
that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the
trust account upon consummation of such initial business combination, we may need to have more than $5,000,001 in net tangible
assets either immediately prior to or upon consummation and this may force us to seek third party financing which may not be available
on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and we may
not be able to locate another suitable target within the applicable time period, if at all. Public stockholders may therefore have
to wait 21 months from the closing of our initial public offering in order to be able to receive a pro rata share of the trust
account.
Our
sponsor, initial stockholders, officers and directors have agreed (1) to vote any shares of common stock owned by them in favor
of any proposed business combination, (2) not to convert any shares of common stock in connection with a stockholder vote to approve
a proposed initial business combination and (3) not sell any shares of common stock in any tender in connection with a proposed
initial business combination.
If
we hold a meeting to approve a proposed business combination and a significant number of stockholders vote, or indicate an intention
to vote, against such proposed business combination or that they wish to convert their shares, our officers, directors, sponsor,
initial stockholders or their affiliates could make such purchases in the open market or in private
transactions in order to influence the vote and reduce the number of conversions. Notwithstanding the
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foregoing, our officers,
directors, sponsor, initial stockholders and their affiliates will not make purchases of shares of common stock if the purchases
would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company’s
stock.
Conversion
Rights
At
any meeting called to approve an initial business combination, public stockholders may seek to convert their shares, regardless
of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate
amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination,
less any taxes then due but not yet paid. Alternatively, we may provide our public stockholders with the opportunity to sell their
shares of our common stock to us through a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal
to their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid.
Our
sponsor, initial stockholders and our officers and directors will not have conversion rights with respect to any shares of common
stock owned by them, directly or indirectly, whether acquired prior to our initial public offering or purchased by them in our
initial public offering or in the aftermarket. Additionally, the holders of the representative shares will not have conversion
rights with respect to the representative shares.
We
may require public stockholders, whether they are a record holder or hold their shares in “street name,” to either
(i) tender their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, in each case prior to a date
set forth in the proxy materials sent in connection with the proposal to approve the business combination.
There
is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering them
through the DWAC System. The transfer agent will typically charge the tendering broker a nominal amount and it would be up to the
broker whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of whether or not we require
holders seeking to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion rights regardless
of the timing of when such delivery must be effectuated. However, in the event we require stockholders seeking to exercise conversion
rights prior to the consummation of the proposed business combination and the proposed business combination is not consummated
this may result in an increased cost to stockholders.
Any
proxy solicitation materials we furnish to stockholders in connection with a vote for any proposed business combination will indicate
whether we are requiring stockholders to satisfy such certification and delivery requirements. Accordingly, a stockholder would
have from the time the stockholder received our proxy statement up until the vote on the proposal to approve the business combination
to deliver his shares if he wishes to seek to exercise his conversion rights. This time period varies depending on the specific
facts of each transaction. However, as the delivery process can be accomplished by the stockholder, whether or not he is a record
holder or his shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his
broker and requesting delivery of his shares through the DWAC System, we believe this time period is sufficient for an average
investor. However, we cannot assure you of this fact. Please see the risk factor titled “In connection with any stockholder
meeting called to approve a proposed initial business combination, we may require stockholders who wish to convert their shares
in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult
for them to exercise their conversion rights prior to the deadline for exercising their rights” for further information
on the risks of failing to comply with these requirements.
Any
request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed business combination or the
expiration of the tender offer. Furthermore, if a holder of public shares delivered his certificate in connection with an election
of their conversion and subsequently decides prior to the applicable date not to elect to exercise such rights, he may simply request
that the transfer agent return the certificate (physically or electronically).
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If
the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any shares delivered by public holders.
Liquidation
if No Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 21 months from the closing of our initial public
offering to complete an initial business combination. If we have not completed an initial business combination by such date, we
will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including any interest not previously released to us but net of taxes payable (and
less up to $50,000 of interest to pay liquidation expenses), divided by the number of then outstanding public shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii)
and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
Our
sponsor, initial stockholders, officers and directors have agreed that they will not propose any amendment to our amended and restated
certificate of incorporation that would affect our public stockholders’ ability to convert or sell their shares to us in
connection with a business combination as described herein or affect the substance or timing of our obligation to redeem 100% of
our public shares if we do not complete a business combination within 21 months from the closing of our initial public offering
unless we provide our public stockholders with the opportunity to convert their shares of common stock upon such approval at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest not previously
released to us but net of taxes payable, divided by the number of then outstanding public shares. This redemption right shall apply
in the event of the approval of any such amendment, whether proposed by our sponsor, initial stockholders, executive officers,
directors or any other person.
Under
the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the
extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public
stockholders upon the redemption of 100% of our outstanding public shares in the event we do not complete our initial business
combination within the required time period may be considered a liquidation distribution under Delaware law. If the corporation
complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to ensure that it makes
reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought
against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day
waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. It is our intention
to redeem our public shares as soon as reasonably possible following our 21st month, and, therefore, we do not
intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public shares
in the event we do not complete our initial business combination within the required time period is not considered a liquidation
distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the
Delaware General Corporation Law, the statute of limitations for claims of creditors could then be six years after the unlawful
redemption distribution, instead of three years, as in the case of a liquidation distribution.
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Because
we will not be complying with Section 280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation
Law requires us to adopt a plan, based on facts known to us at such time that will provide
for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent ten
years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers, etc.) or prospective target businesses.
We
are required to seek to have all third parties (including any vendors or other entities we engage after our initial public offering)
and any prospective target businesses enter into agreements with us waiving any right, title, interest or claim of any kind they
may have in or to any monies held in the trust account. As a result, the claims that could be made against us will be limited,
thereby lessening the likelihood that any claim would result in any liability extending to the trust. We therefore believe that
any necessary provision for creditors will be reduced and should not have a significant impact on our ability to distribute the
funds in the trust account to our public stockholders. Nevertheless, Marcum LLP, our independent registered public accounting firm,
and the underwriters of the offering, will not execute agreements with us waiving such claims to the monies held in the trust account.
Furthermore, there is no guarantee that other vendors, service providers and prospective target businesses will execute such agreements.
Nor is there any guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account.
