Item 1. Business.
Overview
We are a blank check company
incorporated in December 2020 as a Delaware corporation for the purpose of effecting our initial business combination.
While we may pursue an initial
business combination opportunity in any business, industry, sector or geographical location, we have focused and will continue to focus
on technology-focused middle market and emerging growth companies operating in North America with total enterprise values from $200 million
to $1 billion in industries that benefit from continuously evolving technology and the resulting shift in consumer and business purchase
behavior, including Marketplace & Platforms, Financial Technology (“Fintech”) & Financial Services or Software
as a Service (“SaaS”) & Technology.
Initial Public Offering
On May 7, 2021, we consummated
our initial public offering of 16,000,000 units. Each unit consists of one share of Class A common stock, and one-half of one redeemable
warrant, with each whole warrant entitling the holder thereof to purchase one share of common stock for $11.50 per share. The units were
sold at a price of $10.00 per unit, generating gross proceeds to the Company of $160,000,000.
Simultaneously with the closing
of the initial public offering, we completed the private sale of an aggregate of 551,000 placement units to our sponsor at a purchase
price of $10.00 per placement unit, generating gross proceeds of $5,510,000.
A total of $162,400,000, comprised
of $158,113,471 of the proceeds from the initial public offering and $4,286,529 of the proceeds of the sale of the placement units was
placed in the trust account maintained by Continental, acting as trustee.
On May 10, 2021, the underwriters
exercised their over-allotment option in part, and the closing of the issuance and sale of the additional 1,309,719 units (the “over-allotment
units”) occurred on May 12, 2021, generating gross proceeds of $13,097,190. In connection with the closing of the purchase of the
over-allotment units, the Company sold an additional 32,743 placement units to the sponsor at a price of $10.00 per placement unit, generating
an additional $327,430 of gross proceeds.
It is the job of our sponsor
and management team to complete our initial business combination. Our management team is led by Jeff Ransdell, our Chief Executive Officer,
Guillermo Eduardo Cruz our Chief Operating Officer, Maggie Vo, our Chief Investment Officer and Jeronimo Peralta, our Chief Financial
Officer. We must complete our initial business combination during the Combination Period, which ends May 7, 2023, 24 months from the closing
of our initial public offering. If our initial business combination is not consummated during the Combination Period, then our existence
will terminate, and we will distribute all amounts in the trust account.
Business Strategy
While we may pursue an initial
business combination target in any industry or geographic location, we have focused and will continue to focus our search on middle market
and emerging growth technology-focused companies in North America in industries that benefit from continuously evolving technology and
the resulting shift in consumer and business purchase behavior. Most of these companies will ultimately need to consolidate to achieve
the scale necessary to attain high revenue growth and attractive profitability. We believe that acquiring a leading high-growth technology
company will provide a platform to fund consolidation and fuel growth for our company. Segments we are exploring and might continue to
explore include, but are not limited to, technology enabled medical devices, horizontal and vertical SaaS, SaaS business-to-business,
agriculture technology, genomics, peer-to-peer lending, insurance and payments. There is no restriction in the geographic location of
targets we can pursue, although we intend to initially prioritize North America as the geographical focus.
We believe that there is a
large pool of quality initial business combination targets looking for exit opportunities with an increasing number of private equity
(“PE”) and venture capital (“VC”) activities in the Americas, which provides us opportunities given what we believe
are the limited exit options for mid-market companies in the region. Also, we believe that the technology and tech enabled industries
in the Americas represent a particularly attractive deal sourcing environment that will allow us to leverage our team’s skill sets
and experience to identify an initial business combination which can potentially serve as a strong platform for future add-on acquisitions.
