Item 1. Business
We are a blank check company
incorporated in August 27, 2020 as a Delaware corporation formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses,
which we refer to throughout this Annual Report as our initial business combination.
While we may pursue an initial business combination
opportunity in any industry or geographical location, we intend to capitalize on our management team’s background and experience
to identify promising opportunities in the biopharmaceutical sector.
In addition, we believe our ability to complete
our initial business combination is enhanced by our having entered into the forward purchase agreement pursuant to which Samsara
BioCapital agreed to purchase an aggregate of 2,500,000 forward purchase shares, at a purchase price of $25,000,000 in the aggregate,
in a private placement to close substantially concurrently with the closing of our initial business combination.
Samsara BioCapital and its Competitive Advantages
Samsara BioCapital, which commenced operations
on March 22, 2017, was organized for the purpose of providing a limited number of select investors with the opportunity to realize
long-term capital appreciation from investments in assets and securities of all kinds, including debt securities, in public and
private companies in life science-related industries. As of September 1, 2020, the partnership had $671 million in regulatory assets
under management.
Samsara BioCapital is ultimately controlled
by Dr. Srinivas Akkaraju, M.D., Ph.D., and is registered with the Securities and Exchange Commission as an investment advisor under
the U.S. Investment Advisors Act of 1940. Samsara BioCapital’s general partner is responsible for the investment decisions
on behalf of Samsara BioCapital, including naming such agents of Samsara BioCapital as it deems advisable, including, but not limited
to, the investment manager, and for development and implementation of Samsara BioCapital’s investment policy and strategy.
Samsara’s investment strategy is focused
on long-term value creation. Samsara believes that innovation and meaningful patient impact will drive attractive risk-adjusted
returns, and that the time scale for this value accretion parallels the development and commercialization of innovative therapeutics.
It invests in both public and private biopharmaceutical companies across all financing rounds from seed to crossover to initial
public offering, private investments in public equity (PIPEs) and follow-on offerings. It is agnostic with respect to development
stage and therapeutic area with current investments ranging from an early-stage incubator, focused on facilitating the advancement
of academic research, to public companies with marketed products. Samsara invests in companies in the U.S. as well as other global
markets.
Since 2017, Samsara has met with and
evaluated over 1,000 private and public biopharmaceutical companies, investing in 60 private and public companies in various
financing rounds. As of March 22, 2021, 14 out of the 60 companies had completed initial public offerings and one
company had announced its acquisition. Representative investments by Samsara include Allakos (Nasdaq: ALLK), Chinook
Therapeutics, Dewpoint Therapeutics, Forma Therapeutics (Nasdaq: FMTX), Principia Biopharma (Nasdaq: PRNB), and Nkarta Therapeutics (Nasdaq: NKTX). Samsara has also invested in several seed and
early private rounds of companies including Synthekine, Graphite Bio and Tentarix Biotherapeutics. Samsara has also been
instrumental in the creation of an early-stage incubator called Autobahn Labs. Autobahn Labs collaborates with scientists at
leading academic institutions to accelerate the translation of scientific ideas to novel therapeutics.
Samsara has deep knowledge of the biopharmaceutical
sector and an extensive network of relationships across the biopharmaceutical ecosystem including leading academic researchers,
discovery scientists, clinicians,
entrepreneurs, pharmaceutical and biotechnology executives,
investment bankers and venture capitalists as well as other members of the healthcare industry ecosystem. Samsara’s opportunity
evaluation centers on understanding of the underlying pathophysiology of a particular disease state, the rationale of a proposed
therapeutic target, detailed understanding of the proposed therapeutic modality and clinical development program, regulatory requirements
for product approval and the end-market clinical and commercial opportunity, including market access and reimbursement. These factors
are integrated to develop an investment thesis focused on intrinsic value and a capital formation plan to achieve significant milestones.
Critical to the investment process is the identification of specific management talent that can successfully develop and commercialize
the company’s products. Samsara is an active investor with significant operating and board experience in guiding companies
through the drug discovery and development process, and ultimately to successful commercialization. Samsara’s expertise and
broad network of industry relationships combined with our management team and independent Board members will facilitate the identification
and evaluation of investment targets with high probabilities of technical success and attractive investment risk profiles.
We are led by Rekha Hemrajani who serves
as our Chief Executive Officer (CEO) and serves on our Board of Directors. Ms. Hemrajani is an experienced biopharma executive
with extensive senior management experience in both large and small publicly traded biopharmaceutical companies, including serving
as President & Chief Executive Officer of Aravive, Inc (Nasdaq: ARAV), Chief Financial Officer & Chief Operating Officer
of Arcus Biosciences (Nasdaq: RCUS), Chief Operating Officer of RAPT Therapeutics (Nasdaq: RAPT), Vice President - Head of Licensing
and M&A at Onyx Pharmaceuticals (Nasdaq: ONXX, acquired by Amgen for $10.4 billion), Vice President of Business Development
at Exelixis (Nasdaq: EXEL), as well as prior investment banking experience with Credit Suisse First Boston and Lehman Brothers.
Ms. Hemrajani is supported by a dedicated
research team, as well as the Samsara investment team and an experienced Board of Directors with significant investing, operating,
and clinical development experience. All of our independent directors have had significant experience in the leadership of both
large and small biopharmaceutical companies. We believe that the depth of experience and industry relationships
that our directors possess will help ensure our Management’s ability to identify and diligence potential business combination
targets and successfully complete our business combination. In addition, having a dedicated management team puts us in a unique
position to potentially create new companies as business combination targets with promising assets we may in-license from pharmaceutical
or biotechnology companies, or combine target companies with additional assets to create critical mass in a therapeutic area. We
further believe that the experience of our highly experienced Board will help position the merged company for success following
the business combination by helping guide the company in areas such as clinical development, portfolio strategy, business development,
financing and building key leadership talent. We believe this unique structure makes us highly differentiated and creates the optimal
leverage for the company to pursue a broader set of investment opportunities and create shareholder value.
Industry Opportunity
The last decade has seen unprecedented innovation
in the biopharmaceutical industry, including the introduction of a multitude of new therapies for serious diseases and the establishment
of new therapeutic modalities. These innovations have resulted in significant advances for clinicians and patients, and markedly
improved the outcomes for patients suffering from a wide range of diseases. Among the most significant advances during this period
was the introduction of new immuno-oncology agents that leverage a patient’s immune system to fight their disease. These
medications have become the backbone treatment for many cancers and were led by the approvals by the U.S. FDA of Yervoy (2011)
and Keytruda (2014). In the years since the first approvals, a number of additional agents have been approved and a large number
are currently in clinical trials. In 2013, a functional cure for patients suffering from specific types of the hepatitis C virus
was approved by the U.S. FDA. The industry also saw the first cell and gene therapy products approved by the U.S. FDA this decade,
with the approval and launches of chimeric antigen receptor (CAR) T cell therapy for cancer and gene therapies for a genetic form
of blindness and spinal muscular atrophy (“SMA”), an orphan disease characterized by neuromuscular issues and early
death.
These new medicines and modalities represent
the culmination of decades of basic science research and significant advances in our understanding of disease pathophysiology as
well as the advancement in manufacturing techniques for these new therapeutic approaches. The advances in our understanding of
the underlying causes of disease have been facilitated by significant improvements in the cost, speed, and accuracy of tools that
allow
researchers to identify the specific genetic, genomic, and cellular
aberrations associated with disease. This has enabled better identification of biological targets as well as facilitated broader
use of biomarkers as surrogate biological indicators of efficacy in clinical development, allowing researchers to refine and enhance
clinical trial designs, and direct treatments to the patients that will benefit most.
This innovation has been supported, and
indeed accelerated, by regulatory bodies such as the U.S. FDA which have utilized a number of tools to catalyze the
introduction of new medicines to physicians and patients. The U.S. FDA, and similar agencies in other territories, has
established a number of regulatory tools that allow biopharmaceutical companies to accelerate the drug development process
and the advancement of new therapies to patients. These regulatory tools include orphan drug designation which provides
defined regulatory exclusivity for products targeting under 200,000 patients in the U.S., fast track designation which
decreases the FDA review time from 10 months to 6 months, accelerated approval which allows for the approval of new medicines
based on surrogate markers of efficacy, priority review and breakthrough designation which provides additional access and
interaction to the FDA for diseases with high unmet medical needs. From 2014 to 2020, the U.S. FDA approved 314 new molecular
entities (NMEs) and therapeutic biologics, with 48% of approvals receiving orphan drug designation, 61% receiving priority review, 16% receiving
accelerated approval, and 29% designated as breakthrough therapies.
Largely based on the confluence of
scientific innovation, regulatory alignment and patient need, the pace of private company formation as well as IPOs has been
very strong. From 2018 to 2020, there were over 1,300 private biopharmaceutical financing rounds in the U.S. and EU raising
over $50 billion in proceeds. During the same period, there were 171 biopharmaceutical IPOs in the US and EU raising over $29
billion in proceeds. Despite the recent volume of IPOs, the process of “going public” is replete with myriad
challenges that are specific to the biopharmaceutical industry and results in significant inefficiencies in the
biopharmaceutical equity markets. This includes the need for a private biotech company management team to assemble their own
syndicate of sophisticated investors who are able to understand the complex scientific, clinical and regulatory factors
needed for creating successful medicines. We believe that key to the successful growth and maturation of a biopharmaceutical
company is to reduce its cost of capital, diversify its shareholder base, and increase its visibility in the broader
healthcare ecosystem through access to the public markets. The additional capital available in the public markets allows
companies to advance products through more advanced stages of the drug development and regulatory process, and potentially to
eventual commercialization, leading to significant value inflections in their market capitalization and shareholder
returns.