Our sponsor has agreed that it will be liable to ensure that the proceeds in the trust account are not reduced below $10.00 per
share by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered
or contracted for or products sold to us, but we cannot assure you that it will be able to satisfy its indemnification obligations
if it is required to do so. We have not asked our sponsor to reserve for such indemnification obligations, nor have we independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only
assets are securities of our company. Therefore, we believe it is unlikely that our sponsor will be able to satisfy its indemnification
obligations if it is required to do so. Additionally, the agreement our sponsor entered into specifically provides for two exceptions
to the indemnity it has given: it will have no liability (1) as to any claimed amounts owed to a target business or vendor or other
entity who has executed an agreement with us waiving any right, title, interest or claim of any kind they may have in or to any
monies held in the trust account, or (2) as to any claims for indemnification by the underwriters of our initial public offering
against certain liabilities, including liabilities under the Securities Act. As a result, if we liquidate, the per-share distribution
from the trust account could be less than $10.00 due to claims or potential claims of creditors.
We
anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after November 1, 2022 and anticipate
it will take no more than 10 business days to effectuate such distribution. The holders of the founders’ shares and private
shares have waived their rights to participate in any liquidation distribution from the trust account with respect to such shares.
There will be no distribution from the trust account with respect to our warrants, which will expire worthless. We will pay the
costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, we
will utilize the up to $50,000 of interest earned on the funds held in the trust account available to us to pay for our liquidation
expenses.
If
we are unable to complete an initial business combination and expend all of the net proceeds of our initial public offering, other
than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account,
the initial per-share redemption price would be $10.00. As discussed above, the proceeds deposited in the trust account could become
subject to claims of our creditors that are in preference to the claims of public stockholders.
Our
public stockholders shall be entitled to receive funds from the trust account only in the event of our failure to complete a business
combination within the required time period, if the stockholders seek to have us convert or purchase their respective shares upon
a business combination which is actually completed by us or upon certain amendments to our amended and restated certificate of
incorporation prior to consummating an initial business combination. In no other circumstances shall a stockholder have any right
or interest of any kind to or in the trust account.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds
held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject
to the claims of third parties with priority over the claims of our stockholders. To the extent
any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public stockholders at least
$10.00 per share.
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If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received
by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders
promptly after 21 months from the closing of our initial public offering, this may be viewed or interpreted as giving preference
to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore,
our board may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby
exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing
the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Amended
and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions that will apply to us until the
consummation of our initial business combination. These provisions cannot be amended without the approval of a majority of our
stockholders. If we seek to amend any provisions of our amended and restated certificate of incorporation that would affect our
public stockholders’ ability to convert or sell their shares to us in connection with a business combination as described
herein or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete a business
combination within 21 months from the closing of our initial public offering, we will provide dissenting public stockholders with
the opportunity to convert their public shares in connection with any such vote. This conversion right shall apply in the event
of the approval of any such amendment, whether proposed by our sponsor, any executive officer, director or director nominee, or
any other person. Our sponsor, officers and directors have agreed to waive any conversion rights with respect to any founders’
shares, private shares and any public shares they may hold in connection with any vote to amend our amended and restated certificate
of incorporation. Specifically, our amended and restated certificate of incorporation provides, among other things, that:
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we shall either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or don’t vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein;
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we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 either immediately prior to or upon consummation of such business combination and, if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination;
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if our initial business combination is not consummated within 21 months from the closing of our initial public offering, then we will redeem all of the outstanding public shares and thereafter liquidate and dissolve our company;
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we may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar transaction prior to our initial business combination; and
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prior to our initial business combination, we may not issue additional stock that participates in any manner in the proceeds of the trust account, or that votes as a class with the common stock sold in our initial public offering on an initial business combination.
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Competition
In
identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business
objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources
than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we
believe there may be numerous potential target businesses that we could acquire with the net proceeds of our initial public offering,
our ability to compete in acquiring certain sizable target businesses may be limited by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
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our obligation to seek stockholder approval of a business combination or engage in a tender offer may delay the completion of a transaction;
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our obligation to convert or repurchase shares of common stock held by our public stockholders may reduce the resources available to us for a business combination; and
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our outstanding warrants, and the potential future dilution they represent.
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Any
of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management
believes, however, that our status as a public entity and potential access to the United States public equity markets may give
us a competitive advantage over privately held entities having a similar business objective as ours in acquiring a target business
with significant growth potential on favorable terms.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target
business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively.
Employees
We
have three executive officers. These individuals are not obligated to devote any specific number of hours to our matters and intend
to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will
vary based on whether a target business has been selected for the business combination and the stage of the business combination
process the company is in. Accordingly, once a suitable target business to acquire has been located, management may spend more
time investigating such target business and negotiating and processing the business combination (and consequently spend more time
on our affairs) than had been spent prior to locating a suitable target business. We presently expect our executive officers to
devote such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full-time employees
prior to the consummation of a business combination.
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Item 1A. Risk Factors
An investment
in our securities involves a high degree of risk. You should consider carefully the risks described below together with the other
information contained in this report, before making a decision to invest in our securities. This report also contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking
statements as a result of specific factors, including the risks described below.
Risks Relating to Searching for
and Consummating a Business Combination
If we are
unable to consummate a business combination, our public stockholders may be forced to wait more than 21 months before receiving
distributions from the trust account.
We have until November
1, 2022 to complete a business combination. We have no obligation to return funds to investors prior to such date unless we consummate
a business combination prior thereto and only then in cases where investors have sought to convert or sell their shares to us.
Only after the expiration of this full time period will public security holders be entitled to distributions from the trust account
if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until after
such date and to liquidate your investment, public security holders may be forced to sell their public shares or warrants, potentially
at a loss.
The requirement
that we complete an initial business combination by November 1, 2022 may give potential target businesses leverage over us in negotiating
a business combination.
We have until November
1, 2022 to complete an initial business combination. Any potential target business with which we enter into negotiations concerning
a business combination will be aware of this requirement. Consequently, such target business may obtain leverage over us in negotiating
a business combination, knowing that if we do not complete a business combination with that particular target business, we may
be unable to complete a business combination with any other target business. This risk will increase as we get closer to the time
limit referenced above.
Our public
stockholders may not be afforded an opportunity to vote on our proposed business combination.