Our investment thesis is supported by what we believe are the following trends in our target sectors:
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The Development of PE and VC Activities in the Americas: The total assets under management of North America-focused PE and VC funds reached in excess of $2.1 trillion in the first half of 2020 according to McKinsey Global Private Markets Review. The growth of PE and VC investments in the Americas is driving demand for exits the portfolio companies (meaning opportunities for PE and VC firms to monetize their investments in their portfolio companies). |
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Strong Performance in the Tech and Software Industries: According to CompTIA, tech services and software account for nearly half of spending in the U.S. technology market, which represents a significantly higher rate than the rate in many other global regions. While emerging technologies currently account for only 19% of the overall global revenue, they are expected to drive nearly half of the growth in new revenue. |
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Operator-Led SPACs outperform their Sectors: According to Wolfe Research, SPACs that are led by executives with past C-Suite experience tend to outperform other SPACs (by about 42%) and their industry peers (by about minus 20%) 12 months after the consummation of their respective initial public offering. |
Competitive Advantages
We intend to capitalize on
the following competitive advantages in our pursuit of a target company:
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Leadership of an Experienced Management Team. Our experienced management team has over 40 years of combined work experience as investment professionals in a variety of industries, such as technology and financial institutions. These years of experience have allowed us to gain not only extensive and deep expertise in our fields, but also vast networks of some of the most influential thought leaders and top performing companies in our target industries and region. This positions us as a unique and strategic player, and as an attractive alternative for the many companies in Mexico, the U.S., Canada and the rest of North America that seek to tap the equity capital markets, ensuring that we find the most attractive opportunities that maximize value to our stockholders. |
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Established Deal Sourcing Network. We believe the strong track record of our management team enables us to get access to quality deal pipelines. In addition, we believe that we, through our management team and advisors, have contacts and sources from which to generate acquisition opportunities and possibly seek complementary follow-on business arrangements. These contacts and sources include those in government, private and public companies, private equity and venture capital funds, investment bankers, attorneys and accountants. |
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Status as a Publicly Listed Acquisition Company. We believe our structure as a public company makes us an attractive business combination partner to prospective target businesses. As a publicly listed company, we offer a target business an alternative to the traditional initial public offering process. We believe that some target businesses will favor this alternative, which we believe is less expensive, while offering greater certainty of execution, than the traditional initial public offering process. During an initial public offering, there are typically underwriting fees and marketing expenses, which would cost more than a business combination with us. Furthermore, once a proposed business combination is approved by our stockholders (if applicable) and the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriter’s ability to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public, we believe our target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company. It can offer further benefits by augmenting a target company’s profile among potential new customers and vendors and aid in attracting talented management staffs. |
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Targeting of Fastest Growing Industries. The main industries we are targeting are: SaaS & Technology, Financial Services & Fintech and Marketplace & Platforms. This is not just a function of our expertise in these fields, but also a consequence of these currently being some of the fastest growing industries in the economy, with SaaS expected to grow at approximately 11% compound annual growth rate (“CAGR”) for the next two years; Fintech, approximately 9% CAGR expected over the next two years; and Marketplaces, approximately 32% CAGR through 2024. |
Industry Opportunity
While we may acquire a business
in any industry, our focus has been and will continue to be in the Marketplace & Platforms, Fintech & Financial Services
or SaaS & Technology. We believe that our target industries are attractive for a number of reasons:
We believe we are currently
in the midst of a secular shift in the SaaS subsegment of the technology industry, which is driving rapid growth in both annual spending
and the number of actionable acquisition targets requiring a public market solution. This is driven in part by large corporations, which
are constantly upgrading legacy technology and expanding their SaaS toolkits. We believe another major driver is new corporations which
heavily rely on SaaS solutions given their cost-efficiency and scalability. Specifically, we see great opportunity in private technology
companies. We believe that private technology companies are fundamentally changing the world at an unprecedented pace by establishing
new markets, creating new experiences and disrupting legacy industries. Key technological advances and practices, such as cloud computing,
data analytics and intelligence platforms, open-source software development, developer-focused software tools, and software-defined networking,
storage and computing, are allowing technology companies to rapidly effect change in every major sector of the global economy. Agile private
technology companies have embraced these advances and practices to create business models and address market needs that will enable them
to reach significant financial scale and create shareholder value.
The number of technology company
initial public offerings has diminished over time. An average of 160 technology companies went public each year during the 1990s, according
to ongoing research performed by Professor Jay Ritter at the University of Florida. Since 2010, however, that yearly average of technology
companies consummating initial public offerings decreased significantly to an average of 44 per year, a 73% drop. That smaller initial
public offering market has also been predominantly focused on so-called “unicorn” companies (meaning start-up with valuations
of over $1 billion, typically VC-backed companies and often focused on technology). The median market capitalization of technology companies
that consummated initial public offerings was about $482 million in 2010; in 2020 it was roughly $1 billion. We believe this means that
very promising, but non-unicorn companies (such as those we will likely target for our initial business combination) are in many instances
missing out on the ability to do an initial public offering.