We believe that this universe of private
companies is fertile ground for accessing the public markets via a business combination with our company. In addition to existing
private companies, large biotechnology and pharmaceutical companies continue to evolve their therapeutic focus and strategies leading
to rationalization of their product portfolios. We believe that this pool of rationalized assets also represents an attractive
pool of acquisition candidates. We believe we are uniquely positioned to leverage these market inefficiencies to identify high
value assets that are under appreciated by the broader investment community. Our management team and Board, combined with Samsara’s
expertise, network and premier deal flow, provide us with unparalleled visibility across all stages of biopharmaceutical companies.
The biopharmaceutical industry has also
benefited significantly from a continued need for larger pharmaceutical and biotechnology companies to build their pipelines of
drugs via mergers and acquisitions (M&A). There are many drivers of M&A activity in the biopharmaceutical industry, including
significant loss of revenues due to patent expirations and the need to access next generation technologies to drive future growth.
Since the beginning of 2017, in North America and Europe there have been over 100 M&A transactions in the biopharmaceutical
industry with transaction value greater than $500 million each, resulting in a cumulative M&A volume of nearly $585 billion.
Industry analysts predict that M&A activity is expected to continue as biopharmaceutical companies continue to face patent
expirations and depend on acquisitions to drive innovation and growth. Since 2019, there have been a number of M&A transactions
in the biopharmaceutical industry with transaction value greater than $1 billion. A few recent examples include Bristol-Myers
Squibb’s acquisition of Celgene for $74 billion, Eli Lilly’s acquisition of LOXO Oncology for $8 billion, and Gilead’s
acquisition of Forty Seven for $4.9 billion. In addition, recently announced M&A transactions with transaction value greater
than $1 billion that recently closed or may soon close include AstraZeneca's acquisition of Alexion for $39 billion, Jazz Pharmaceuticals’
acquisition of GW Pharmaceuticals for $7.2 billion, Amgen's acquisition of Five Prime Therapeutics for $1.9 billion and Merck's
acquisition of Pandion Therapeutics for $1.9 billion.
Acquisition Strategy
Our acquisition strategy includes identifying
and acquiring an innovative biopharmaceutical company, in-licensing promising assets from pharmaceutical and biotechnology companies,
or combining target companies with additional assets to create critical mass in a therapeutic area. We believe our management team
working alongside Samsara is uniquely positioned to identify potential acquisition targets, and our collective reach and reputation
in the industry will make us a preferred partner. Our dedicated management team puts us in a unique position, if needed, to take
operating or board roles and help position the merged company for success following the business combination. We believe that our
focus on patient impact and long-term value creation is a meaningful differentiator in the industry. Our selection process leverages
the relationships of our Management and Board and relies on our industry leading approach to diligence and building companies that
create significant shareholder value.
Investment Criteria
We have identified the following criteria
to evaluate prospective target businesses based on our investment strategy and process. These criteria are not meant to be exhaustive,
and we may decide to enter into our initial business combination with a target business that does not meet all of these criteria.
We intend to seek to acquire one or more businesses that we believe:
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Target significant unmet medical needs. We seek to identify businesses targeting significant unmet medical needs. We
believe that filling material gaps in treatment paradigms aligns all relevant stakeholders including patients, payors, and regulators
and offers the best opportunity for differentiated risk-adjusted returns
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Have a high probability of clinical and regulatory success. The core of our investment approach is to target clinical
stage assets that we believe will have a high probability of technical and regulatory success. We believe that probability of technical
success is directly correlated with deep understanding of the underlying pathobiology of a specific disease, the natural history
of the disease, current standard of care, and the regulatory landscape
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Leverage innovative science and approaches to drug development. We intend to identify businesses that leverage innovative
approaches to drug discovery and development including genetics, genomics, and biomarkers which we believe allow for early evidence
of clinical benefit and more capital-efficient drug development with higher probabilities of success
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Possess scarcity value via a unique approach to disease targeting. We intend to identify businesses with unique therapeutic
strategies to disease targeting resulting in asset scarcity value and the creation of a differentiated profile for a publicly traded
company
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Have a clear plan for capital formation. We believe that capital adequacy is key to success in drug development, and
we will focus on businesses that can be capitalized through key value inflection points
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Have strong existing Management or key expertise that can benefit from the managerial experience of our team and Board.
We intend to focus on companies with strong and experienced management teams who could benefit from the guidance of our management
team and Board. In addition, if needed, members of our team or Board may be willing to take operating or board roles following
a business combination
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The evaluation of a particular business
combination target may be based, to the extent relevant, on these general criteria as well as other considerations that our management
may deem relevant.
Samsara BioCaptial has entered into an
agreement to make an aggregate investment of up to $25,000,000 in us at the time of our initial business combination through the
purchase of up to 2,500,000 forward purchase shares in a private placement that may close simultaneously with the closing of our
initial business combination. Samsara BioCapital’s commitment under the forward purchase agreement is subject to, among other
conditions, the business combination (including the target assets or business, and the terms of the business combination) being
reasonably acceptable to Samsara BioCapital. This purchase will be eligible to be made regardless of whether any shares of Class
A common stock are redeemed by our public stockholders. The forward purchase shares will be issued only in connection with the
closing of the initial business combination. The proceeds from the sale of forward purchase
shares, if any, may be used as part of the
consideration to the sellers in our initial business combination, expenses in connection with our initial business combination
or for working capital in the post-transaction company.
Initial Business Combination
Nasdaq rules require that we must complete
one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the
trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at
the time of our signing a definitive agreement in connection with our initial business combination. Our Board of Directors will
make the determination as to the fair market value of our initial business combination. If our Board of Directors is not able to
independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent
investment banking firm which is a member of FINRA or a valuation or appraisal firm with respect to the satisfaction of such criteria.
While we consider it unlikely that our Board of Directors will not be able to make an independent determination of the fair market
value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of the target’s assets or prospects.
We anticipate structuring our initial business
combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity
interests or assets of the target business or businesses. We may, however, structure our initial business combination such that
the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet
certain objectives of the target management team or stockholders 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 of 1940, as amended, or 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 would 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 taken into account for purposes of the 80%
of net assets test described above. If the business combination involves more than one target business, the 80% of net assets test
will be based on the aggregate value of all of the target businesses.
We are not presently engaged in, and we
will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business combination using
cash from the proceeds of our initial public offering, the private placement of the private placement shares and the forward purchase
shares, if any, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward
purchase agreements or backstop agreements we may enter into following our initial public offering or otherwise), shares issued
to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
We may seek to complete our initial business combination with a company or business that may be financially unstable or in its
early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is
paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance
of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
We may need to obtain additional financing
to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds
held in our trust account or because we become
obligated to redeem a significant number of
our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt in
connection with such business combination. There are no prohibitions on our ability to issue securities or incur debt in connection
with our initial business combination. We are not currently a party to any arrangement or understanding with any third party with
respect to raising any additional funds through the sale of securities, the incurrence of debt or otherwise.
Sourcing of Potential Initial Business Combination Targets
Certain members of our management team
have spent significant portions of their careers working with businesses in the healthcare industry, and have developed a wide
network of professional services contacts and business relationships in that industry. The members of our Board of Directors also
have significant executive management and public company experience with healthcare and healthcare-related companies.
This network has provided our management
team with a flow of referrals that have resulted in numerous transactions. We believe that the network of contacts and relationships
of our management team provides us with an important source of acquisition opportunities. In addition, we anticipate that target
business candidates will be brought to our attention from various unaffiliated sources, including investment market participants,
private equity groups, investment banks, consultants, accounting firms and large business enterprises.
We are not prohibited from pursuing an
initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or making the
acquisition through a joint venture or other form of shared ownership with our sponsor, executive officers or directors. In the
event we seek to complete an initial business combination with a target that is affiliated with our sponsor, executive officers
or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking which
is a member of FINRA or a qualified independent accounting firm that such an initial business combination is fair to our company
from a financial point of view. We are not required to obtain such an opinion in any other context.
If any of our executive officers becomes
aware of a business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing
fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity
prior to presenting such business combination opportunity to us. All of our executive officers currently have certain relevant
fiduciary duties or contractual obligations that may take priority over their duties to us. Our amended and restated certificate
of incorporation will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and
such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Target business candidates may also be
brought to our attention from various unaffiliated sources, including investment bankers, private investment funds and other intermediaries.
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 in which they think we may be interested on an unsolicited
basis, since many of these sources will have read this Annual Report and know what types of businesses we are targeting. Our officers
and directors, as well as their affiliates, may also bring to our attention target business candidates that they become aware of
through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending
trade shows or conventions. In addition, we expect to receive a number of proprietary opportunities that would not otherwise necessarily
be available to us as a result of the track record and business relationships of our officers and directors.
Financial Position
With funds available at December 31,
2020 for a business combination initially in the amount of $99,899,315 (assuming no redemptions and assuming no funding under
the forward purchase agreement), after payment of $3,623,214 of deferred underwriting fees, we offer a target business a
variety of options such as creating a liquidity event for its owners, 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 complete
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, we have not taken any steps to secure third party financing
and there can be no assurance it will be available to us.
Lack
of Business Diversification
For an indefinite period of time after
the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in
one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks
of being in a single line of business. By completing our initial business combination with only a single entity, our lack of diversification
may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse
impact on the particular industry in which we operate after our initial business combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although we intend to closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future
management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role
of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination
as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our
initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience
or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our key
personnel will remain in senior management or advisory positions with the combined company. The determination as to whether any
of our key personnel will remain with the combined company will be made at the time of our initial business combination.
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 additional managers will have the requisite skills, knowledge or
experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended and restated certificate of incorporation.
However, we will seek stockholder approval if it is required by law or applicable stock exchange rule, or we may decide to seek
stockholder approval for business or other legal reasons.
Presented in the table below is a graphic
explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required
under Delaware law for each such transaction.