We will either (1)
seek stockholder approval of our initial business combination at a meeting called for such purpose at which public stockholders
may seek to convert their shares, regardless of whether they vote for or against the proposed business combination or don’t
vote at all, into their pro rata share of the aggregate amount then on deposit in the trust account (net of taxes payable), or
(2) provide our public stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid
the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust
account (net of taxes payable), in each case subject to the limitations described elsewhere in this Annual Report or incorporated
herein by reference. Accordingly, it is possible that we will consummate our initial business combination even if holders of a
majority of our public shares do not approve of the business combination we consummate. The decision as to whether we will seek
stockholder approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer
will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and
whether the terms of the transaction would otherwise require us to seek stockholder approval. For instance, Nasdaq rules currently
allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval
if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination.
Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we
would seek stockholder approval of such business combination instead of conducting a tender offer.
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Our initial
stockholders will control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
As of March 31,
2021, our sponsor, officers, directors, initial stockholders and their respective affiliates owned approximately 19.7% of our issued
and outstanding shares of common stock. In connection with any vote for a proposed business combination, our initial stockholders,
as well as all of our officers and directors, have agreed to vote the shares of common stock owned by them in favor of such proposed
business combination.
Our board of directors
is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of
directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors
prior to the consummation of a business combination, in which case all of the current directors will continue in office until at
least the consummation of the business combination. Accordingly, you may not be able to exercise your voting rights under corporate
law for up to 21 months. If there is an annual meeting, as a consequence of our “staggered” board of directors, only
a minority of the board of directors will be considered for election and our sponsor, because of their ownership position, will
have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least
until the consummation of a business combination.
The ability
of our stockholders to exercise their conversion rights or sell their shares to us in a tender offer may not allow us to effectuate
the most desirable business combination or optimize our capital structure.
If our business
combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many stockholders
may exercise conversion rights or seek to sell their shares to us in a tender offer, we may either need to reserve part of the
trust account for possible payment upon such conversion, or we may need to arrange third party financing to help fund our business
combination. In the event that the acquisition involves the issuance of our stock as consideration, we may be required to issue
a higher percentage of our stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve
dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the
most attractive business combination available to us.
In connection
with any vote to approve a business combination, we will offer each public stockholder the option to vote in favor of a proposed
business combination and still seek conversion of his, her or its shares.
In connection with
any vote to approve a business combination, we will offer each public stockholder (but not our sponsor, officers or directors)
the right to have his, her or its shares of common stock converted to cash (subject to the limitations described elsewhere in this
report) regardless of whether such stockholder votes for or against such proposed business combination or does not vote at all.
The ability to seek conversion while voting in favor of our proposed business combination may make it more likely that we will
consummate a business combination.
We do not
have a specified maximum conversion threshold. The absence of such a conversion threshold may make it easier for us to consummate
a business combination even where a substantial number of public stockholders seek to convert their shares to cash in connection
with the vote on the business combination.
We have no specified
percentage threshold for conversion in our amended and restated certificate of incorporation. As a result, we may be able to consummate
a business combination even though a substantial number of our public stockholders do not agree with the transaction and have converted
their shares. However, in no event will we consummate an initial business combination unless we have net tangible assets of at
least $5,000,001 either immediately prior to or upon consummation of our initial business combination.
In connection
with any stockholder meeting called to approve a proposed initial business combination, we may require stockholders who wish to
convert their shares in connection with a proposed business combination to comply with specific requirements for conversion that
may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising their rights.
In connection with
any stockholder meeting called to approve a proposed initial business combination, each public stockholder will have the right,
regardless of whether he is voting for or against such proposed business combination or does not vote at all, to demand that we
convert his shares into a pro rata share of the trust account as
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of two business days prior to the
consummation of the initial business combination. We may require public stockholders who wish to convert their shares in connection
with a proposed business combination to either (i) tender their certificates to our transfer agent or (ii) deliver their shares
to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System,
at the holders’ option, in each case prior to a date set forth in the tender offer documents or proxy materials sent in connection
with the proposal to approve the business combination. In order to obtain a physical stock certificate, a stockholder’s broker
and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders
should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have
any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical
stock certificate. While we have been advised that it takes a short time to deliver shares through the DWAC System, we cannot assure
you of this fact. Accordingly, if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who
wish to convert may be unable to meet the deadline for exercising their conversion rights and thus may be unable to convert their
shares.
If, in connection
with any stockholder meeting called to approve a proposed business combination, we require public stockholders who wish to convert
their shares to comply with specific requirements for conversion, such converting stockholders may be unable to sell their securities
when they wish to in the event that the proposed business combination is not approved.
If we require public
stockholders who wish to convert their shares to comply with specific requirements for conversion and such proposed business combination
is not consummated, we will promptly return such certificates to the tendering public stockholders. Accordingly, investors who
attempted to convert their shares in such a circumstance will be unable to sell their securities after the failed acquisition until
we have returned their securities to them. The market price for our shares of common stock may decline during this time and you
may not be able to sell your securities when you wish to, even while other stockholders that did not seek conversion may be able
to sell their securities.
Because of
our structure, other companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
We expect to encounter
intense competition from entities other than blank check companies having a business objective similar to ours, including venture
capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established
and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these
competitors possess greater technical, human and other resources than we do and our financial resources will be relatively limited
when contrasted with those of many of these competitors. While we believe that there are numerous potential target businesses that
we could acquire with the net proceeds of our initial public offering, our ability to compete in acquiring certain sizable target
businesses will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, seeking stockholder approval or engaging in a tender offer
in connection with any proposed business combination may delay the consummation of such a transaction. Additionally, our outstanding
warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of
the foregoing may place us at a competitive disadvantage in successfully negotiating a business combination.
If we determine
to change our acquisition criteria or guidelines, many of the disclosures contained in this report would not be applicable and
you would be investing in our company without any basis on which to evaluate the potential target business we may acquire.
We could seek to
deviate from the acquisition criteria or guidelines disclosed in this report although we have no current intention to do so. Accordingly,
investors may be making an investment in our company without any basis on which to evaluate the potential target business we may
acquire. Regardless of whether or not we deviate from the acquisition criteria or guidelines in connection with any proposed business
combination, investors will always be given the opportunity to convert their shares or sell them to us in a tender offer in connection
with any proposed business combination as described in this prospectus.
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We may not
obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying solely on
the judgment of our board of directors in approving a proposed business combination.
We will only be
required to obtain a fairness opinion with respect to the target business that we seek to acquire if it is an entity that is affiliated
with any of our sponsor, initial stockholders, officers, directors or their affiliates. In all other instances, we will have no
obligation to obtain an opinion. Accordingly, investors will be relying solely on the judgment of our board of directors in approving
a proposed business combination.