Our management team believes
that these factors present an intriguing paradox: a growing number of new companies have attracted more private capital. Yet once they
flourish, they have a narrower exit route. In addition, that exit route is often reserved for larger companies, which leads to a substantial
disadvantage for smaller private technology companies.
Ultimately, we believe this
same paradox creates a long-term opportunity for stockholder return via an initial business combination with a smaller, high-performing
private technology company or companies. Additionally, it provides a persuasive argument for such companies to partner with us, as we
believe they have fewer exit options than presently exist for unicorns.
Acquisition Criteria
Consistent with our strategy,
we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses.
We have used and will continue to use these criteria and guidelines in evaluating acquisition opportunities, although we may decide to
enter into our initial business combination with a target business that meets some but not all of these criteria and guidelines.
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Target Size: We target businesses of total enterprise value from $200 million to $1 billion in North American companies in the SaaS & Tech, Fintech & Financial Services and Marketplace & Platforms industries. |
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Revenue and Earnings Growth Potential. We seek to acquire one or more businesses that have the potential for significant revenue and earnings growth through a combination of both existing and new product development, increased production capacity, expense reduction and synergistic follow-on acquisitions resulting in increased operating leverage. |
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Potential for Strong Free Cash Flow Generation. We seek to acquire one or more businesses that have the potential to generate strong, stable and increasing free cash flow. We are focused on one or more businesses that have predictable, recurring revenue streams and definable low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance shareholder value. |
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Strong and
Experienced Management. We seek companies that have strong, experienced management teams in place, or are a platform to
assemble an effective management team with a track record of driving growth and profitability. We have spent and will continue to
spend significant time assessing a company’s leadership and human fabric, and maximizing its efficiency over time. |
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Benefit from Being a Public Company. We intend to acquire one or more businesses that will benefit from being publicly traded and can effectively utilize the broader access to capital and the public profile that are associated with being a publicly traded company. |
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Defensible Market Position. We intend to acquire one or more businesses that have a defensible market position, with demonstrated advantages when compared to their competitors and which create barriers to entry against new competitors. |
These criteria are not exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that from time to time our management may deem relevant.
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 or another independent entity that commonly renders valuation opinions 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 a target’s assets or prospects. Additionally, pursuant to
Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.
We will have until 24 months
from the closing of our initial public offering, or until May 7, 2023, to consummate an initial business combination. On November 4, 2022,
at the Special Meeting, our stockholders approved the Extension Amendment by which we amended our amended and restated certificate of
incorporation to extend the end of the Combination Period from November 7, 2022 to May 7, 2023. In connection with the approval of the
Extension Amendment, our sponsor agreed to contribute to us the Contribution, with each such Contribution to be deposited into the trust
account within five business days from the beginning of such calendar month (or portion thereof). Based on the outstanding 3,539,809 public
shares following the redemption of 13,769,910 public shares in connection with the Special Meeting, each monthly Contribution will be
$159,291. On November 14, 2022, we issued the Second Extension Note, a promissory note in the principal amount of up to $955,748 to the
sponsor. As of April 3, 2023, an aggregate of $796,457 had been deposited into the trust account to support the first five months of
the extension through April 7, 2023.
Prior to the date of the Special
Meeting and the adoption of the Extension Amendment, we were required to complete our initial business combination by May 7, 2022, subject
to the right to extend the period of time to consummate a business combination up to two times, each by an additional three months, without
submitting such proposed extensions to our stockholders for approval or offering our public stockholders redemption rights in connection
therewith. Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement entered into between
us and Continental, in order to extend the time available for us to consummate our initial business combination, our sponsor or its affiliates
or designees, upon ten days advance notice prior to the applicable deadline, were required to deposit into the trust account $1,789,347,
($0.10 per share) on or prior to the date of the applicable deadline, for each three-month extension (or up to an aggregate of $3,578,694,
or $0.20 per share if we were to extend for the full six months). Any such payments would be made in the form of a loan, with any such
loans being non-interest bearing and payable upon the consummation of our initial business combination. If we complete our initial business
combination, we would repay such loaned amounts out of the proceeds of the trust account released to us. If we do not complete a business
combination, we will not repay such loans. Furthermore, the letter agreement with our initial stockholders contains a provision pursuant
to which our sponsor has agreed to waive its right to be repaid for such loans out of the funds held in the trust account in the event
that we do not complete a business combination. Our sponsor and its affiliates or designees are not obligated to fund the trust account
to extend the time for us to complete our initial business combination. Up to $1,500,000 of the loans made by our sponsor, our officers
and directors, or our or their affiliates to us prior to or in connection with our initial business combination (including loans made
to extend our time period for consummating a business combination) may be convertible into units at a price of $10.00 per unit at the
option of the lender.