Type
of Transaction
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Whether
Stockholder Approval is Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under Nasdaq’s listing rules, stockholder
approval would be required for our initial business combination if, for example:
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We issue shares of common stock that will be equal to or in excess of 20% of the number of our shares of common stock then
outstanding (other than in a public offering);
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Any of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business
or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding
common stock or voting power of 5% or more; or
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The issuance or potential issuance of common stock will result in our undergoing a change of control.
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Permitted
Purchases of Our Securities
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates may purchase
shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates
may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. None of the funds in the trust account
will be used to purchase shares in such transactions. If they engage in such transactions, they will be restricted from making
any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases
are prohibited by Regulation M under the Exchange Act.
In the event that our sponsor, initial
stockholders, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public
stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke
their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender
offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules
under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to
such rules, the purchasers will comply with such rules.
The purpose of any such purchases of shares
could be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder
approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have
a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such
requirement would otherwise not be met. Any such purchases of our securities may result in the completion of our initial business
combination that may not otherwise have been possible.
In addition, if such purchases are made,
the public “float” of our Class A common stock may be reduced and the number of beneficial holders of our securities
may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national
securities exchange.
Our sponsor, initial stockholders, officers,
directors and/or their affiliates anticipate that they may identify the stockholders with whom our initial stockholders, officers,
directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by
our receipt of redemption requests submitted by stockholders (in the case of Class A common stock) following our mailing of proxy
materials in connection with our initial business combination. To the extent that our sponsor, officers, directors, advisors or
their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed
their election to redeem their shares for a pro rata share of the trust account or vote against our initial business combination,
whether or not such stockholder has already submitted a proxy with respect to our initial business combination but only if such
shares have not already been voted at the stockholder meeting related to our initial business combination. Our sponsor, executive
officers, directors, advisors or any of their affiliates will select which stockholders to purchase shares from based on a negotiated
price and number of shares and any other factors
that they may deem relevant, and will only
purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws. Our sponsor,
officers, directors and/or their affiliates will be restricted from making purchases of shares if the purchases would violate Section
9(a)(2) or Rule 10b-5 of the Exchange Act. We expect any such purchases will be reported pursuant to Section 13 and Section 16
of the Exchange Act to the extent such purchases are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of Our Initial Business Combination
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business
combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated
as of two business days prior to the consummation of the initial business combination, including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares,
subject to the limitations and on the conditions described herein. The amount in the trust account is at least $10.00 per public
share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred
underwriting commissions we will pay to the underwriters. Our initial stockholders, sponsor, officers and directors have entered
into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder
shares and public shares they may hold in connection with the completion of our initial business combination.
Limitations
on Redemptions
Our amended and restated certificate of
incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i)
cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or
(iii) the retention of cash to satisfy other conditions. In the event the aggregate cash consideration we would be required to
pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will
not complete the initial business combination or redeem any shares in connection with such initial business combination, and all
shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through
the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our initial business
combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following consummation
of our initial public offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
Manner
of Conducting Redemptions
We will provide our public stockholders
with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination
either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) without a stockholder
vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial business combination
or conduct 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 require us to seek stockholder approval under applicable law
or stock exchange listing requirements. Asset acquisitions and stock purchases would not typically require stockholder approval
while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding
common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. So long
as we obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with Nasdaq’s stockholder
approval rules.
The requirement that we provide our public
stockholders with the opportunity to redeem their public shares by one of the two methods listed above are contained in provisions
of our amended and restated certificate of incorporation and apply whether or not we maintain our registration under the Exchange
Act or our listing on Nasdaq. Such provisions may be amended if approved by holders of 65% of our common stock entitled to vote
thereon.
If we provide our public stockholders with
the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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If we seek stockholder approval, we
will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted
in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person or by
proxy of shares of outstanding capital stock of the Company representing a majority of the voting power of all outstanding
shares of capital stock of the Company entitled to vote at such meeting. Our initial stockholders will count towards this
quorum and, pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote any founder shares and
private placement shares they hold and any public shares purchased during or after our initial public offering (including in
open market and privately-negotiated transactions) in favor of our initial business combination. For purposes of seeking
approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of
our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’
founder shares and shares of Class A common stock issued as part of the private placement shares, we would need only
3,628,495, or approximately 35%, of the 10,352,040 public shares sold in our initial public offering to be voted in favor of
an initial business combination in order to have our initial business combination approved (assuming all outstanding shares
are voted). These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more
likely that we will complete our initial business combination. Each public stockholder may elect to redeem its public shares
irrespective of whether they vote for or against the proposed transaction or whether they were a stockholder on the record
date for the stockholder meeting held to approve the proposed transaction.
If a stockholder vote is not required and
we do not decide to hold a stockholder vote for business or other legal reasons, we will:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers,
and
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file tender offer documents with the SEC prior to completing our initial business combination, which contain substantially
the same financial and other information about the initial business combination and the redemption rights as is required under
Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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In the event we conduct redemptions pursuant
to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender
offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number
of public shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause
our net tangible assets to be less than $5,000,001. If public stockholders tender more shares than we have offered to purchase,
we will withdraw the tender offer and not complete the initial business combination.
Upon the public announcement of our initial
business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will terminate any
plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market, in order to
comply with Rule 14e-5 under the Exchange Act.
We intend to require our public stockholders
seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our
transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to
the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may
be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct
redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares
to also
submit a written request for redemption to
our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. The
proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares in connection with
our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements.
We believe that this will allow our transfer agent to efficiently process any redemptions without the need for further communication
or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative cost. If
the proposed initial business combination is not approved and we continue to search for a target company, we will promptly return
any certificates or shares delivered by public stockholders who elected to redeem their shares.
Our amended and restated certificate of
incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i)
cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or
(iii) the retention of cash to satisfy other conditions. In the event the aggregate cash consideration we would be required to
pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will
not complete the initial business combination or redeem any shares in connection with such initial business combination, and all
shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through
the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our initial business
combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following consummation
of our initial public offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
Limitation
on Redemption Upon Completion of Our Initial Business Combination If We Seek Stockholder Approval
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with
any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares,
without our prior consent. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and
subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination
as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or
on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold
in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased
by us, our sponsor or our management at a premium to the then-current market price or on other undesirable terms. By limiting our
stockholders’ ability to redeem no more than 15% of the shares sold in our initial public offering without our prior consent,
we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete
our initial business combination, particularly in connection with a business combination with a target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash.
However, we would not be restricting our
stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Delivering
Stock Certificates in Connection with the Exercise of Redemption Rights
As described above, we intend to require
our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares
to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system,
prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this
date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition,
if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of
its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in
which the name of the beneficial owner of such shares is included. The proxy materials or tender offer
documents, as applicable, that we will furnish
to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public
stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have up to two business days prior
to the vote on the initial business combination if we distribute proxy materials, or from the time we send out our tender offer
materials until the close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise
its redemption rights. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy
or tender offer materials, as applicable, its shares may not be redeemed. Given the relatively short exercise period, it is advisable
for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with
the above-referenced process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent
will typically charge the broker submitting or tendering shares a fee of approximately $80.00 and it would be up to the broker
whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we
require holders seeking to exercise redemption rights to submit or tender their shares. The need to deliver shares is a requirement
of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any request to redeem such shares, once
made, may be withdrawn at any time up to the date set forth in the proxy materials or tender offer documents, as applicable. Furthermore,
if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides
prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return
the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares
electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If our initial business combination is
not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not
be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return
any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed initial business
combination is not completed, we may continue to try to complete an initial business combination with a different target until
24 months from the closing of our initial public offering.
Redemption
of Public Shares and Liquidation if No Initial Business Combination
Our amended and restated certificate of
incorporation provides that we will have only 24 months from the closing of our initial public offering to complete our initial
business combination. If we do not complete our initial business combination within such 24-month period, 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 the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including interest earned on the funds held in the trust account (less taxes payable and up to $100,000 of interest to pay dissolution
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 liquidating distributions, if any), and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our Board of Directors, liquidate
and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law.
Our initial stockholders, sponsor, officers
and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions
from the trust account with respect to any founder shares they hold if we fail to complete our initial business combination within
24 months from the closing of our initial public offering. However, if our initial stockholders, sponsor or management team acquire
public shares in or after our initial public offering, they will be entitled to liquidating distributions from the trust account
with respect to such public shares if we fail to complete our initial business combination within the allotted 24-month time period.
Our initial stockholders, sponsor, officers
and directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment to our amended and
restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if
we do not complete our initial business combination within 24 months from the closing of our initial public offering or with respect
to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we
provide our public
stockholders with the opportunity to redeem
their public shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to
us to pay our taxes, divided by the number of then outstanding public shares. However, we may not redeem our public shares in an
amount that would cause our net tangible assets to be less than $5,000,001. If this optional redemption right is exercised with
respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement, we would not proceed
with the amendment or the related redemption of our public shares at such time.
We expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the
approximately $2,000,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient
funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing
our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may
request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds
of our initial public offering and the sale of the private placement shares, other than the proceeds deposited in the trust account,
and without taking into account interest, if any, earned on the trust account and any tax payments or expenses for the dissolution
of the trust, the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.00.
The proceeds deposited in the trust account
could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders.
We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00.
Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision
for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before
we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure
you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors,
service providers, prospective target businesses and other entities with which we do business 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,
there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented
from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will consider whether competitive alternatives
are reasonably available to us and will only enter into an agreement with such third party if management believes that such third
party’s engagement would be in the best interests of the company under the circumstances. Examples of possible instances
where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute
a waiver or in cases where management is unable to find a service provider willing to execute a waiver. The underwriters of our
initial public offering did not execute agreements with us waiving such claims to the monies held in the trust account. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.