Our outstanding
warrants may have an adverse effect on the market price of our common stock and make it more difficult to effect a business combination.
We issued warrants
to purchase 2,500,000 shares of common stock as part of the units offered in our initial public offering and private warrants to
purchase 2,350,000 shares of common stock. We may also issue other warrants to our sponsor, initial stockholders, officers, directors
or their affiliates in payment of working capital loans made to us. To the extent we issue shares of common stock to effect a business
combination, the potential for the issuance of a substantial number of additional shares upon exercise of these warrants could
make us a less attractive acquisition vehicle in the eyes of a target business. Such securities, when exercised, will increase
the number of issued and outstanding shares of common stock and reduce the value of the shares issued to complete the business
combination. Accordingly, our warrants may make it more difficult to effectuate a business combination or increase the cost of
acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants could
have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent
these warrants are exercised, you may experience dilution to your holdings.
A provision
of our warrant agreement may make it more difficult for us to consummate an initial business combination.
If:
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we issue additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of common stock,
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the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and
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the Market Value is below $9.20 per share,
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then the exercise
price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the price at which we issue the
additional shares of common stock or equity-linked securities. This may make it more difficult for us to consummate an initial
business combination with a target business.
We may issue
shares of our capital stock or debt securities to complete a business combination, which would reduce the equity interest of our
stockholders and likely cause a change in control of our ownership.
Our amended and
restated certificate of incorporation authorizes the issuance of up to 50,000,000 shares of common stock, par value $.0001 per
share, and 1,000,000 shares of preferred stock, par value $.0001 per share. There are 38,800,000 authorized but unissued
shares of common stock available for issuance (after appropriate reservation for the issuance of the shares underlying the public
and private warrants). We may issue a substantial number of additional shares of common stock or shares of preferred stock, or
a combination of common stock and preferred stock, to complete a business combination. The issuance of additional shares of common
stock will not reduce the per-share conversion amount in the trust account. The issuance of additional shares of common stock or
preferred stock:
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may significantly reduce the equity interest of our existing investors;
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may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock;
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may cause a change in control if a substantial number of shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our shares of common stock.
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Similarly, if we
issue debt securities, it could result in:
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default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding.
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If we incur indebtedness,
our lenders will not have a claim on the cash in the trust account and such indebtedness will not decrease the per-share conversion
amount in the trust account.
We may be
unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of
the target business, which could compel us to restructure or abandon a particular business combination.
Although we believe
that the net proceeds provided by our initial public offering will be sufficient to allow us to consummate a business combination,
because we have not yet identified any prospective target business, we cannot ascertain the capital requirements for any particular
transaction. If the net proceeds of our initial public offering prove to be insufficient, either because of the size of the business
combination, the depletion of the available net proceeds in search of a target business, or the obligation to convert into cash
a significant number of shares from dissenting stockholders, we will be required to seek additional financing. Such financing may
not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to
consummate a particular business combination, we would be compelled to either restructure the transaction or abandon that particular
business combination and seek an alternative target business candidate. In addition, if we consummate a business combination, we
may require additional financing to fund the operations or growth of the target business. The failure to secure additional financing
could have a material adverse effect on the continued development or growth of the target business. None of our sponsor, officers,
directors or stockholders is required to provide any financing to us in connection with or after a business combination.
If the net
proceeds of our initial public offering not being held in trust are insufficient to allow us to operate for at least the next 19
months, we may be unable to complete a business combination.
Of the net proceeds
of our initial public offering, only approximately $724,000 are available to us outside the trust account to fund our working capital
requirements. We believe that such funds will be sufficient to allow us to operate for at least the next 19 months; however, we
cannot assure you that our estimate is accurate. Accordingly, if we use all of the funds held outside of the trust account and
all interest available to us, we may not have sufficient
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funds available with which to structure, negotiate or close an initial
business combination. In such event, we would need to borrow funds from our sponsor,
officers or directors or their affiliates to operate or may be forced to liquidate. Our sponsor, initial stockholders, officers,
directors and their affiliates may, but are not obligated to, loan us funds, from time to time or at any time, in whatever amount
that they deem reasonable in their sole discretion for our working capital needs. Each loan would be evidenced by a promissory
note. The notes would either be paid upon consummation of our initial business combination, without interest, or, at holder’s
discretion, up to $1,500,000 of the notes may be converted into warrants at a price of $1.00 per warrant.
We may only
be able to complete one business combination with the proceeds of our initial public offering, which will cause us to be solely
dependent on a single business which may have a limited number of products or services.
It is likely we
will consummate a business combination with a single target business, although we have the ability to simultaneously acquire several
target businesses. By consummating a business combination with only a single entity, our lack of diversification may subject us
to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success
may be:
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solely dependent upon the performance of a single business, or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse
impact upon the particular industry in which we may operate subsequent to a business combination.
Alternatively, if
we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for
each of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other business
combinations, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple
business combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent
assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable
to adequately address these risks, it could negatively impact our profitability and results of operations.
Resources
could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to
locate and acquire or merge with another business.
It is anticipated
that the investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If a decision is made not to complete a specific business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific
target business, we may fail to consummate the business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business.
Because we
must furnish our stockholders with target business financial statements prepared in accordance with U.S. generally accepted accounting
principles or international financial reporting standards, we will not be able to complete a business combination with prospective
target businesses unless their financial statements are prepared
in accordance with U.S. generally accepted accounting principles or international financial reporting standards.
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The federal proxy
rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests
include historical and/or pro forma financial statement disclosure in periodic reports. These financial statements may be required
to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America,
or GAAP, or international financial reporting standards, or IFRS, depending on the circumstances, and the historical financial
statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United
States), or PCAOB. We will include the same financial statement disclosure in connection with any tender offer documents we use,
whether or not they are required under the tender offer rules. Additionally, to the extent we furnish our stockholders with financial
statements prepared in accordance with IFRS, such financial statements will need to be audited in accordance with U.S. GAAP at
the time of the consummation of the business combination. These financial statement requirements may limit the pool of potential
target businesses we may acquire.
The COVID-19
pandemic and the impact on business and debt and equity markets could have a material adverse effect on our search for a business
combination, and any target business with which we ultimately complete a business combination.
The COVID-19 pandemic
has adversely affected the economies and financial markets worldwide, business operations and the conduct of commerce generally
and could have a material adverse effect on the business of any potential target business with which we complete a business combination.