On May 4, 2022, we issued
a press release announcing that the sponsor had requested that we extend the deadline for consummating a business combination from May
7, 2022 to August 7, 2022 and that the sponsor had notified us that it intended to deposit an aggregate of $1,730,972 into the trust account
on or before May 7, 2022. On May 3, 2022, the Company issued the First Extension Note, a promissory note in the principal amount of $1,730,972
to the sponsor in connection with Initial Extensions. On August 4, 2022, the First Extension Note was amended and restated solely to increase
the principal amount thereunder to $3,461,944 in connection with the further extension of the deadline for consummating a business combination
from August 7, 2022 to November 7, 2022.
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 prior owners of the target business, 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. 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, shares or other
equity interests 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 issued and outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets
of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that
is owned or acquired is what will be valued for purposes of the 80% fair market value test. If the business combination involves more
than one target business, the 80% fair market value test will be based on the aggregate value of all of the target businesses and we will
treat the target businesses together as our initial business combination for purposes of a tender offer or for seeking stockholder approval,
as applicable.
To the extent we effect our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth,
we may be affected by numerous risks inherent in such company or business. Although our management endeavors and will continue to endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In evaluating a prospective
target business, we conduct a thorough due diligence review which encompasses, among other things, meetings with incumbent management
and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information
which will be made available to us.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses
and will reduce the funds we can use to complete another business combination.
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 technology 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 technology related companies and bring additional relationships that further broaden
our industry network.
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, target business candidates
are brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment
banks, consultants, accounting firms and large business enterprises.
Members of our management
team and our independent directors directly or indirectly own founder shares and/or placement units and, accordingly, may have a conflict
of interest in determining whether a particular target business is an appropriate business with which to effectuate our initial business
combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a particular business
combination if the retention or resignation of any such officers and directors was included by a target business as a condition to any
agreement with respect to our initial business combination.
In addition, 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. We do
not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability
to complete our initial business combination.
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 investments
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.
Status as a Public Company
We believe our structure as
a public company makes us an attractive business combination partner to target businesses. As a public company, we offer a target business
an alternative to the traditional initial public offering through a merger or other business combination with us. Following an initial
business combination, we believe the target business would have greater access to capital and additional means of creating management
incentives that are better aligned with stockholders’ interests than it would as a private company. A target business can further
benefit by augmenting its profile among potential new customers and vendors and aid in attracting talented employees. In a business combination
transaction with us, the owners of the target business may, for example, exchange their shares of stock in the target business for our
shares of Class A common stock (or shares of a new holding company) or for a combination of our shares of Class A common stock
and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various
costs and obligations associated with being a public company, we believe target businesses will find this method a more expeditious and
cost-effective method to becoming a public company than the typical initial public offering. The typical initial public offering process
takes a significantly longer period of time than the typical business combination transaction process, and there are significant expenses
in the initial public offering process, including underwriting discounts and commissions, marketing and road show efforts that may not
be present to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed
initial business combination is completed, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay
or prevent the offering from occurring or could have negative valuation consequences. Following an initial business combination, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent with
stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further
benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our
structure and our management team’s backgrounds makes us an attractive business partner, some potential target businesses may view
our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed
initial business combination, negatively.
We are an
“emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to 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 independent registered public accounting firm 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 non-binding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active
trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We are taking and intend to continue to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of
our initial public offering (May 7, 2026), (b) in which we have total annual gross revenue of at least $1.235 billion, or (c)
in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by
non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than
$1.0 billion in non-convertible debt securities during the prior three-year period.
Additionally, we are a “smaller
reporting company” as defined in Rule 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
equals or exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues equaled or 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.