In order to protect the amounts held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent
any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered
into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount
of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held
in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per public share due to reductions
in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party
or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or
not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial public offering
against certain liabilities, including liabilities under the Securities Act. 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 we believe that our sponsor’s only assets are securities of our company. Therefore,
we cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully
made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less
than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust
account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust
account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions in the value of
the trust assets, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its indemnification 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 its indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly,
we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.00
per share.
We will seek to reduce the possibility
that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service
providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right,
title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims
under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. We will have access to up to approximately $2,000,000 from the proceeds of our initial public offering with
which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated
to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve for
claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made
by creditors. In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds from
the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account
would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000,
the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
Under the DGCL, 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 our public shares in the event
we do not complete our initial business combination within 24 months from the closing of our initial public offering may be considered
a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of
the DGCL 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.
Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 24 months from the closing of our initial public offering, is not considered a liquidating
distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of
legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174
of the DGCL, 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 liquidating distribution. If we do not complete our initial business combination within
24 months from the closing of our initial public offering, 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 the public shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds
held in the trust account (less
taxes payable and up to $100,000 of interest
to pay dissolution 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 liquidating distributions, if any) 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 each case to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as
reasonably possible following our 24th 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.
Because we will not be complying with Section
280, Section 281(b) of the DGCL 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 10 years.
However, because we are a blank check company, rather than an operating company, and our operations are 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. As described above, pursuant to the obligation contained in our underwriting agreement,
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any
claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the
extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such
lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions
in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any
claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor
will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that 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 $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that 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 some or all amounts received by our stockholders. Furthermore, our Board
of Directors may be viewed as having breached its fiduciary duty 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.
Our public stockholders will be entitled
to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do not complete our
initial business combination within 24 months from the closing of our initial public offering, (ii) in connection with a stockholder
vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our initial
public offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business
combination activity or (iii) if they redeem their respective shares for cash upon the completion of our initial business combination.
In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we
seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with
the business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share
of the trust account. Such stockholder must have also exercised its redemption rights described above. These provisions of our
amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation,
may be amended with a stockholder vote.
Competition
In identifying, evaluating and selecting
a target business for our initial business combination, we may encounter competition from other entities having a business objective
similar to ours, including other special purpose acquisition companies, private equity groups and leveraged buyout funds, public
companies and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will be
limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition of
a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and the future dilution they potentially represent,
may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in
successfully negotiating an initial business combination.
Facilities
We currently utilize office space at 628
Middlefield Road, Palo Alto, CA 94301 from our sponsor and the members of our management team. We consider our current office space
adequate for our current operations.
Employees
We currently have four executive officers,
including our Chief Executive Officer, Rekha Hemrajani and our VP of Corporate Development, Dr. Mayank Gandhi. Aside from Ms. Hemrajani
and Dr. Gandhi, members of our management team are not obligated to devote any specific number of hours to our matters but they
intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination.
The amount of time that any such person will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the current stage of the business combination process.
Item 1A. Risk Factors
An investment in our securities involves
a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained
in this Annual Report, before making a decision to invest in our shares. If any of the following events occur, our business, financial
condition and operating results may be materially adversely affected. In that event, the trading price of our securities could
decline, and you could lose all or part of your investment.
General Risk Factors
We are a blank check company with no
operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check company incorporated
under the laws of the State of Delaware and all of our activities to date have been related to our formation, our initial public
offering and our search for a business combination target. Because we lack a significant operating history, you have no basis upon
which to evaluate our ability to achieve our business objective of completing our initial business combination. If we fail to complete
our initial business combination, we will never generate any operating revenues.
We are an emerging growth company and
a smaller reporting company within the meaning of the Securities Act, and we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive
to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before
that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether
investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities
less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise
would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The
JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private
companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our
financial statements with another public company
which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition
period difficult or impossible because of the potential differences in accounting standards used.
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 prior June 30th, 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 prior June 30th. 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.
Risks Relating to Our Search for, and Consummation
of or Inability to Consummate, a Business Combination
Our stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares
will participate in such vote, which means we may complete our initial business combination even though a majority of our public
stockholders do not support such a combination.
We may choose not to hold a stockholder
vote to approve our initial business combination if the business combination would not require stockholder approval under applicable
law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement, 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. Even if we
seek stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly, we may
complete our initial business combination even if a majority of our public stockholders do not approve of the business combination
we complete.
In evaluating a prospective target business
for our initial business combination, our management may consider the availability of funds from the sale of the forward purchase
shares, which may be used as part of the consideration to the sellers in the initial business combination. If Samsara BioCapital
decides not to exercise its right to purchase all or some of the forward purchase shares, we may lack sufficient funds to consummate
our initial business combination.
We have entered into a forward purchase
agreement pursuant to which Samsara BioCapital agreed to purchase an aggregate of up to 2,500,000 forward purchase shares for $10.00
per share, or an aggregate maximum amount of $25,000,000, in a private placement that may close simultaneously with the closing
of our initial business combination. The funds from the sale of the forward purchase shares, if any, are expected to be used as
part of the consideration to the sellers in our initial business combination, and to pay expenses in connection with our initial
business combination and may be used for working capital in the post-transaction company. If Samsara BioCapital does not agree
to fund some or all of the forward purchase shares, the post-transaction company may not have enough cash available for working
capital. The obligations under the forward purchase agreement do not depend on whether any public stockholders elect to redeem
their shares in connection with our initial business combination. However, if the sale of the forward purchase shares does not
close, for example, by reason of the failure of Samsara BioCapital or any forward transferee to fund the purchase price for their
forward purchase shares, we may lack sufficient funds to consummate our initial business combination. Samsara BioCapital’s
obligation to purchase forward purchase shares will, among other things, be conditioned on the business combination (including
the target assets or business, and the terms of the business combination) being reasonably acceptable to Samsara BioCapital and
on a requirement that such initial business combination is approved by a unanimous vote of our Board of Directors. In determining
whether a target is reasonably acceptable to Samsara BioCapital, we expect that Samsara BioCapital would consider many of the same
criteria as we will consider, but will also consider whether the investment is an appropriate investment for Samsara BioCapital.
Accordingly, if we pursue an acquisition target that is not reasonably acceptable to Samsara BioCapital, or if the initial business
combination is not approved by a unanimous vote of our Board of Directors, Samsara BioCapital would not be obligated to purchase
any forward purchase shares, and we may need to seek alternative financing. Additionally, Samsara BioCapital’s and any
forward transferee’s obligations to
purchase the forward purchase shares will be subject to termination prior to the closing of the sale of such securities by mutual
written consent of the Company and such party, or automatically: (i) if our initial public offering was not consummated on or prior
to December 31, 2020; (ii) if our initial business combination is not consummated within 24 months from the closing of this offering,
unless extended up to a maximum of sixty (60) days in accordance with our amended and restated certificate of incorporation; or
(iii) if we become subject to any voluntary or involuntary petition under the United States federal bankruptcy laws or any state
insolvency law, in each case which is not withdrawn within sixty (60) days after being filed, or a receiver, fiscal agent or similar
officer is appointed by a court for business or property of us, in each case which is not removed, withdrawn or terminated within
sixty (60) days after such appointment. In addition, Samsara BioCapital’s obligations to purchase the forward purchase shares
will be subject to fulfilment of customary closing conditions, including that our initial business combination must be consummated
substantially concurrently with the purchase of the forward purchase shares. In the event of any such failure to fund by Samsara
BioCapital or any forward transferees, any obligation is so terminated or any such condition is not satisfied and not waived by
such party, we may not be able to obtain additional funds to account for such shortfall on terms favorable to us or at all. Any
such shortfall would also reduce the amount of funds that we have available for working capital of the post-business combination
company.
Your only opportunity to affect the investment
decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us
for cash.
At the time of your investment in us, you
will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our
Board of Directors may complete a business combination without seeking stockholder approval, public stockholders may not have the
right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity
to affect the investment decision regarding our initial business combination may be limited to exercising your redemption rights
within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public
stockholders in which we describe our initial business combination.
The recent coronavirus (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.
In December 2019, a novel strain of coronavirus
(COVID-19) surfaced and is continuing to spread throughout the world, including the United States and Europe. On January 30, 2020,
the World Health Organization declared the outbreak of the coronavirus a “Public Health Emergency of International Concern.”
On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United
States to aid the U.S. healthcare community in responding to the coronavirus, and on March 11, 2020 the World Health Organization
characterized the outbreak as a “pandemic”. A significant outbreak of the coronavirus and other infectious diseases
could result in a widespread health crisis that could adversely affect 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 continued
concerns relating to the coronavirus restrict travel, 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 coronavirus 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 coronavirus
pandemic and the actions to contain the coronavirus or treat its impact, among others. If the disruptions posed by the coronavirus
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.
If we seek stockholder approval of our
initial business combination, our initial stockholders and management team have agreed to vote in favor of such initial business
combination, regardless of how our public stockholders vote.
Our initial stockholders own 20% of
our outstanding common stock following the completion of our initial public offering, excluding the shares of our Class A
common stock issued as part of the private placement shares. Our initial stockholders and management team also may from time
to time purchase Class A common stock prior to our initial business combination. Our amended and restated certificate of
incorporation provides that, if we seek stockholder approval of an initial business combination, such initial business
combination will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting, including
the founder shares. As a result, in addition to our initial stockholders’ founder shares and shares of Class A common
stock issued as part of the private placement shares, we would need only 3,628,495, or approximately 35%, of the 10,352,040
public shares sold in our initial public offering to be voted in favor of an initial business combination in order to have
our initial business combination approved (assuming all outstanding shares are voted). Accordingly, if we seek stockholder
approval of our initial business combination, the agreement by our initial stockholders and management team to vote in favor
of our initial business combination will increase the likelihood that we will receive the requisite stockholder approval for
such initial business combination.