Furthermore, we may be unable to complete a business combination if concerns relating to the COVID-19 continue to restrict travel
or limit the ability to have meetings with potential investors, or the target company’s personnel, vendors and services providers
are unavailable to negotiate and complete a transaction in a timely manner. The extent to which the COVID-19 pandemic impacts our
search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including
new information which may emerge concerning the severity of the pandemic and the actions to contain the pandemic or treat its impact,
among others. If the disruptions posed by the pandemic or other matters of global concern continue for an extensive period of time,
it could have a material adverse effect on our ability to complete a business combination, or the operations of a target business
with which we ultimately complete a business combination.
In addition, our
ability to complete a transaction may be dependent on the ability to raise equity and debt financing and the coronavirus pandemic
and other related events could have a material adverse effect on our ability to raise adequate financing.
As the number
of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more
competition for attractive targets. This could increase the cost of our initial business combination and could even result in our
inability to find a target or to consummate an initial business combination.
In recent years,
the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets for
special purpose acquisition companies have already entered into an initial business combination, and there are still many special
purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently
in registration. As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and
more resources to identify a suitable target and to consummate an initial business combination.
In addition, because
there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets,
the competition for available targets with attractive fundamentals or business models may increase, which could cause targets companies
to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or
operate targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability
to find and consummate an initial business combination, and may result in our inability to consummate an initial business combination
on terms favorable to our investors altogether.
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Risks Relating to the Post-Business
Combination Company
Our ability
to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our
key personnel, some of whom may join us following a business combination. While we intend to closely scrutinize any individuals
we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
Our ability to successfully
effect a business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued
service of our key personnel, at least until we have consummated our initial business combination. We cannot assure you that any
of our key personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers is required
to commit any specified amount of time to our affairs and, accordingly, our officers will have conflicts of interest in allocating
management time among various business activities, including identifying potential business combinations and monitoring the related
due diligence. We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected
loss of the services of our key personnel could have a detrimental effect on us.
The role of our
key personnel after a business combination, however, cannot presently be ascertained. Although some of our key personnel serve
in senior management or advisory positions following a business combination, it is likely that most, if not all, of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after a business combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with
the requirements of operating a public company which could cause us to have to expend time and resources helping them become familiar
with such requirements. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely
affect our operations.
Our officers
and directors may not have significant experience or knowledge regarding the jurisdiction or industry of the target business we
may seek to acquire.
We may consummate
a business combination with a target business in any geographic location or industry we choose. We cannot assure you that our officers
and directors will have enough experience or have sufficient knowledge relating to the jurisdiction of the target or its industry
to make an informed decision regarding a business combination.
Since we have
not yet selected a particular industry or target business with which to complete a business combination, we are unable to currently
ascertain the merits or risks of the industry or business in which we may ultimately operate.
We may pursue an
acquisition opportunity in any business industry or sector we choose. Accordingly, there is no current basis for you to evaluate
the possible merits or risks of the particular industry in which we may ultimately operate or the target business which we may
ultimately acquire. To the extent we complete a business combination with a financially unstable company or an entity in its development
stage, we may be affected by numerous risks inherent in the business operations of those entities. If we complete a business combination
with an entity in an industry characterized by a high level of risk, we may be affected by the currently unascertainable risks
of that industry. Although our management will endeavor to evaluate the risks inherent in a particular industry or target business,
we cannot assure you that we will properly ascertain or assess all of the significant risk factors.
If we acquire
a company in the life sciences, biotechnology and healthcare sectors, our future operations may be subject to risks associated
with this sector.
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While
we may pursue an initial business combination target in any stage of its corporate evolution or in any industry or sector, we
currently intend to concentrate our efforts in identifying businesses in the life sciences, biotechnology and healthcare
sectors. Because we have not yet identified or approached any specific target business, we cannot provide specific risks of
any business combination. However, risks inherent in investments in this sector may include, but are not limited to, the
following:
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adverse changes in international, national, regional or local economic, demographic and market conditions;
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competition from other companies and businesses in the life sciences, biotechnology and healthcare sectors;
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the ability to develop successful new products or improve existing ones;
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the disruption or failure of our networks, systems, platform or technology that frustrate or thwart our users’ ability to access our products and services, which may cause our users, advertisers, and partners to cut back on or stop using our products and services altogether, which could harm our business;
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mobile malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products, which could harm our business and reputation;
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litigation and other legal proceedings;
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the ability to attract and retain highly skilled employees;
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environmental risks; and
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civil unrest, labor strikes, acts of God, including earthquakes, floods and other natural disasters and acts of war or terrorism, which may result in uninsured losses.
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Any of the foregoing
could have an adverse impact on our operations following a business combination. However, our efforts in identifying prospective
target businesses will not be limited to companies in the life sciences, biotechnology and healthcare sectors. Accordingly, if
we acquire a target business in another industry, these risks we will be subject to risks attendant with the specific industry
in which we operate or target business which we acquire, which may or may not be different than those risks listed above.
If we do not
conduct an adequate due diligence investigation of a target business, we may be required to subsequently take write-downs or write-offs,
restructuring, and impairment or other charges that could have a significant negative effect on our financial condition, results
of operations and our stock price, which could cause you to lose some or all of your investment.
We must conduct
a due diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and expensive
due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even if we
conduct extensive due diligence on a target business, this diligence may not reveal all material issues that may affect a particular
target business, and factors outside the control of the target business and outside of our control may later arise. If our diligence
fails to identify issues specific to a target business, industry or the environment in which the target business operates, we may
be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could
result in our reporting losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our common stock. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing.
If we effect
a business combination with a company located in a foreign jurisdiction, we would be subject to a variety of additional risks that
may negatively impact our operations.
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If we consummate
a business combination with a target business in a foreign country, we would be subject to any special considerations or risks
associated with companies operating in the target business’ home jurisdiction, including any of the following:
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rules and regulations or currency conversion or corporate withholding taxes on individuals;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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longer payment cycles;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist attacks and wars; and
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deterioration of political relations with the United States.
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We cannot assure
you that we would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.
If we effect
a business combination with a company located outside of the United States, the laws applicable to such company will likely govern
all of our material agreements and we may not be able to enforce our legal rights.
If we effect a business
combination with a company located outside of the United States, the laws of the country in which such company operates will govern
almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to
enforce any of its material agreements or that remedies will be available in this new jurisdiction. The system of laws and the
enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States.