Financial Position
With funds available for
an initial business combination in the amount of $37,570,177 as of December 31, 2022, after payment of $5,192,916 of deferred underwriting
fees and before fees and expenses associated with our initial business combination (other than 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 or leverage 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, there can be no assurance that third party financing will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged
in, and we will not engage in, any operations until we consummate our initial business combination. We will effectuate our initial business
combination using cash from the proceeds of our initial public offering and the sale of the placement units, the proceeds of the sale
of our shares in connection with our initial business combination (pursuant to backstop agreements we may enter into following the consummation
of 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 seek to raise
additional funds through a private offering of debt or equity securities in connection with the completion of our initial business
combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the
amounts held in the trust account. In addition, we intend to target businesses larger than we could acquire with the net proceeds of
our initial public offering and the sale of the placement units, and may as a result be required to seek additional financing to
complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to
complete such financing only simultaneously with the completion of our initial business combination. In the case of an initial
business combination funded with assets other than the trust account assets, our proxy materials or tender offer documents
disclosing the initial business combination would disclose the terms of the financing and, only if required by applicable law or
stock exchange requirements, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise
funds privately, or through loans in connection with our initial business combination. At this time, we are not a party to any
arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or
otherwise.
We have not engaged or retained
any agent or other representative to identify or locate any suitable acquisition candidate, to conduct any research or take any measures,
directly or indirectly, to locate or contact a target business. However, we may contact any targets if we become aware that such targets
are interested in a potential initial business combination with us and such transaction would be attractive to our stockholders. Although
our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this
assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside
of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
Sources of Target Businesses
Target business candidates
have been and may continue to be brought to our attention from various unaffiliated sources, including investment bankers and investment
professionals, as a result of being solicited by us by calls or mailings. These sources have also introduced and may continue to 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 the
prospectus in connection with our initial public offering or this Report and know what types of businesses we are targeting. Our officers
and directors, as well as our sponsor and 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 have received and expect to continue to receive a number of deal flow opportunities that would
not otherwise necessarily be available to us as a result of the business relationships of our officers and directors and our sponsor and
their affiliates. We may engage the services of professional firms or other individuals that specialize in business acquisitions, in which
event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation
based on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may
bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential
transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion
of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor
or any of our existing officers or directors be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment
of a loan or other compensation by the company prior to, or in connection with any services rendered for any services they render in order
to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is). None of our sponsor,
executive officers or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees
or consulting fees from a prospective business combination target in connection with a contemplated initial business combination except
as set forth herein. We entered into an administrative support agreement with ARC Group Ltd., our financial advisor, pursuant to which
we agreed to pay up to total of $10,000 per month for office space, utilities and secretarial and administrative support. However, since
our initial public offering, no services have been provided, and we have not made any payments under such administrative support agreement.
Instead we reimburse our affiliates for any out-of-pocket expenses related to identifying, investigating and completing an initial business
combination. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following
our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection
process of an initial business combination candidate.
We are not prohibited from
pursuing an initial business combination with an initial business combination target that is affiliated with our sponsor, officers or
directors or making the initial business combination through a joint venture or other form of shared ownership with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with an initial business combination target that is affiliated
with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions 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 officers or
directors becomes aware of an initial 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. Our officers and directors currently have certain relevant
fiduciary duties or contractual obligations that may take priority over their duties to us.
Selection of a Target Business and Structuring of our 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. The fair market value of our initial
business combination will be determined by our board of directors based upon one or more standards generally accepted by the financial
community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation
based on the financial metrics of M&A transactions of comparable businesses. 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 or another independent entity that commonly renders valuation opinions 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 a target’s assets or prospects. We do not intend to purchase
multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement, our management
virtually has unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we are not be
permitted to effectuate our initial business combination with another blank check company or a similar company with nominal operations.
In any case, we will only
complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or
otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under
the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses,
the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account
for purposes of Nasdaq’s 80% fair market value test.
To the extent we effect our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth
we may be affected by numerous risks inherent in such company or business. Although our management endeavors and will continue to endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In evaluating a prospective
business target, we conduct a thorough due diligence review, which encompasses, among other things, meetings with incumbent management
and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and
other information that are made available to us.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses
and will reduce the funds we can use to complete another business combination.