The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which
may make it difficult for us to enter into a business combination with a target.
We may seek to enter into a business combination
transaction agreement with minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash
for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. If too many
public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result, would
not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001. Consequently, if accepting all properly submitted redemption requests
would cause our net tangible assets to be less than $5,000,001 or make us unable to satisfy a minimum cash condition as described
above, we would not proceed with such redemption and the related business combination and may instead search for an alternate business
combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination
transaction with us.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business
combination or optimize our capital structure.
At the time we enter into an agreement
for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore
will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption.
If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase
price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account
to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares is submitted for redemption
than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account
or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution
provision of the Class B common stock results in the issues of shares of Class A common stock on a greater than one-to-one basis
upon conversion of the shares of Class B common stock at the time of our initial business combination. In addition, the amount
of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection
with an initial business combination. The per share amount we will distribute to stockholders who properly exercise their redemption
rights will not be reduced by the deferred underwriting commission and after such redemptions, the amount held in trust will continue
to reflect our obligation to pay the entire deferred underwriting commissions. The above considerations may limit our ability to
complete the most desirable business combination available to us or optimize our capital structure.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business
combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement
requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business
combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account.
If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our
shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material
loss on your investment or lose the benefit of funds expected in connection with your exercise of redemption rights until we liquidate
or you are able to sell your shares in the open market.
The requirement that we complete our
initial business combination within 24 months after the closing of our initial public offering may give potential target businesses
leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential
business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete
our initial business combination on terms that would produce value for our stockholders.
Any potential target business with which
we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination
within 24 months from the closing of our initial public offering. Consequently, such target business may obtain leverage over us
in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular
target business, we may be unable to complete our initial business combination with any target business. This risk will increase
as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter
into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to complete our initial
business combination within 24 months after the closing of our initial public offering, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able to find a suitable target
business and complete our initial business combination within 24 months after the closing of our initial public offering. Our ability
to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital
and debt markets and the other risks described herein. If we have not completed our initial business combination within such time
period, 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 the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest earned on the funds held in the trust account (less taxes payable
and up to $100,000 of interest to pay dissolution 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 liquidating
distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our Board of Directors, liquidate and dissolve, subject in each case, to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law.
If we seek stockholder approval of our
initial business combination, our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates may
elect to purchase shares from public stockholders, which may influence a vote on a proposed business combination and reduce the
public “float” of our Class A common stock.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates may purchase
shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination, although they are under no obligation to do so. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law
and Nasdaq
rules. None of the funds in the trust account
will be used to purchase shares in such transactions. Such purchases may include a contractual acknowledgment that such stockholder,
although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise
its redemption rights.
In the event that our sponsor, initial
stockholders, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required
to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote such shares
in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination
or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount
of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met.
Any such purchases of our shares of Class A common stock may result in the completion of our initial business combination that
may not otherwise have been possible. We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the
Exchange Act to the extent such purchasers are subject to such reporting requirements.
In addition, if such purchases are made,
the public “float” of our shares of Class A common stock and the number of beneficial holders of our securities may
be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national
securities exchange.
Because of our limited resources and
the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business
combination. If we do not complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders.
We expect to encounter competition from
other entities having a business objective similar to ours, including private investors (which may be individuals or investment
partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses
we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying
and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many
of these competitors possess similar or greater technical, human and other resources to ours or more local industry knowledge than
we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we
believe there are numerous target businesses we could potentially acquire with the net proceeds of our initial public offering
and the sale of the private placement shares, our ability to compete with respect to the acquisition of certain target businesses
that are sizable 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, we are obligated to offer holders of our public shares the
right to redeem their shares for cash at the time of our initial business combination in conjunction with a stockholder vote or
via a tender offer. Target companies will be aware that this may reduce the resources available to us for our initial business
combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.
If we do not complete our initial business combination, our public stockholders may receive only their pro rata portion of the
funds in the trust account that are available for distribution to public stockholders.
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, 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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each of which may make it difficult for us to complete our initial
business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are not subject
to.
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In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily
in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government
securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination and
thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with
a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our principal activities
will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested 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. Pursuant to the trust agreement, the trustee is not permitted
to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business
plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner
of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning
of the Investment Company Act. This offering is not intended for persons who are seeking a return on investments in government
securities or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of
either: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly tendered in connection
with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the
closing of this offering; and (iii) absent an initial business combination within 24 months from the closing of this offering or
with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity,
our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If
we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed
to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses
for which we have not allotted funds and may hinder our ability to complete a business combination. If we do not complete our initial
business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account that are
available for distribution to public stockholders.
Changes in laws or regulations, or a
failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete
our initial business combination, and results of operations. Because we intend to seek a business combination with a target business
in the healthcare industry, we expect our future operations will be subject to laws and regulations of the U.S. FDA.
We are subject to laws and regulations
enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal
requirements and, because we intend to seek a business combination with a target business in the healthcare industry, we expect
our future operations will be subject to laws and regulations of the U.S. FDA. 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, including our ability to negotiate and complete our initial business combination, and results of
operations.
We may seek business combination opportunities
in industries outside of the healthcare industry (which industries may, or may not be outside of our management's area of expertise).
Although
we intend to focus on identifying business combination candidates in the healthcare industry in the United States (including candidates
based in the United States which may have operations or opportunities outside the United States) or other developed countries,
and we will not initially actively seek to identify business combination candidates in other industries (which industries may be
outside our management's area of expertise), we will consider a business combination outside of the healthcare industry if a business
combination candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for
our company or we are unable to identify a suitable candidate in the healthcare industry after having expended a reasonable amount
of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular
business combination candidate, we may not adequately ascertain or assess all of the risks. An investment in our shares may ultimately
prove to be less favorable to investors in this offering than a direct investment, if an opportunity were available, in a business
combination candidate.
In
the event we elect to pursue a business combination outside of the healthcare industry, our management's expertise may not be directly
applicable to its evaluation or operation, and the information contained in this Annual Report regarding the healthcare industry
would not be relevant to an understanding of the business that we elect to acquire.
Because we intend to seek a business
combination with a target business in the healthcare industry, we expect our future operations to be subject to risks associated
with this industry.
Healthcare-related companies are generally
subject to greater governmental regulation than most other industries at the U.S. state and federal levels, and internationally.
In recent years, both local and national governmental budgets have come under pressure to reduce spending and control healthcare
costs, which could both adversely affect regulatory processes and public funding available for healthcare products, services and
facilities. In March 2010, comprehensive healthcare reform legislation was enacted in the United States through the Health Care
Reform Act. These laws are intended to increase health insurance coverage through individual and employer mandates, subsidies offered
to lower income individuals, tax credits available to smaller employers and broadening of Medicaid eligibility.
While one intent of healthcare reform is
to expand health insurance coverage to more individuals, it may also involve additional regulatory mandates and other measures
designed to constrain medical costs, including coverage and reimbursement for healthcare services. The Health Care Reform Act has
had a significant impact on the healthcare sector in the U.S. and consequently has the ability to affect the companies within the
healthcare industry. The ultimate effects of federal healthcare reform or any future legislation or regulation, or healthcare initiatives,
if any, on the healthcare sector, whether implemented at the federal or state level, or internationally, cannot be predicted with
certainty and such reform, legislation, regulation or initiatives, including the Health Care Reform Act or any successor legislation,
may adversely affect the performance of a potential business combination.
Changes in governmental policies may have
a material effect on the demand for or costs of certain products and services. A healthcare-related company must receive government
approval before introducing new drugs and medical devices or procedures. This process may delay the introduction of these products
and services to the marketplace, resulting in increased development costs, delayed cost recovery and loss of competitive advantage
to the extent that rival companies have developed competing products or procedures, adversely affecting the company’s revenues
and profitability. Failure to obtain governmental approval of a key drug or device or other regulatory action could have a material
adverse effect on the business of a portfolio company. Additionally, expansion of facilities by healthcare-related providers is
subject to “determinations of need” by the appropriate government authorities. This process not only increases the
time and cost involved in these expansions, but also makes expansion plans uncertain, limiting the revenue and profitability growth
potential of healthcare-related facilities operators.
Certain healthcare-related companies depend
on the exclusive rights or patents for the products they develop and distribute. Patents have a limited duration and, upon expiration,
other companies may market substantially similar “generic” products that are typically sold at a lower price than the
patented product, causing the original developer of the product to lose market share and/or reduce the price charged for the product,
resulting in lower
profits for the original developer. As a result,
the expiration of patents may adversely affect the profitability of these companies. The profitability of healthcare-related companies
may also be affected, among other factors, by restrictions on government reimbursement for medical expenses, rising or falling
costs of medical products and services, pricing pressure, an increased emphasis on outpatient services, a limited product offering,
industry innovation, changes in technologies and other market developments. Finally, because the products and services of healthcare-related
companies affect the health and well-being of many individuals, these companies are especially susceptible to product liability
lawsuits.
The healthcare industry spends heavily
on research and development. Research findings (e.g., regarding side effects or comparative benefits of one or more particular
treatments, services or products) and technological innovation (together with patent expirations) may make any particular treatment,
service or product less attractive if previously unknown or underappreciated risks are revealed, or if a more effective, less costly
or less risky solution is or becomes available. Any such development could have a material adverse effect on the companies that
are target businesses for investment.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business
combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter
into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria
and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our
initial business combination will not have all of these positive attributes. If we complete our initial business combination with
a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a
business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we do not complete
our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account
that are available for distribution to public stockholders.
We are not required to obtain an opinion
from an independent investment banking firm or from a valuation or appraisal firm, and consequently, you may have no assurance
from an independent source that the price we are paying for the business is fair to our stockholders from a financial point of
view.