The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business,
business opportunities or capital. Additionally, if we acquire a company located outside of the United States, it is likely that
substantially all of our assets would be located outside of the United States and some of our officers and directors might reside
outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights,
to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil
liabilities and criminal penalties of our directors and officers under federal securities laws.
There may
be tax consequences to our business combinations that may adversely affect us.
While we expect
to undertake any merger or acquisition so as to minimize taxes both to the acquired business and/or asset and us, such business
combination might not meet the statutory requirements of a tax-free reorganization, or the parties might not obtain the intended
tax-free treatment upon a transfer of shares or assets. A non-qualifying reorganization could result in the imposition of substantial
taxes.
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Risks Relating to Conflicts of Interest
of our Officers, Directors, and Others
Our key personnel
may negotiate employment or consulting agreements with a target business in connection with a particular business combination.
These agreements may provide for them to receive compensation following a business combination and as a result, may cause them
to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our key personnel
will be able to remain with the company after the consummation of a business combination only if they are able to negotiate employment
or consulting agreements or other appropriate arrangements in connection with the business combination. Such negotiations would
take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to the company after the consummation of the
business combination. The personal and financial interests of such individuals may influence their motivation in identifying and
selecting a target business.
Our officers
and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how
much time to devote to our affairs. This could have a negative impact on our ability to consummate a business combination.
Our officers and
directors will not commit their full time to our affairs. We presently expect each of our officers and directors to devote such
amount of time as they reasonably believe is necessary to our business. We do not intend to have any full-time employees prior
to the consummation of our initial business combination. The foregoing could have a negative impact on our ability to consummate
our initial business combination.
Our officers
and directors may have a conflict of interest in determining whether a particular target business is appropriate for a business
combination.
Our sponsor has
waived its right to convert its founders’ shares or any other shares purchased in our initial public offering or thereafter,
or to receive distributions from the trust account with respect to its founders’ shares upon our liquidation if we are unable
to consummate a business combination. Accordingly, the shares acquired prior to our initial public offering, as well as the private
warrants and any warrants purchased by our officers or directors in the aftermarket, will be worthless if we do not consummate
a business combination. The personal and financial interests of our directors and officers may influence their motivation in timely
identifying and selecting a target business and completing a business combination and in determining whether the terms, conditions
and timing of a particular business combination are appropriate and in our stockholders’ best interest.
Our officers
and directors or their affiliates have pre-existing fiduciary and contractual obligations and may in the future become affiliated
with other entities engaged in business activities similar to those intended to be conducted by us. Accordingly, they may have
conflicts of interest in determining to which entity a particular business opportunity should be presented.
Our officers and
directors or their affiliates have pre-existing fiduciary and contractual obligations to other companies. Accordingly, they may
participate in transactions and have obligations that may be in conflict or competition with our consummation of our initial business
combination. As a result, a potential target business may be presented by our management team to another entity prior to its presentation
to us and we may not be afforded the opportunity to engage in a transaction with such target business. Additionally, our officers
and directors may in the future become affiliated with entities that are engaged in a similar business, including another blank
check company that may have acquisition objectives that are similar to ours. Accordingly, they may have conflicts of interest in
determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor
and a potential target business may be presented to other entities prior to its presentation to us, subject to our officers’
and directors’ fiduciary duties under Delaware law. For a more detailed description of our officers’ and directors’
business affiliations and the potential conflicts of interest that you should be aware of, see the sections titled “Management
— Directors and Executive Officers” and “Management — Conflicts of Interest.”
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EarlyBirdCapital
may have a conflict of interest in rendering services to us in connection with our initial business combination.
We have
engaged EarlyBirdCapital to assist us in connection with our initial business combination. We will pay EarlyBirdCapital a
cash fee for such services in an aggregate amount equal to up to 3.5% of the total gross proceeds raised in the offering only
if we consummate our initial business combination. The representative shares purchased by EarlyBirdCapital and its designees
will also be worthless if we do not consummate an initial business combination. These financial interests may result in
EarlyBirdCapital having a conflict of interest when providing the services to us in connection with an initial business
combination.
Risks Relating to our Securities
A market for
our securities may not develop, which would adversely affect the liquidity and price of our securities.
The price of our securities
may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore,
an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to sell
your securities unless a market can be established and sustained.
Nasdaq may
delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our securities are
currently listed on Nasdaq. Nasdaq generally requires that we meet certain requirements relating to stockholders’ equity,
market capitalization, aggregate market value of publicly held shares and distribution requirements, we cannot assure you that
our securities will continue to be listed on Nasdaq in the future prior to an initial business combination. Additionally, in connection
with our initial business combination, it is likely that Nasdaq will require us to file a new initial listing application and meet
its initial listing requirements as opposed to its more lenient continued listing requirements. We cannot assure you that we will
be able to meet those initial listing requirements at that time. Nasdaq will also have discretionary authority to not approve our
listing if Nasdaq determines that the listing of the company to be acquired is against public policy at that time.
If Nasdaq delists
our securities from trading on its exchange, or we are not listed in connection with our initial business combination, we could
face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity with respect to our securities;
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a determination that our shares of common stock are “penny stock” which will require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of common stock;
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a limited amount of news and analyst coverage for our company; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as “covered securities.” Because we expect that our units and eventually our common
stock and warrants will be listed on Nasdaq, our units, common stock and warrants will be covered securities. Although the states
are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if
there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale
of covered securities in a particular case. Further, if we were no longer listed on Nasdaq, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities.
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If we do not
file and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants, holders
will only be able to exercise such warrants on a “cashless basis.”
If we do not file
and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants at the time
that holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis” provided
that an exemption from registration is available. As a result, the number of shares of common stock that holders will receive upon
exercise of the warrants will be fewer than it would have been had such holder exercised his warrant for cash. Further, if an exemption
from registration is not available, holders would not be able to exercise on a cashless basis and would only be able to exercise
their warrants for cash if a current and effective prospectus relating to the common stock issuable upon exercise of the warrants
is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to meet these conditions and to
file and maintain a current and effective prospectus relating to the common stock issuable upon exercise of the warrants until
the expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential
“upside” of the holder’s investment in our company may be reduced or the warrants may expire worthless.