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. In addition, we are focusing our search for an initial business combination in a single industry. 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. |
Limited Ability to Evaluate the Target’s Management Team
Although we 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’ 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 an initial 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. However, we will seek stockholder approval if it is required
by applicable law or applicable stock exchange listing requirements, 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.
| |
Whether
Stockholder
Approval is |
Type of Transaction | |
Required |
Purchase of assets | |
No |
Purchase of stock of target not involving a merger with the company | |
No |
Merger of target into a subsidiary of the company | |
No |
Merger of the company with a target | |
Yes |
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 Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A 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. |
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, officers, advisors or their affiliates may purchase public shares
or public warrants 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 or their affiliates may
purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. If they
engage in such transactions, they will not make any such purchases when they are in possession of any material nonpublic information not
disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. 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. 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.
None of the funds held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion
of our initial business combination.
The purpose of any such purchases
of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder
approval of the initial 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. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding
or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination.
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 shares of Class A common stock or warrants
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, officers, directors
and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor, 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 following our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor,
officers, directors 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. Our sponsor,
officers, directors or their affiliates will only purchase public shares if such purchases comply with Regulation M under the Exchange
Act and the other federal securities laws.
Any purchases by our sponsor,
officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made
to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation
under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must
be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates
will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
We expect that 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 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
described herein. As of December 31, 2022, the amount in the trust account was approximately $10.53 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 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 placement shares and any public shares held by them in
connection with the completion of our initial business combination.
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares of Class A common stock 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) 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 the law or stock exchange
listing requirement. Under Nasdaq rules, 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. If we structure an initial
business combination with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to
seek a stockholder vote to approve the proposed initial business combination. We may conduct redemptions without a stockholder vote pursuant
to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we
choose to seek stockholder approval for business or other legal reasons. So long as we maintain a listing for our securities on Nasdaq,
we are required to comply with such rules.
If stockholder approval of
the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or
other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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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 |
|
● |
file proxy materials with the SEC. |
In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public stockholders with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval,
we will complete our initial business combination only if a majority of the outstanding shares of common stock present and entitled to
vote at the meeting to approve the initial business combination when a quorum is present 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 toward this quorum and pursuant to the letter agreement, our sponsor, officers and directors have
agreed to vote any founder shares and placement shares held by them and any public shares acquired 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 of the redemption of 13,769,910 public shares in connection with the
Special Meeting, our sponsor presently holds a majority of the outstanding shares of our common stock and we would therefore not need
any of the remaining 3,539,809 outstanding public shares to be voted in favor of an initial business combination in order to have our
initial business combination approved, unless otherwise required under applicable law. We will give approximately 30 days (but not
less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken
to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders,
make it more likely that we will consummate 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.
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, pursuant to our amended and restated
certificate of incorporation:
|
● |
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
|
● |
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. |
Upon the public announcement
of our initial business combination, 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 if we elect to redeem our public shares through a tender offer, to comply with
Rule 14e-5 under the Exchange Act.
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, we will not redeem any public shares unless our net tangible assets will be at least $5,000,001 either immediately prior
to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that we
are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be
contained in the agreement relating to our initial business combination. 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.
Our amended and restated certificate
of incorporation provides that we may not redeem our public shares unless our net tangible assets are at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. For example, the proposed initial business combination may
require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms
of the proposed initial business combination. 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, and all shares of Class A common stock submitted for redemption will be returned to the
holders thereof.
Limitation on Redemption upon Completion of our Initial Business
Combination if we Seek Stockholder Approval
Notwithstanding the foregoing,
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 more than an
aggregate of 15% of the shares sold in our initial public offering (the “Excess Shares.”) Such restriction shall also be applicable
to our affiliates. 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 initial 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. 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 an initial 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.
Tendering Stock Certificates in Connection with Redemption Rights
We may require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to either tender their certificates to our transfer agent up to two business days prior to the vote on the proposal to approve the initial
business combination, or to deliver their shares to the transfer agent electronically using the DWAC System, at the holder’s option.
The proxy materials 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 days prior to the vote on the initial business combination to tender its shares if it wishes to seek to exercise its redemption rights.
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 tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer
agent will typically charge the tendering broker $100.00 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 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.
The foregoing is different
from the procedures used by many special purpose acquisition companies. In order to perfect redemption rights in connection with their
business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business
combination, and a holder could simply vote against a proposed initial business combination and check a box on the proxy card indicating
such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved, the company would
contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder
then had an “option window” after the completion of the initial business combination during which he or she could monitor
the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares
in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to
which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving
past the completion of the initial business combination until the redeeming holder delivered its certificate. The requirement for physical
or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the initial
business combination is approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date of the stockholder meeting. 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
the end of the Combination Period.