Unless we complete our initial business
combination with an affiliated entity or our Board of Directors cannot independently determine the fair market value of the target
business or businesses (including with the assistance of financial advisors), we are not required to obtain an opinion from an
independent investment banking firm which is a member of FINRA or from a valuation or appraisal firm that the price we are paying
is fair to our stockholders from a financial point of view. If no opinion is obtained, our stockholders will be relying on the
judgment of our Board of Directors, who will determine fair market value based on standards generally accepted by the financial
community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our
initial business combination.
Since only holders of our founder
shares will have the right to vote on the election of directors, Nasdaq may consider us to be a ‘controlled company’
within the meaning of Nasdaq rules and, as a result, we may qualify for exemptions from certain corporate governance requirements.
Only holders of our founder shares have
the right to vote on the election of directors. As a result, Nasdaq may consider us to be a ‘controlled company’ within
the meaning of the Nasdaq corporate governance standards. Under Nasdaq corporate governance standards, a company of which more
than 50% of the voting power is held by an individual, group or another company is a ‘controlled company’ and may elect
not to comply with certain corporate governance requirements, including the requirements that:
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we have a board that includes a majority of ‘independent directors,’ as defined under the rules of Nasdaq;
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we have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
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we have a nominating committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
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We do not intend to utilize these exemptions
and intend to comply with the corporate governance requirements of Nasdaq, subject to applicable phase-in rules. However, if we
determine in the future to utilize some or all of these exemptions, you will not have the same protections afforded to stockholders
of companies that are subject to all of Nasdaq corporate governance requirements.
We may issue additional shares of Class
A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive plan after
completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the founder
shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
contained in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders
and likely present other risks.
Our amended and restated certificate of
incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, par value $0.0001 per share, 10,000,000
shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share.
There are 89,140,919 and 7,411,990 authorized but unissued shares of Class A common stock and Class B common stock, respectively,
available for issuance which amount does not take into account the forward purchase shares or shares issuable upon conversion of
the Class B common stock. The Class B common stock is automatically convertible into Class A common stock concurrently with or
immediately following the consummation of our initial business combination, initially at a one-for-one ratio but subject to adjustment
as set forth in our amended and restated certificate of incorporation. There are no shares of preferred stock issued and outstanding.
We may issue a substantial number of additional
shares of Class A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue shares of Class A common stock upon conversion of
the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the
anti-dilution provisions as set forth therein. However, our amended and restated certificate of incorporation provides, among other
things, that prior to our initial business combination, we may not issue additional shares that would entitle the holders thereof
to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on any initial business combination
or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate
a business combination beyond 24 months from the closing of our initial public offering or (y) amend the foregoing provisions.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with a stockholder vote. The issuance of additional shares of common stock or shares of preferred
stock:
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may significantly dilute the equity interest of investors in this offering;
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may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to
those afforded our Class A common stock;
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could cause a change in control if a substantial number of shares of Class A common stock is 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, Class A common stock.
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Unlike some other similarly structured
special purpose acquisition companies, our initial stockholders will receive additional shares of Class A common stock if we issue
certain shares to consummate an initial business combination.
The founder shares will automatically convert
into shares of Class A common stock concurrently with or immediately following the consummation of our initial business combination
on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like,
and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked
securities are issued or deemed issued in connection with our initial business combination, the number of shares of Class A common
stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number
of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class
A common stock by public stockholders), including the total number of shares of Class A common stock issued, or deemed issued or
issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection
with or in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked
securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, or forward purchase
shares, to any seller in the initial business combination. This is different than some other similarly structured special purpose
acquisition companies in which the initial stockholders will only be issued an aggregate of 20% of the total number of shares to
be outstanding prior to our initial business combination.
Resources could be wasted in researching
business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we have not completed our initial business combination within the required time period, our
public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders.
We anticipate 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 we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction
likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete
our initial 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. If we have not completed our initial business combination within the required time period, our public stockholders
may only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders.
Since our sponsor, executive officers
and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect
to public shares they may acquire during or after this offering), a conflict of interest may arise in determining whether a particular
business combination target is appropriate for our initial business combination.
On September 9, 2020, our sponsor
purchased an aggregate of 4,312,500 founder shares in exchange for a capital contribution of $25,000, or approximately $0.006
per share. On October 30, 2020, our sponsor forfeited 1,437,500 founder shares for no consideration. Prior to the initial
investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible. In connection with
the partial exercise of the underwriters’ over-allotment option, our sponsor forfeited an additional 286,990 founder
shares, such that at December 31, 2020 there were an aggregate of 2,588,010 founder shares outstanding. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by
the number of founder shares issued. The number of founder shares outstanding was determined based on the expectation that
the total size of the initial public offering would be a maximum of 11,500,000 shares if the underwriters’
over-allotment option is exercised in full, and therefore that such founder shares would represent 20% of the outstanding
shares after the initial public offering. In addition, concurrently with our initial public offering, our sponsor purchased
an aggregate of 507,041 private placement shares, at a price of $10.00 per share, for an aggregate purchase price of
$5,070,410. The personal and financial interests of our executive officers and directors may influence their motivation in
identifying and selecting a target business combination, completing an initial business combination and influencing the
operation of the business following the
initial business combination. This risk may
become more acute as the 24-month anniversary of the closing of our initial public offering nears, which is the deadline for our
completion of an initial business combination.
We may only be able to complete one business
combination with the proceeds of our initial public offering and the sale of the private placement shares and the forward purchase
shares, which will cause us to be solely dependent on a single business which may have a limited number of products or services.
This lack of diversification may negatively impact our operations and profitability.
We may effectuate our initial business
combination with a single target business or multiple target businesses simultaneously or within a short period of time. However,
we may not be able to effectuate our initial business combination with more than one target business because of various factors,
including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements
with the SEC that present operating results and the financial condition of several target businesses as if they had been operated
on a combined basis. By completing our initial 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, property or asset, 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 risks, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination
and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire
several businesses that 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 our initial 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.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
In pursuing our business combination strategy,
we may seek to effectuate our initial business combination with a privately held company. Very little public information generally
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business
combination on the basis of limited information, which may result in a business combination with a company that is not as profitable
as we suspected, if at all.
Our management may not be able to maintain
our control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control
of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such
business.
We may structure our initial business combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests
or assets of a target business, 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 us not to be required to register as an investment company
under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction
company owns 50% or more of the voting securities of the target business, our stockholders prior to the business combination may
collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and
us in the business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares
of Class A common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100%
interest in the target. However, as a result of the issuance of a substantial number of new shares of Class A common stock, our
stockholders immediately prior to such transaction could own less than a majority of our outstanding Class A common stock subsequent
to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person
or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make it more
likely that our management will not be able to maintain our control of the target business.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination
with which a substantial majority of our stockholders do not agree.
Our amended and restated certificate of
incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares
in an amount that would cause our net tangible assets to be less than $5,000,001. In addition, our proposed initial business combination
may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. As a result, we may be
able to complete our initial business combination even though a substantial majority of our public stockholders do not agree with
the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not
conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately
negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or any of their affiliates. In the event
the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed
the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares in connection
with such initial business combination, all shares of Class A common stock submitted for redemption will be returned to the holders
thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business
combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other
governing instruments. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation
or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders
may not support.
In order to effectuate a business combination,
special purpose acquisition companies have, in the recent past, amended various provisions of their charters and governing instruments.
For example, special purpose acquisition companies have amended the definition of business combination, increased redemption thresholds
and extended the time to consummate an initial business combination. Amending our amended and restated certificate of incorporation
will require the approval of holders of 65% of our common stock . In addition, our amended and restated certificate of incorporation
requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment
to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of
our public shares if we do not complete an initial business combination within 24 months of the closing of our initial public offering
or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity.
To the extent any of such amendments would be deemed to fundamentally change the nature of the securities offered through this
registration statement, we would register, or seek an exemption from registration for, the affected securities. We cannot assure
you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial business combination
in order to effectuate our initial business combination.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement
governing the release of funds from our
trust account) may be amended with the
approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other special purpose acquisition
companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the
completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate of
incorporation provides that any of its provisions related to pre-business combination activity may be amended if approved by holders
of 65% of our common stock entitled to vote thereon and corresponding provisions of the trust agreement governing the release of
funds from our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all
other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding
common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial
stockholders, who collectively beneficially own 20% of our common stock (including the private placement shares but assuming they
did not purchase any shares in our initial public offering), may participate in any vote to amend our amended and restated certificate
of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be
able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-business combination
behavior more easily than some other special purpose acquisition companies, and this may increase our ability to complete a business
combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated
certificate of incorporation.
Our sponsor, executive officers, directors
and director nominees have agreed, pursuant to written agreements with us, that they will not propose any amendment to our amended
and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within 24 months from the closing of our initial public offering or with
respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless
we provide our public stockholders with the opportunity to redeem their Class A common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned
on the funds held in the trust account and not previously released to pay our taxes, divided by the number of then outstanding
public shares. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not
have the ability to pursue remedies against our sponsor, executive officers, directors or director nominees for any breach of these
agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject
to applicable law.
Certain agreements related to our initial
public offering may be amended without stockholder approval.
Each of the agreements related to our initial
public offering to which we are a party, other than the investment management trust agreement, may be amended without stockholder
approval. Such agreements are: the underwriting agreement; the letter agreement among us and our initial stockholders, sponsor,
officers and directors; the registration rights agreement among us and our initial stockholders; the private placement purchase
agreement between us and our sponsor; and the administrative services agreement among us, our sponsor and an affiliate of our sponsor.
These agreements contain various provisions that our public stockholders might deem to be material. For example, our letter agreement
and the underwriting agreement contain certain lock-up provisions with respect to the founder shares, private placement shares
and other securities held by our initial stockholders, sponsor, officers and directors. Amendments to such agreements would require
the consent of the applicable parties thereto and would need to be approved by our Board of Directors, which may do so for a variety
of reasons, including to facilitate our initial business combination. While we do not expect our Board of Directors to approve
any amendment to any of these agreements prior to our initial business combination, it may be possible that our Board of Directors,
in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such
agreement. Any amendment entered into in connection with the consummation of our initial business combination will be disclosed
in our proxy materials or tender offer documents, as applicable, related to such initial business combination, and any other material
amendment to any of our material agreements will be disclosed in a filing with the SEC. Any such amendments would not require approval
from our stockholders, may result in the completion of our initial business combination that may not otherwise have been possible,
and may have an adverse effect on the value of an investment in our securities. For example, amendments to the lock-up provision
discussed above may result in our initial stockholders selling their securities earlier than they would otherwise be permitted,
which may have an adverse effect on the price of our securities.
We may be unable to obtain additional
financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel
us to restructure or abandon a particular business combination.
We have not selected any specific business
combination target but intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds
of our initial public offering and the sale of the private placement shares. As a result, if the cash portion of the purchase price
exceeds the amount available from the trust account, net of amounts needed to satisfy any redemption by public stockholders, we
may be required to seek additional financing to complete such proposed initial business combination. 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 complete
our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business
combination and seek an alternative target business candidate. Further, we may be required to obtain additional financing in connection
with the closing of our initial business combination for general corporate purposes, including for maintenance or expansion of
operations of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing
our initial business combination, or to fund the purchase of other companies. If we do not complete our initial business combination,
our public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders. In addition, even if we do not need additional financing to complete our initial business combination,
we may require such 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 officers, directors
or stockholders is required to provide any financing to us in connection with or after our initial business combination.
Risks Relating to our Securities
If the net proceeds of our initial public
offering not being held in the trust account are insufficient to allow us to operate for at least the 24 months following the closing
of the offering, it could limit the amount available to fund our search for a target business or businesses and complete our initial
business combination, and we will depend on loans from our sponsor or management team to fund our search and to complete our initial
business combination.
Of the net proceeds of our initial public
offering, only $2,000,000 is available to us initially outside the trust account to fund our working capital requirements. We believe
that, upon closing of our initial public offering, the funds available to us outside of the trust account will be sufficient to
allow us to operate for at least the 24 months following such closing; however, we cannot assure you that our estimate is accurate.
Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with
our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop”
provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping”
around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a
particular proposed business combination, although we do not have any current intention to do so. If we entered into a letter of
intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required
to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching
for, or conduct due diligence with respect to, a target business.
In the event that our offering expenses
exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount
of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that
the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the trust account
would increase by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase
or decrease. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team or
other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their
affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds
held outside the trust account or from funds released to us upon completion of our initial business combination. Up to $1,500,000
of such loans may be convertible into shares of the post-business combination entity at a price of $10.00 per share at the option
of the lender. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than
our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds
and provide a waiver against any and all rights
to seek access to funds in our trust account. If we do not complete our initial business combination because we do not have sufficient
funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders
may only receive an estimated $10.00 per share, or possibly less, on our redemption of our public shares.
We may be required to 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 the price of our securities, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence
on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may
be present with a particular target business, that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of
these factors, 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 if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. 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 securities. 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 debt financing to partially finance the initial business combination or thereafter.
Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in
the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able
to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary
duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy materials or
tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material
omission.
If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share.
Our placing of funds in the trust account
may not protect those funds from third party claims against us. Although we will seek to have all vendors, service providers, prospective
target businesses and other entities with which we do business 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, such parties may not
execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust
account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well
as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against
our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims
to the monies held in the trust account, our management will consider whether competitive alternatives are reasonably available
to us and will only enter into an agreement with such third party if management believes that such third party’s engagement
would be in the best interests of the company under the circumstances. The underwriters of our initial public offering will not
execute agreements with us waiving such claims to the monies held in the trust account.
Examples of possible instances where we
may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise
or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. For example, Marcum LLP, our independent
registered public accounting firm and the underwriters of our initial public offering will not execute agreements with us waiving
such claims to the monies held in the trust account. In addition, there is no guarantee that such entities will agree to waive
any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we do not complete our
initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our
initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be
brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders
could be less than the $10.00 per public share
initially held in the trust account, due to claims of such creditors. Pursuant to the letter agreement entered into in connection
with our initial public offering, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third
party for services rendered or products sold to us, or a prospective target business with which we have entered into a written
letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds in the
trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust
account as of the date of the liquidation of the trust account, if less than $10.00 per public share due to reductions in the value
of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective
target business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver
is enforceable). 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 we believe that our sponsor’s
only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
As a result, if any such claims were successfully made against the trust account, the funds available for our initial business
combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete
our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your
public shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims
by vendors and prospective target businesses.
The securities in which we invest the
proceeds held in the trust account could bear a negative rate of interest, which could reduce the interest income available for
payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received by shareholders
may be less than $10.00 per share.
The proceeds held in the trust account
may only be invested in direct U.S. Treasury obligations having a maturity of 185 days or less, or in certain money market funds
which invest only in direct U.S. Treasury obligations. While short-term U.S. 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 of very low or negative yields, the amount
of interest income (which we may withdraw to pay income taxes, if any) would be reduced. In the event that we are unable to complete
our initial business combination, our public shareholders are entitled to receive their pro-rata share of the proceeds held in
the trust account, plus any interest income. If the balance of the trust account is reduced below $103,520,400 as a result of negative
interest rates, the amount of funds in the trust account available for distribution to our public shareholders may be reduced below
$10.00 per share.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, 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 the lesser of (i) $10.00 per share and (ii) the actual amount per public share held in the trust account
as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions in the value of the
trust assets, in each case less taxes payable, 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 its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in
any particular instance. 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.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our Board of Directors may be
viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our Board of Directors and us
to claims of punitive damages.
If, after we distribute the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that 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 some or all amounts received by our stockholders. In addition, our Board of Directors may be viewed as having
breached its fiduciary duty to our creditors and/or having acted in bad faith, by paying public stockholders from the trust account
prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If, before distributing the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and
the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that 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, the per-share amount that would otherwise be received by our stockholders in connection
with our liquidation may be reduced.
Our stockholders may be held liable for
claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, 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 our public shares in the event
we do not complete our initial business combination within 24 months from the closing of our initial public offering may be considered
a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the
DGCL 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. However, it is our intention to redeem our public shares as soon as reasonably possible following
the 24th month from the closing of our initial public offering in the event we do not complete our initial business combination
and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not be complying with Section
280, Section 281(b) of the DGCL 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 10 years following our
dissolution. 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. If our plan of distribution complies with Section 281(b) of the DGCL,
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 likely be barred
after the third anniversary of the dissolution. 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 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 our public shares in
the event we do not
complete our initial business combination
within 24 months from the closing of our initial public offering is not considered a liquidating distribution under Delaware law
and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party
may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, 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 liquidating distribution.
We may not hold an annual meeting of
stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders
to elect directors.
In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following
our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for
the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such
a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business
combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore,
if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt
to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the
DGCL.
The grant of registration rights to our
initial stockholders may make it more difficult to complete our initial business combination, and the future exercise of such rights
may adversely affect the market price of our Class A common stock.
Pursuant to an agreement entered into concurrently
with the issuance and sale of the securities in our initial public offering, our initial stockholders and their permitted transferees
can demand that we register their founder shares, after those shares convert to our Class A common stock at the time of our initial
business combination. Pursuant to the forward purchase agreement, we agreed that we will use our commercially reasonable efforts
to file within 30 days after the closing of the initial business combination a registration statement with the SEC for a secondary
offering of the forward purchase shares and to cause such registration statement to be declared effective as soon as practicable
after it is filed. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock.
In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for
more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the
common stock owned by our initial stockholders, holders of our forward purchase shares or holders of our working capital loans
or their respective permitted transferees are registered.
Because we are neither limited to evaluating
a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our
initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Our efforts to identify a prospective initial
business combination target are not be limited to a particular industry, sector or geographic region. While we may pursue an initial
business combination opportunity in any industry or sector, we intend to capitalize on the ability of our management team to identify,
acquire and operate a business or businesses that can benefit from our management team’s established global relationships
and operating experience. Our management team has extensive experience in identifying and executing strategic investments globally
and has done so successfully in a number of sectors. Our amended and restated certificate of incorporation prohibits us from effectuating
a business combination with another blank check company or similar company with nominal operations. Because we have not yet selected
any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks
of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects.
To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations
with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record
of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development
stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a
particular target business, we cannot assure
you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete
due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce
the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our shares
will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business
combination target. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer
a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless
they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or
other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy
materials or tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement
or material omission.
Past performance by our management team,
the Samsara BioCapital and its affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or
businesses associated with, our management team, the Samsara BioCapital and its affiliates, or businesses associated with them,
is presented for informational purposes only. Past performance by such individuals and entities is not a guarantee either (i) of
success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate
for our initial business combination. You should not rely on the historical record of the performance of our management team, the
Samsara BioCapital and its affiliates or businesses associated with them as indicative of our future performance of an investment
in us or the returns we will, or is likely to, generate going forward.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures
for tendering its shares, such shares may not be redeemed.
We will comply with the proxy rules or
tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our
compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable, such
stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly tender or submit public shares for redemption. For example,
we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold
their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer
agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender
offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the
proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote,
we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption
to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included.
In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials,
as applicable, its shares may not be redeemed.
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be
forced to sell your public shares, potentially at a loss.
Our public stockholders will be entitled
to receive funds from the trust account only upon the earlier to occur of: (i) our completion of an initial business combination,
and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject
to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a stockholder
vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our initial
public offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business
combination activity, and (iii) the redemption of our public shares if we do not complete an initial business combination within
24 months from the closing of our initial public offering, subject to applicable law and as further
described herein. In addition, if our plan
to redeem our public shares if we do not complete an initial business combination within 24 months from the closing of our initial
public offering is not completed for any reason, compliance with Delaware law may require that we submit a plan of dissolution
to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case,
public stockholders may be forced to wait beyond 24 months from the closing of our initial public offering before they receive
funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the
trust account.
Nasdaq may delist our securities from
trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional
trading restrictions.
Our shares of Class A common stock are
listed on Nasdaq. Although we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the Nasdaq
listing standards, we cannot assure you that our securities will continue to be listed on Nasdaq in the future or prior to our
initial business combination. In order to continue listing our securities on Nasdaq prior to our initial business combination,
we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum amount in stockholders’
equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, in
connection with our initial business combination, we will be required to demonstrate compliance with Nasdaq’s initial listing
requirements, which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the
listing of our securities on Nasdaq. For instance, our share price would generally be required to be at least $4.00 per share and
our stockholder’s equity would generally be required to be at least $5.0 million. We cannot assure you that we will be able
to meet those initial listing requirements at that time.
If Nasdaq delists our securities from trading
on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could
be quoted on an over-the-counter market. If this were to occur, 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 for our securities;
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a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class
A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading
market for our securities;
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a limited amount of news and analyst coverage; 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 our Class A common stock are listed on Nasdaq, our shares of Class
A common stock qualify as covered securities under the statute. 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. While
we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies,
other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers,
or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were
no longer listed on Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to
regulation in each state in which we offer our securities.
You are not entitled to protections normally
afforded to investors of many other blank check companies.
Since the net proceeds of our initial public
offering and the sale of the private placement shares are intended to be used to complete an initial business combination with
a target business that has not been selected, we may be deemed to be a “blank check” company under the United States
securities laws. However, because we will have net tangible assets in excess of $5,000,000 as of the completion of our initial
public offering and the sale of the private placement shares and we filed a Current Report on Form 8-K, including an audited balance
sheet demonstrating this
fact, we are exempt from rules promulgated
by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors are not be afforded the benefits
or protections of those rules. Among other things, this means our shares were immediately tradable and we have a longer period
of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if our initial public offering
were subject to Rule 419, that rule would have prohibited the release of any interest earned on funds held in the trust account
to us unless and until the funds in the trust account were released to us in connection with our completion of an initial business
combination.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of stockholders are deemed to hold in excess of 15% of our shares of Class A common stock, you will lose the ability to redeem
all such shares in excess of 15% of our shares of Class A common stock.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with
any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), is restricted from seeking redemption rights with respect to more than an aggregate
of 15% of the shares sold in our initial public offering without our prior consent, which we refer to as the “Excess Shares.”
However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for
or against our initial business combination. Your inability to redeem the Excess Shares reduces your influence over our ability
to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares
in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we
complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding 15% and,
in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial
condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments to incur
outstanding debt following our initial public offering, we may choose to incur substantial debt to complete our initial business
combination. We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a
waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of
debt will affect the per share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could
have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial 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 is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such
financing while the debt is outstanding;
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our inability to pay dividends on our Class A common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available
for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate
purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in
government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements,
execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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Our initial stockholders control a substantial
interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that
you do not support.
Our initial stockholders own approximately
20% of our issued and outstanding common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation.
If our initial stockholders purchase any shares in this offering or if our initial stockholders purchase any additional Class A
common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Factors that would
be considered in making such additional purchases would include consideration of the current trading price of our Class A common
stock. In addition, our Board of Directors, whose members were elected by our sponsor, is and will be divided into three classes,
each of which will generally serve for a terms for three years with only one class of directors being elected in each year. We
may not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial business combination,
in which case all of the current directors will continue in office until at least the completion of the business combination. 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 initial stockholders, 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 completion
of our initial business combination. The forward purchase shares will not be issued until completion of our initial business combination
and, accordingly, will not be included in any stockholder vote until such time.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy rules require that the
proxy statement with respect to the vote on an initial business combination include historical and pro forma financial statement
disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not
they are required under the tender offer rules. 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 (“GAAP”), or international
financial reporting standards as issued by the International Accounting Standards Board (“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) (“PCAOB”). These financial statement requirements may limit the
pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time
for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within
the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending
December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify
as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation
requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we
will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control
over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley
Act particularly burdensome on us as compared to other public companies
because a target business with which we seek
to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such business combination.
Provisions in our amended and restated
certificate of incorporation 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 shares of Class A common stock and could entrench management.
Our amended and restated certificate of
incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their
best interests. These provisions include a staggered Board of Directors and the ability of the Board of Directors to designate
the terms of and issue new series of preferred stock, which 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.
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 the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of
incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or
proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer
or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees
arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action
asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only
in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of 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) any action arising under the Securities Act, as to which the Court of
Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. If an action is brought
outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s
counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in
the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is
enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders
will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Notwithstanding the foregoing, our amended
and restated certificate of incorporation provides that the exclusive forum provision will not apply to suits brought to enforce
a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. 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. Although we believe this provision benefits us by providing increased
consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect
of discouraging lawsuits against our directors and officers.
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.
If we effect our initial business combination
with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect
us.
If we pursue a target company with operations
or opportunities outside of the United States for our initial business combination, we may face additional burdens in connection
with investigating, agreeing to and completing such initial business combination, and if we effect such initial business combination,
we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target a company with operations
or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with
cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business
combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators
or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination
with such a company, we would be subject to any special considerations or risks associated with companies operating in an international
setting, including any of the following:
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costs and difficulties inherent in managing cross-border business operations;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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challenges in managing and staffing international operations;
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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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underdeveloped or unpredictable legal or regulatory systems;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks and wars; and
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deterioration of political relations with the United States.
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We may not be able to adequately address
these additional risks. If we were unable to do so, we may be unable to complete such initial business combination, or, if we complete
such initial business combination, our operations might suffer, either of which may adversely impact our business, financial condition
and results of operations.
Risks Relating to our Management Team
We are dependent upon our executive officers
and directors and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the
continued service of our officers and directors, at least until we have completed our initial business combination. In addition,
our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will
have conflicts of interest in allocating their time among various business activities, including identifying potential business
combinations and monitoring the related due diligence. We do not have key-man insurance on the life of any of our directors or
executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental
effect on us.
Our ability to successfully effect our
initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom
may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our ability to successfully effect our
initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business,
however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management
or advisory positions following our initial business combination, it is likely that some or all of the management of the target
business will remain in place. While we closely scrutinize any individuals we engage after our initial 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 company regulated by the SEC, which could cause us to have to expend time and resources helping them
become familiar with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business
combination may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to
receive compensation following our initial 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 may be able to remain
with our company after the completion of our initial business combination only 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 such individuals to receive compensation in the form of cash payments and/or
our securities for services they would render to us after the completion of the business combination. Such negotiations also could
make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests
of such individuals may influence their motivation in identifying and selecting a target business, subject to their fiduciary duties
under Delaware law.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business
whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting
our initial business combination with a prospective target business, our ability to assess the target business’s management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target business’s
management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected.
Should the target business’s management not possess the skills, qualifications or abilities necessary to manage a public
company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders
who choose to remain stockholders following the business combination could suffer a reduction in the value of their securities.
Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the
reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as
applicable, relating to the business combination contained an actionable material misstatement or material omission.
The officers and directors of an acquisition
candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key
personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s
key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate
that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate
following our initial business combination, it is possible that members of the management of an acquisition candidate will not
wish to remain in place.
Our executive officers and directors
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 conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers and directors are
not required to commit their full time to our affairs, which may result in a conflict of interest in allocating their time between
our operations and our search for a business combination and their other businesses. Our executive officers may be engaged in several
other business endeavors for which he or she may be entitled to substantial compensation. Our independent directors also serve
as officers and board members for other entities. If our executive officers’ and directors’ other business affairs
require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit
their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
Our officers and directors presently
have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly,
may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
We are engage in the business of identifying
and combining with one or more businesses. Each of our officers and directors presently has, and any of them in the future may
have, additional fiduciary or contractual obligations to other entities, pursuant to which such officer or director is or will
be required to present a business combination opportunity to such entity. 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 another entity prior to its presentation to us. Our amended and restated certificate of incorporation
provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of the company and such opportunity
is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent
the director or officer is permitted to refer that opportunity to us without violating another legal obligation. In addition, our
sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue
other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies,
businesses or ventures may present additional conflicts of interest in pursuing an initial business
combination. However, we do not believe that
any such potential conflicts would materially affect our ability to complete our initial business combination.
Our executive officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly
prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial
interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or
executive officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from
engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have
a conflict between their interests and ours.
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. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable
target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular
business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be a breach
of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such individuals
for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may make against
them for such reason.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, executive officers,
directors or existing holders which may raise potential conflicts of interest.
In light of the involvement of our sponsor,
executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor,
executive officers, directors or existing holders. Our directors also serve as officers and board members for other entities. Such
entities may compete with us for business combination opportunities. Although we will not be specifically focusing on, or targeting,
any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met
our criteria for a business combination and such transaction was approved by a majority of our independent and disinterested directors.
Despite our agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation
or appraisal firm regarding the fairness to our company from a financial point of view of a business combination with one or more
domestic or international businesses affiliated with our sponsor, executive officers, directors or existing holders, potential
conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our
public stockholders as they would be absent any conflicts of interest.