An investor
will only be able to exercise a warrant if the issuance of shares of common stock upon such exercise has been registered or qualified
or is deemed exempt under the securities laws of the state of residence of the holder of the warrants.
No warrants will
be exercisable and we will not be obligated to issue shares of common stock unless the shares of common stock issuable upon such
exercise has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder
of the warrants. If the shares of common stock issuable upon exercise of the warrants are not qualified or exempt from qualification
in the jurisdictions in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the
warrants may be limited and they may expire worthless if they cannot be sold.
The private
warrants may be exercised at a time when the public warrants may not be exercised.
Once the private
warrants become exercisable, such warrants may immediately be exercised on a cashless basis, at the holder’s option, so long
as they are held by the initial purchasers or their permitted transferees. The public warrants, however, will only be exercisable
on a cashless basis at the option of the holders if we fail to register the shares issuable upon exercise of the warrants under
the Securities Act within 90 days following the closing of our initial business combination. Accordingly, it is possible that the
holders of the private warrants could exercise such warrants at a time when the holders of public warrants could not.
We may amend
the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least a majority of
the then outstanding public warrants.
Our warrants will
be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to
cure any ambiguity or correct any defective provision. The warrant agreement requires the approval by the holders of at least a
majority of the then outstanding public warrants in order to make any change that adversely affects the interests of the registered
holders.
We may redeem
your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability
to redeem outstanding warrants (excluding the private warrants and any warrants underlying additional units issued to our sponsor,
officers or directors in payment of working capital loans made to us) at any time after they become exercisable and prior to their
expiration, at a price of $0.01 per warrant, provided that the last
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reported sales price of the
common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and
recapitalizations) for any 20 trading days within a 30 trading-day period commencing at any time after the warrants become
exercisable and ending on the third business day prior to proper notice of such redemption provided that on the date we give
notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an effective
registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants
and a current prospectus relating to them is available. If and when the warrants become redeemable by us, we may exercise our
redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state
securities laws. Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise
price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current
market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at
the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your
warrants. None of the private warrants will be redeemable by us so long as they are held by the initial purchasers or their
permitted transferees.
Our management’s
ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares
of common stock upon their exercise of the warrants than they would have received had they been able to exercise their warrants
for cash.
If we call our public
warrants for redemption after the redemption criteria described elsewhere in this report have been satisfied, our management will
have the option to require any holder that wishes to exercise his warrant (including any private warrants) to do so on a “cashless
basis.” If our management chooses to require holders to exercise their warrants on a cashless basis, the number of shares
of common stock received by a holder upon exercise will be fewer than it would have been had such holder exercised his warrant
for cash. This will have the effect of reducing the potential “upside” of the holder’s investment in our company.
If our security
holders exercise their registration rights, it may have an adverse effect on the market price of our shares of common stock and
the existence of these rights may make it more difficult to effect a business combination.
Our initial stockholders
are entitled to make a demand that we register the resale of the founders’ shares at any time commencing three months prior
to the date on which their shares may be released from escrow. Additionally, the holders of the representative shares, private
warrants and any warrants our sponsor, initial stockholders, officers, directors, or their affiliates may be issued in payment
of working capital loans made to us, are entitled to demand that we register the resale of their securities commencing at any time
after we consummate an initial business combination. The presence of these additional securities trading in the public market may
have an adverse effect on the market price of our securities. In addition, the existence of these rights may make it more difficult
to effectuate a business combination or increase the cost of acquiring the target business, as the stockholders of the target business
may be discouraged from entering into a business combination with us or will request a higher price for their securities because
of the potential effect the exercise of such rights may have on the trading market for our shares of common stock.
Because each
unit contains one-half of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than units
of other blank check companies.
Each unit contains
one-half of one redeemable warrant. No fractional warrants will be issued upon separation of the units and only whole warrants
will trade. Accordingly, unless you purchase a multiple of two units, the number of warrants issuable to you upon separation of
the units will be rounded down to the nearest whole number of warrants. This is different from other offerings similar to ours
whose units include one share of common stock and one warrant to purchase one whole share. We have established the components of
the units in this way in order to reduce the dilutive effect of the warrants upon completion of an initial business combination
since the warrants will be exercisable in the aggregate for one-half of the number of shares compared to units that each contain
a warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless,
this unit structure may cause our units to be worth less than if they included a warrant to purchase one whole share.
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If third parties
bring claims against us, the proceeds held in trust could be reduced and the per-share redemption price received by stockholders
may be less than $10.00.
Our placing of funds
in trust may not protect those funds from third party claims against us. Although we will seek to have all vendors and service
providers we engage and prospective target businesses we negotiate with execute agreements with us waiving any right, title, interest
or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, they may not execute
such agreements. Furthermore, even if such entities execute such agreements with us, they may seek recourse against the trust account.
A court may not uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which
could take priority over those of our public stockholders. If we are unable to complete a business combination and distribute the
proceeds held in trust to our public stockholders, our sponsor has agreed (subject to certain exceptions described elsewhere in
this report) that it will be liable to ensure that the proceeds in the trust account are not reduced below $10.00 per share by
the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted
for or products sold to us. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we
independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s
only assets are securities of our company. Therefore, we believe it is unlikely that our sponsor will be able to satisfy its indemnification
obligations if it is required to do so. As a result, the per-share distribution from the trust account may be less than $10.00,
plus interest, due to such claims.
Additionally, if
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds
held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject
to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we may not be able to return to our public stockholders at least $10.00.
Our stockholders
may be held liable for claims by third parties against us to the extent of distributions received by them.
Our amended and
restated certificate of incorporation provides that we will continue in existence only until 21 months from the closing of our
initial public offering. If we have not completed a business combination by such date, we will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100%
of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including any interest not previously released to us but net of taxes payable (and less up to $50,000 of interest to pay
liquidation expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. We cannot assure you that we
will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable
for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well
beyond the third anniversary of the date of distribution. Accordingly, we cannot assure you that third parties will not seek to
recover from our stockholders amounts owed to them by us.
If we are forced
to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received
by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer”
or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders.
Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration
of the time we have to complete an initial business combination, this may be viewed or interpreted as giving preference to our
public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board
may be viewed as having breached their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing
itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing
the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
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Our directors
may decide not to enforce our sponsor’s indemnification obligations, resulting in a reduction in the amount of funds in the
trust account available for distribution to our public stockholders.
In the event that
the proceeds in the trust account are reduced below $10.00 per public share and our sponsor asserts that it is unable to satisfy
its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against our sponsor to enforce such indemnification obligations. It is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. Additionally, each of our independent
directors is a member of our sponsor. As a result, they may have a conflict of interest in determining whether to enforce our sponsor’s
indemnification obligations. If our independent directors choose not to enforce these indemnification obligations, the amount of
funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
The securities
in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value of
the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00 per
share.
The proceeds held
in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government
treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have
briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in
recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future
adopt similar policies in the United States. In the event that we are unable to complete our initial business combination or make
certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled to receive their
pro-rata share of the proceeds held in the trust account, plus any interest income not previously released to us, net of taxes
payable. Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption amount received
by public stockholders may be less than $10.00 per share.
Provisions
in our amended and restated certificate of incorporation and bylaws and Delaware law may inhibit a takeover of us, which could
limit the price investors might be willing to pay in the future for our common stock and could entrench management.
Our amended and
restated certificate of incorporation and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. Our board of directors is divided into three classes, each of which will generally
serve for a term of three years with only one class of directors being elected in each year. As a result, at a given annual meeting
only a minority of the board of directors may be considered for election. Since our “staggered board” may prevent our
stockholders from replacing a majority of our board of directors at any given annual meeting, it may entrench management and discourage
unsolicited stockholder proposals that may be in the best interests of stockholders. Moreover, our board of directors has the ability
to designate the terms of and issue new series of preferred stock.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
Our amended
and restated certificate of incorporation will provide, subject to limited exceptions, that the Court of Chancery of the State
of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’
ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
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Our amended and
restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our
name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought
only in the Court of Chancery in the State of Delaware, except any action (A) as to which the Court of Chancery in the State of
Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable
party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B)
which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of
Chancery does not have subject matter jurisdiction, or (D) arising under the Securities Act. Any person or entity purchasing or
otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions
in our amended and restated certificate of incorporation.
This choice of forum
provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with
us or any of our directors, officers or employees, which may discourage lawsuits with respect to such claims, although our stockholders
will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder and may
therefore bring a claim in another appropriate forum. We cannot be certain that a court will decide that this provision is either
applicable or enforceable, and if a court were to find the choice of forum provision contained in our amended and restated certificate
of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such
action in other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and
restated certificate of incorporation will provide that the exclusive forum provision will be applicable to the fullest extent
permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce
any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision
will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal
courts have exclusive jurisdiction.
General Risks
We are a newly
formed company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve
our business objective.
We are a newly formed
company with no operating results to date. Therefore, our ability to commence operations is dependent upon obtaining financing
through this public offering of our securities. Since we do not have an operating history, you will have no basis upon which to
evaluate our ability to achieve our business objective, which is to acquire an operating business. We have not conducted any substantive
discussions and we have no plans, arrangements or understandings with any prospective acquisition candidates. We will not generate
any revenues until, at the earliest, after the consummation of a business combination.
You will not
be entitled to protections normally afforded to investors of blank check companies.
Since the net proceeds
of our initial public offering are intended to be used to complete a business combination with a target business that has not been
identified, we may be deemed to be a “blank check” company under the United States securities laws. However, since
we will have net tangible assets in excess of $5,000,000, we are exempt from rules promulgated by the SEC to protect investors
of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules
which would, for example, completely restrict the transferability of our securities, require us to complete a business combination
within 18 months of the effective date of the initial registration statement and restrict the use of interest earned on the funds
held in the trust account. Because we are not subject to Rule 419, our units will be immediately tradable, we will have a longer
period of time to consummate an initial business combination and we will be entitled to withdraw amounts from the funds held in
the trust account prior to the completion of a business combination.
We are an
“emerging growth company” and “smaller reporting company” and we cannot be certain if the reduced disclosure
requirements applicable to emerging growth companies and smaller reporting companies will make our shares of common stock less
attractive to investors.
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We are an
“emerging growth company,” as defined in the JOBS Act. We will remain an “emerging growth company”
for up to five years. However, if our non-convertible debt issued within a three year period or revenues exceeds $1.07
billion, or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last
day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the
following fiscal year. As an emerging growth company, we are not required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, we have reduced disclosure obligations regarding executive compensation in our
periodic reports and proxy statements and we are exempt from the requirements of holding a nonbinding advisory vote on
executive compensation and stockholder approval of any golden parachute payments not previously approved. Additionally, as an
emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies. As such, our financial
statements may not be comparable to companies that comply with public company effective dates. We cannot predict if investors
will find our shares of common stock less attractive because we may rely on these provisions. If some investors find our
shares of common stock less attractive as a result, there may be a less active trading market for our shares and our share
price may be more volatile.
Additionally, we
are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, or (2) our annual
revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates
exceeds $700 million as of the end of that year’s second fiscal quarter. To the extent we take advantage of such reduced
disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
If we are
deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be
restricted, which may make it difficult for us to complete a business combination.
A company that,
among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing,
reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment
Company Act, as amended, or the Investment Company Act. Since we will invest the proceeds held in the trust account, it is possible
that we could be deemed an investment company. Notwithstanding the foregoing, we do not believe that our anticipated principal
activities will subject us to the Investment Company Act. To this end, the proceeds held in trust may be invested by the trustee
only in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act
having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the
Investment Company Act which invest only in direct U.S. government treasury obligations. By restricting the investment of the proceeds
to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment
Company Act.
If we are nevertheless
deemed to be an investment company under the Investment Company Act, we may be subject to certain restrictions that may make it
more difficult for us to complete a business combination, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities.
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In addition, we
may have imposed upon us certain burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy, compliance policies and procedures and disclosure requirements and other rules and regulations.
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Compliance with
these additional regulatory burdens would require additional expense for which we have not allotted.
Compliance
with the Sarbanes-Oxley Act of 2002 will require substantial financial and management resources and may increase the time and costs
of completing an acquisition.
Section 404 of the
Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls and may require that we have
such system of internal controls audited beginning with our Annual Report on Form 10-K for the year ending December 31, 2022. If
we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties
and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the
Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on management’s evaluation
of our system of internal controls. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement
required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes
and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal
controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect
on the trading price of our stock.
Changes in
laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results
of operations.
We are subject to
laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain
SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes
could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with
applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of
operations.
Cyber incidents
or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital
technologies, including information systems, infrastructure and cloud applications and services, including those of third parties
with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
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