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, or until May 7, 2023, to complete
our initial business combination. If we are unable to complete our initial business combination within such allotted 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 and not previously released to us to pay our taxes
(less 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), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no
redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial
business combination within the Combination Period.
Our 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 and placement shares held by them if we fail to complete our initial business combination
by the end of the Combination Period. However, if our sponsor, officers or directors 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 by the end of the Combination Period.
Our sponsor, officers and
directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our initial business
combination or certain amendments to our charter prior thereto or to redeem 100% of our public shares if we do not complete our initial
business combination by the end of the Combination Period or (ii) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares
of 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 us
to pay our taxes divided by the number of then outstanding public shares. However, we may not redeem our public shares unless our net
tangible assets are at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after
payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). 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 (described above), we would not proceed with the amendment or the related redemption of our public shares at such time.
If we do not consummate our
initial business combination by the end of the Combination Period, 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 $67,022
of proceeds held outside the trust account (as of December 31, 2022), although we cannot assure you that there will be sufficient funds
for such purpose. We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any tax obligations
we may owe. 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 placement units, other than the proceeds deposited in the trust account,
and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders
upon our dissolution would be approximately $10.53. 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 $10.53. 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 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 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 perform an analysis of the alternatives available to it and will
only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. 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. Marcum, 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. 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 similar agreement or business combination agreement, reduce
the amount of funds in the trust account to below the lesser of (i) $10.15 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 $10.15 per 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 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.
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 (i) $10.15 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 which may be withdrawn to pay taxes, 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 if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the
amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our sponsor
to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy those
obligations. 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 $10.15 per public share.
We have sought and will continue
to 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. As of the closing of our initial public offering, we had access to up to approximately $475,500 from the proceeds
of our initial public offering and the sale of the placement units 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). As of December 31, 2022,
the amount held outside the trust account to use for these purposes was $67,022. 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.
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 by the end of the Combination Period 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 by the end of the Combination Period, 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 are unable to complete our initial business combination by the end of the Combination 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 and not previously released to us to pay our taxes (less 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),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above
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 the end of the Combination Period 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 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. As described above, pursuant to the obligation contained in our underwriting agreement,
we have sought and will continue to 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) $10.15 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 $10.53 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, 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 upon the earlier to occur of: (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 any provisions
of our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or certain amendments to our charter prior thereto or to redeem 100% of our public
shares if we do not complete our initial business combination by the end of the Combination Period or (B) with respect to any other
provision relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of all of
our public shares if we are unable to complete our business combination by the end of the Combination Period , subject to applicable law.
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 initial 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 as 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 have encountered and may continue to encounter intense competition
from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic business combinations. 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 we do. 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 initial business combination 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 our outstanding warrants, 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.
Employees
We currently have four officers.
These individuals are not obligated to devote any specific number of hours to our matters but they devote as much of their time as they
deem necessary, in the exercise of their respective business judgement, to our affairs until we have completed our initial business combination.
The amount of time they devote in any time period varies based on whether a target business has been selected for our initial business
combination and the stage of the initial business combination process we are in. We do not intend to have any full-time employees prior
to the completion of our initial business combination. We do not have an employment agreement with any member of our management team.
Periodic Reporting and Financial Information
Our units, Class A common
stock, and warrants are registered under the Exchange Act, and as a result, we have reporting obligations, including the requirement that
we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports,
including this Report, contain financial statements audited and reported on by our independent registered public accountants.
We will provide stockholders
with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials
sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared
in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required
to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets
we may conduct an initial business combination with because some targets may be unable to provide such 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.
We cannot assure you that any particular target business identified by us as a potential business combination candidate will have financial
statements prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in
accordance with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the
proposed target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation
will be material.
We are required to evaluate
our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act. 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 have our internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley
Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination. We have filed a Registration
Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result,
we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15
to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible
to 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 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 non-binding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result,
there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We are taking and intend to continue to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion
of our initial public offering (May 7, 2026), (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in
which we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common stock that are
held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more
than $1.0 billion in non-convertible debt during the prior three-year period. References herein to “emerging growth company”
will have the meaning associated with it in the JOBS Act.
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 equals or exceeds $250 million as of the end of that year’s second fiscal
quarter, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of
our common stock held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter.