General
We
are an early stage blank check company recently formed as a Delaware corporation for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout
this Report as our initial business combination. As discussed below, True Wind Capital is a technology-focused private investment
firm, and we are a portfolio investment held in True Wind Capital II, True Wind Capital’s most recent investment fund. Our Chief
Executive Officer, Mr. Adam H. Clammer, and our Chairman, Mr. James H. Greene, Jr., are the founding partners of True Wind
Capital. We expect to capitalize on the ability of our management team and the broader True Wind Capital platform to identify, acquire,
and operate a business in the technology and technology-enabled services sectors that may provide opportunities for attractive long-term risk-adjusted returns,
though we reserve the right to pursue an acquisition opportunity in any business or industry.
True
Wind Capital
True
Wind Capital is a San Francisco-based private equity firm managing $1.4 billion as of September 2020 that is focused on investing
in leading technology companies with a broad mandate including software, financial technology, industrial technology, healthcare IT,
internet, semiconductors, and IT services. True Wind Capital is a value-added partner, providing support and expertise that is rooted
in its teams’ 75+ years of collective investing experience. True Wind Capital currently has a team of 15 full-time investment
professionals with deep technology investing expertise.
We
are a portfolio investment held in True Wind Capital II, True Wind Capital’s most recent investment fund, which has provided all
of the risk capital to fund our launch. As such, we have utilized True Wind Capital’s platform to provide complete access to its
team, deal prospects, and network, along with any necessary resources to aid in the identification, diligence, and operational support
of a target for the initial business combination. True Wind Capital’s principals, including our Chief Executive Officer, Mr. Adam
H. Clammer and our Chairman, Mr. James H. Greene, Jr., are required under the partnership agreements of True Wind Capital II, subject
to certain exceptions, to dedicate substantially all of their business time to the affairs of True Wind Capital and its affiliates, including
True Wind Capital II and its portfolio companies. As a portfolio investment of True Wind Capital II, we receive substantial time and
support from the True Wind Capital platform.
True
Wind Capital was instrumental in launching Nebula Acquisition Corporation (“Nebula”), a special purpose acquisition company
that completed its initial public offering in January 2018 in which it sold 27,500,000 units, each consisting of one share of Nebula
common stock and one-third of one warrant to purchase one share of Nebula common stock for an offering price of $10.00 per unit,
generating aggregate proceeds of $275,000,000. True Wind Capital sourced several acquisition targets for Nebula, which completed a business
combination in June 2020 with Open Lending, a provider of lending enablement and risk analytics solutions to financial institutions.
In addition to the proceeds from the initial public offering, Nebula contributed another $200 million in proceeds from a private
placement completed at the time of the initial business combination. Open Lending’s common shares trade on Nasdaq under the symbol
“LPRO.” The closing price of LPRO on October 1, 2020 was $26.84 per share. Including the warrants underlying the units,
the return to investors who purchased units in Nebula’s initial public offering was 3.2x multiple of invested capital and an IRR
of 53% through October 1, 2020. The performance of LPRO may not be indicative of our management team’s ability to successfully
find a target business and to consummate an initial business combination.
True
Wind Capital is also the platform used by TWC Tech Holdings II Corp. (NASDAQ: TWCT), a blank check company which raised an aggregate
of $600.0 million in its initial public offering (including exercise of the over-allotment option) in September 2020, which
is currently searching for a target business with which to consummate its initial business combination. In connection with its initial
public offering, TWC Tech Holdings II Corp. also entered into forward purchase agreements with several institutional accredited investors
that provide for the aggregate purchase of at least $100,000,000 of Class A common stock at $10.00 per share. Each member of our
management team, except David Kerko, is a member of the management team of TWC Tech Holdings II Corp.
Business
Combination
On
February 10, 2021, we entered into a Business Combination Agreement and Plan of Merger (the “Business Combination Agreement”)
with Fetch Merger Sub, Inc., a Delaware corporation and direct wholly-owned subsidiary of the Company (“Merger Sub”), and
A Place for Rover, Inc., a Delaware corporation (“Rover”), providing for, among other things, and subject to the terms and
conditions therein, a business combination between the Company and Rover pursuant to which, among other things, (i) Merger Sub will merge
with and into Rover, the separate corporate existence of Merger Sub will cease and Rover will continue as the surviving corporation in
the merger and a wholly owned subsidiary of the Company and (ii) the Company will change its name to “Rover Group, Inc.”
(together with the other transactions related thereto, the “Proposed Transactions”). Rover is the world’s largest online
marketplace for pet care. Rover connects pet parents with caring pet care providers who offer overnight services, including boarding
and in-home pet sitting, as well as daytime services, including doggy daycare, dog walking, drop-in visits, and grooming. Following the
Proposed Transactions, it is expected that Rover’s common shares will be listed on The Nasdaq Capital Market.
Consummation
of the transactions contemplated by the Business Combination Agreement is subject to customary conditions of the respective parties,
including the approval of the Proposed Transactions by the Company’s stockholders in accordance with the Company’s amended
and restated certificate of incorporation and the completion of a redemption offer whereby the Company will be providing its public stockholders
with the opportunity to redeem their shares of Class A common stock for cash equal to their pro rata share of the aggregate amount on
deposit in the Company’s trust account.
Concurrently
with the execution of the Business Combination Agreement, we entered into a backstop subscription agreement with True Wind Capital II,
L.P. and True Wind Capital II-A, L.P. (together, the “TWC Funds”) (the “Sponsor Backstop Subscription Agreement”),
pursuant to which the TWC Funds agreed to, among other things, purchase shares of our common stock in an aggregate amount of up to $50,000,000
(or such greater amount at the election of the TWC Funds) to the extent of the amount of redemptions of shares of our common stock. The
TWC Funds also agreed to purchase additional shares of our common stock in an aggregate amount of up to $50,000,000 if mutually agreed
with Rover.
Concurrently
with the execution of the Business Combination Agreement, certain accredited investors (the “PIPE Investors”), entered into
subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors have committed to purchase
5,000,000 shares of our common stock (the “PIPE Shares”) at a purchase price per share of $10.00 and an aggregate purchase
price of $50,000,000 (the “PIPE Investment”). The purchase of the PIPE Shares is conditioned upon, and will be consummated
concurrently with, the closing of the initial business combination. Certain offering related expenses are payable by us, including customary
fees payable to the placement agents, Deutsche Bank Securities and Morgan Stanley & Co. LLC. The purpose of the sale of the PIPE
Shares is to raise additional capital for use in connection with the Proposed Transactions and to meet the minimum cash requirements
provided in the Business Combination Agreement.
Concurrently
with the execution of the Business Combination Agreement, we entered into stockholder support agreements with Rover and certain stockholders
of Rover (the “Rover Holders Support Agreements”), pursuant to which such stockholders agreed to approve the Business Combination
Agreement and the Proposed Transactions.
Concurrently
with the execution of the Business Combination Agreement, our Sponsor, Rover and the Persons set forth on Schedule I thereto (such Persons,
together with our Sponsor, the “Sponsor Parties”) entered into a sponsor support agreement (the “Sponsor Support Agreement”),
pursuant to which, among other things, (i) each Sponsor Party and each of our directors agreed to vote to adopt and approve the Business
Combination Agreement and all other documents and transactions contemplated thereby, (ii) each Sponsor Party agreed to deliver a duly
executed copy of the Investors Rights Agreement and the Lock-Up Agreement (as defined below) at the closing of our initial business combination
and (iii) each Sponsor Party agreed to subject certain shares of our common stock and warrants to purchase our common stock to certain
vesting and forfeiture provisions based on the number of stockholders (if any) that exercise their rights to redeem their shares of our
common stock pursuant to our certificate of incorporation and, following the closing of our initial business combination, based on the
achievement of certain trading price targets following the closing of our initial business combination, in each case subject to the terms
and conditions of our Sponsor Support Agreement.
At
the closing of our initial business combination, we will enter into an investors rights agreement (the “Investors Rights Agreement”)
with our Sponsor, certain affiliates of our Sponsor and certain Rover stockholders, pursuant to which, among other things, (i) we will
agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of our common stock and other equity securities
of the Company that are held by the parties thereto from time to time, (ii) in the event that we sell Backstop Shares (as defined in
the Investor Rights Agreement) with an aggregate purchase price of at least $15 million, we will include one individual designated by
our Sponsor in the slate of nominees recommended by our Board of Directors (or duly constituted committee thereof) for election as directors
at each annual meeting of stockholders at which such nominee’s term expires, subject to our Sponsor and its Affiliates (as defined
in the Business Combination Agreement) beneficially owning a certain minimum number of shares of our common stock and (iii) we will waive
the corporate opportunities doctrine with respect to our Sponsor, its affiliates (including portfolio companies), their respective investors
and the director nominees of the foregoing.
At
the closing of our initial business combination, we will enter into a lock-up agreement with our Sponsor, certain affiliates of our Sponsor
and certain Rover stockholders (the “Lock-Up Agreement”) containing restrictions on transfer with respect to shares of our
common stock held by each such holder (subject to certain exceptions, the “Lock-Up Shares”) for a period ending on the date
that is 6 months after the date the closing of our initial business combination occurs, provided that, if during such 6 month period
the volume weighted average price of our common stock is greater than or equal to $16.00 over any twenty trading days within any thirty
trading day period (“Triggering Event III”), 50% of each applicable holder’s Lock-Up Shares shall be released from
such lock-up on the later of (i) Triggering Event III and (ii) the date that is 90 days after the closing under the Business Combination
Agreement. In addition, Rover equityholders will be subject to substantially similar lock-up terms pursuant to our amended and restated
bylaws following the closing of our initial business combination.
The
Business Combination Agreement and related agreements are further described in the Form 8-K filed by the Company on February 11, 2021.
Other
than as specifically discussed, this report does not assume the closing of the Proposed Transactions.
Business
Strategy
Our
business strategy is to utilize True Wind Capital’s existing investment identification and evaluation platform to identify and
complete our initial business combination with a company that our management believes, with proper utilization of our network and experience,
has a compelling potential for value creation through our involvement. The True Wind Capital team leverages their vast investment experience,
deep network and technology industry expertise to identify and generate attractive acquisition opportunities among technology companies
with overall transaction values between $750 million and $2.5 billion. To the extent the purchase price for any acquisition
to be paid in cash exceeds the net proceeds available to us, we may issue debt or equity to consummate the acquisition. Such additional
financing may come in the form of bank financings or preferred equity, common equity or debt offerings or a combination of the foregoing.
We believe True Wind’s experience and track record, along with its disciplined direct sourcing and thematic research approach,
are particularly differentiated, and will enable us to successfully identify and execute an initial business combination. We leverage
True Wind Capital’s extensive network of relationships, ranging from senior executives at public and private companies to financial
advisory firms around the globe, to assist in the identification of a target for the initial business combination. True Wind Capital
intends to dedicate its time and resources to conduct diligence in an effort to complete an initial business combination.
True
Wind Capital and our management team has experience in:
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Operating
companies, setting and changing strategies, and identifying, mentoring and recruiting exceptional
talent;
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Developing
and growing companies, both organically and through strategic transactions and acquisitions,
and expanding the product range and geographic footprint of a number of target businesses;
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Investing
in leading private and public technology companies to accelerate their growth and maturation;
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Sourcing,
structuring, acquiring, and selling businesses;
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Accessing
the capital markets, including financing businesses and helping companies transition to public
ownership; and
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Fostering
relationships with sellers, capital providers and target management teams.
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Market
Opportunity
We
are pursuing opportunities with private, high-growth, and high-quality technology companies with an overall transaction value between
$750 million and $2.5 billion. Given our management team’s extensive and diverse technology investing experience, we
are seeking opportunities in software, hardware, and tech-enabled services businesses across a range of different sectors and end-markets.
Furthermore, we are open to combining with businesses that are owned by founders and minority investors, private equity firms, and family-owned businesses.
Private technology companies are at the forefront of innovation and have been driving disruption in legacy industries at an unprecedented
pace, creating brand new markets and business models in the process. We believe that as these companies continue to scale, their addressable
markets continue to expand, and they reach financial maturity, they will make fundamentally attractive long-term investments that
will drive shareholder value creation. We believe that our mandate provides us with a broad pool of potential opportunities to complete
an initial business combination with.
There
has been a significant increase in the amount of capital available and deployed in private markets in recent years, not only from traditional
venture capital firms but also other types of investors including hedge funds, mutual funds, and sovereign wealth funds. This has not
only driven private technology company valuations higher but has resulted in them staying private longer as these companies now have
greater access to growth capital and liquidity that the traditional IPO process has typically provided. We estimate that there are over
400+ private technology companies globally with a valuation, as of the last round of financing, in excess of $1 billion, which is
more than double the number from four years prior. However, we believe that there are significant benefits to companies from being publicly
traded at a certain stage of their development. These include increased brand awareness and development, the ability to create acquisition
currency to pursue inorganic growth, and increased access to capital markets.
We
believe that combining with a blank check company, especially one with a management team with extensive technology investing experience,
will inherently be an attractive mechanism to go public. Given the current volatility experienced in both the stock market and debt capital
markets as a result of the COVID-19 pandemic, it has become increasingly difficult for high-quality businesses that want to
go public to do so on favorable terms. First, a traditional IPO process is inherently an inefficient mechanism for price discovery as
pricing and terms of an offering remain unknown until the day of pricing of the offering, resulting in uncertainty of proceeds and valuation.
Second, the traditional IPO book-build process can result in allocation decisions that leave companies with sub-optimal or
short-term focused investors that further drive volatility and hinder management’s ability to drive long-term shareholder
value creation. Furthermore, the nature of the IPO process, including sizeable regulatory requirements and document drafting, selection
of underwriters, and investor roadshows and engagements, serves as an expensive distraction to management from the day-to-day operations
of their business, especially in the current COVID-19 environment. We believe blank check companies provide a transparent and efficient
mechanism to go public due to their ability to finalize terms of a transaction with a target prior to public disclosure and provide companies
with a stable base of long-term focused investors that have conducted significant due diligence. Our previous involvement with Nebula
and its combination with Open Lending (NASDAQ: LPRO), and our management team’s collective 50+ years of technology investing
experience, provides us with significant differentiation in looking for combination opportunities compared to other technology-focused blank
check companies.
Investment
Criteria
We
seek to identify companies that have compelling growth potential and a combination of the following characteristics. We use these criteria
and guidelines in evaluating acquisition opportunities, but we may decide to enter our initial business combination with a target business
that does not meet these criteria and guidelines. We intend to acquire companies or assets that we believe have the following attributes:
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Large
and growing market. We focus on investments in industry segments that we believe demonstrate
attractive long-term growth prospects and reasonable overall size or potential;
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Attractive,
inherently profitable business with high operating leverage. We seek to invest in companies
that we believe possess not only established business models and sustainable competitive
advantages, but also inherently profitable unit economics;
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Strong
management teams. We spend significant time assessing a company’s leadership and
personnel and evaluating what we can do to augment and/or upgrade the team over time if needed;
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Opportunity
for operational improvements. We seek to identify businesses that we believe are stable
but at an inflection point and would benefit from our ability to drive improvements in the
company’s processes, go-to-market strategy, product or service offering, sales
and marketing efforts, geographical presence and/or leadership team;
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Differentiated
products or services. We evaluate metrics such as recurring revenues, product life cycle,
cohort consistency, pricing per product or customer, cross-sell success and churn rates
to focus on businesses whose products or services are differentiated or where we see an opportunity
to create value by implementing best practices;
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Compelling
growth prospects. We view growth as an important driver of value and seek companies whose
growth potential can generate meaningful upside;
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Minimal
technology risk. We seek to invest in companies that have established market-tested product
or service offerings; and
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Appropriate
valuations. We seek to be a disciplined and valuation-centric investor that invests
on terms that we believe provide significant upside potential with limited downside risk.
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These
criteria are not intended to be 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 on other considerations, factors and criteria that our management
may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet
the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications
related to our initial business combination, which, as discussed in this Report, would be in the form of tender offer documents or proxy
solicitation materials that we would file with the SEC.
Our
Management Team
Our
management team is led by our Chief Executive Officer, Mr. Clammer, and our Chairman, Mr. Greene, who are also the founding
partners of True Wind Capital, who have worked together for over twenty years and who, collectively, have more than 50 years of private
equity investing experience. We believe that they constitute one of the longest standing and most successful partnerships in technology
private equity investing. Prior to founding True Wind Capital, Mr. Clammer and Mr. Greene were founding partners of the Kohlberg
Kravis Roberts & Co. (“KKR”) Global Technology Group in 2004. At KKR, Mr. Clammer and Mr. Greene played a major
role in over 30 platform investments with total transaction values in excess of $75 billion and more than $15 billion of invested
equity, and were involved in investments across geographies, through a variety of different structures and amidst diverse economic cycles.
These investments included some of the largest and most complex private equity deals in the technology industry. Success at this level
requires the highest degree of diligence, financial and market analyses, process management, structuring abilities, operational knowhow
and investment acumen.
As
pioneers in the technology private equity industry, Mr. Clammer and Mr. Greene were required to build the KKR platform organically.
This included: (i) building an exceptional investment team; (ii) creating and fostering relationships with industry leaders and bankers;
(iii) formulating and executing new investment theses; (iv) developing and refining due diligence processes appropriate for highly
technical businesses and markets; and (v) building networks of operating executives and knowledgeable advisors to rely on for investment
input and portfolio management support. More recently, and without the benefit of the KKR brand, Mr. Clammer and Mr. Greene
launched True Wind Capital, creating another exceptional team and raising a $558 million first time fund. Since the final close
in January 2017, True Wind Capital has completed investments in six technology platforms and numerous add-on acquisitions across
a range of structures and types including leveraged buyouts, management buyouts, growth equity, PIPEs, public-take-privates, and carve-outs.
Our
management team is supported by True Wind Capital’s team of investment professionals who each have meaningful technology-related private
equity and growth equity investing experience and possess extensive experience in corporate finance, mergers and acquisitions, equity
and debt capital markets, strategic consulting, and operations. We believe that True Wind Capital’s operating expertise, transaction
experience, and relationships provide us with a substantial number of attractive potential business combination targets.
The
past performance of our management team or of True Wind Capital is not a guarantee either (i) of success with respect to any business
combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business combination. You
should not rely on the historical record of our management’s performance as indicative of our future performance.
Our
Acquisition Process
True
Wind Capital believes that conducting comprehensive due diligence on prospective investments is particularly important within the technology
industry. We have utilized and will continue to utilize the diligence, rigor, and expertise of True Wind Capital’s platform to
evaluate potential targets’ strengths, weaknesses, and opportunities to identify the relative risk and return profile of any potential
target for our initial business combination. Given our management team’s extensive tenure investing in technology companies, we
are familiar with the prospective target’s end-market, competitive landscape and business model.
In
evaluating a prospective initial business combination, we have conducted and will continue to conduct a thorough diligence review that
encompasses, among other things, meetings with incumbent management and employees, document reviews, inspection of facilities, financial
analyses and technology reviews, as well as a review of other information that will be made available to us.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with True Wind Capital, our sponsor,
our officers, or our directors, subject to certain approvals and consents. In the event we seek to complete our initial business combination
with a company that is affiliated with True Wind Capital, our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that
our initial business combination is fair to us from a financial point of view. Currently, we are not aware of an affiliate of True Wind
Capital that would make a suitable target for our initial business combination.
Members
of our management team may directly or indirectly own our securities, and accordingly, they
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.
Each
of our officers and directors presently has, and many of them in the future may have additional, fiduciary, contractual or other obligations
or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination
opportunity to such entities, including TWC Tech Holdings II Corp. Our amended and restated certificate of incorporation provides that
we renounce our interest in any corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered
to such person solely in his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and
contractually permitted to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted
to refer the opportunity to us without violating another legal obligation. Accordingly, if any of our officers or directors becomes aware
of a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other
obligations or duties, including TWC Tech Holdings II Corp., he or she will honor these obligations and duties to present such business
combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines
to present the opportunity to us. We do not believe, however, that the fiduciary, contractual or other obligations or duties of our officers
or directors will materially affect our ability to complete our initial business combination, aside from TWC Tech Holdings II Corp.
We
have entered into forward purchase agreements with the forward purchasers that provide for the aggregate purchase of at least $100,000,000
of Class A common stock at $10.00 per share, in a private placement that will close concurrently with the closing of our initial
business combination. The forward purchasers’ commitments under the forward purchase agreements are subject to certain conditions
as described herein. The obligations under the forward purchase agreements will not depend on whether any shares of Class A common
stock are redeemed by our public stockholders. The forward purchasers will not receive any warrants as part of the forward purchase agreements;
these shares will be identical to the shares of Class A common stock included in the units being sold in our initial public offering,
except that the forward purchase shares will be subject to certain transfer restrictions and have certain registration rights, as described
herein.
Our
sponsor, officers, directors and True Wind Capital may participate in the formation of, or become an officer or director of, any other
blank check company prior to completion of our initial business combination. As a result, our sponsor, officers, directors and True Wind
Capital could have conflicts of interest in determining whether to present business combination opportunities to us or to any other blank
check company with which they may become involved. Although we have no formal policy in place for vetting potential conflicts of interest,
our board of directors will review any potential conflicts of interest on a case-by-case basis.
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 (net of amounts disbursed to management for working capital purposes and 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. If our board of directors is not able to independently determine the fair market
value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of
FINRA or from an independent accounting firm, with respect to the satisfaction of such criteria. We do not currently intend to purchase
multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance that
will be the case. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent
directors.
We
anticipate structuring our initial business combination either (i) in such a way 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, or (ii)
in such a way so that the post-transaction company owns or acquires less than 100% of
such interests or assets of the target business in order to meet certain objectives of the
target management team or stockholders, or for other reasons. However, we will only complete
an initial 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 initial business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new
shares in exchange for all of the outstanding capital stock of a target. In this case, we
would acquire a 100% controlling interest in the target. However, as a result of the issuance
of a substantial number of new shares, our stockholders immediately prior to our initial
business combination could own less than a majority of our outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets
of a target business or businesses are owned or acquired by the post-transaction company,
the portion of such business or businesses that is owned or acquired is what will be taken
into account for purposes of Nasdaq’s 80% fair market value test. If the initial 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 transactions and we will treat the target businesses
together as the initial business combination for purposes of a tender offer or for seeking
stockholder approval, as applicable.
Our
amended and restated certificate of incorporation requires the affirmative vote of a majority of our board of directors, which must include
a majority of our independent directors to approve our initial business combination (or such other vote as the applicable law or stock
exchange rules then in effect may require).
We
do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However,
if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business
combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior
to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination
or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination,
in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we target businesses
with enterprise values that are greater than we could acquire with the net proceeds of our initial public offering and the sale of the
private placement warrants, and, as a result, if the cash portion of the purchase price exceeds the amount available from the trust account,
net of amounts needed to satisfy redemptions by public stockholders, we may be required to seek additional financing to complete such
proposed initial business combination. We may also obtain financing prior to the closing of our initial business combination to fund
our working capital needs and transaction costs in connection with our search for and completion of our initial business combination.
There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans,
advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase agreements
or backstop arrangements we may enter into. Subject to compliance with applicable securities laws, we would only complete such financing
simultaneously with the completion of our business combination. If we are unable to complete our initial business combination because
we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition,
following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet
our obligations.
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.
Corporate
Information
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 intend 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 December 11, 2025,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of
the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt
during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated
with it in the JOBS Act.
Our
executive offices are located at Four Embarcadero Center, Suite 2100, San Francisco, CA 94111, and our telephone number is (415) 780-9975.
We maintain a corporate website at www.truewindcapital.com/nebula-caravelacqcorp. Our website and the information contained on,
or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this Report.
You should not rely on any such information in making your decision whether to invest in our securities.
Sourcing
of Potential Business Combination Targets
We
anticipate that target business candidates will continue to be brought to our attention from various unaffiliated sources, including
investment bankers and investment professionals. Target businesses will continue to be brought to our attention by such unaffiliated
sources as a result of being solicited by us by calls or mailings. These sources will also 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 our public filings and know
what types of businesses we are targeting. Our officers and directors, as well as our sponsor and their affiliates, will continue to
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 may receive a number
of proprietary 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 respective industry and business contacts as well as their affiliates. We have
engaged the services of professional firms or other individuals that specialize in business acquisitions, and we may engage other firms
or other individuals in the future, in which event we are paying or 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, 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, or any entity with which our sponsor or officers
are affiliated, 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). Although none of our sponsor, executive officers
or directors, or any of their respective affiliates, are 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, we do not have a policy
that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement
of out-of-pocket expenses by a target business. 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
are not 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 a company that is affiliated with True Wind Capital, our sponsor,
our officers, or our directors, subject to certain approvals and consents. In the event we seek to complete our initial business combination
with a company that is affiliated with True Wind Capital, our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that
our initial business combination is fair to us from a financial point of view. Currently, we are not aware of an affiliate of True Wind
Capital that would make a suitable target for our initial business combination.
If
any of our officers or directors becomes aware of a business combination opportunity that is suitable for one or more entities to which
he or she has fiduciary, contractual or other obligations or duties, including TWC Tech Holdings II Corp., he or she will honor these
obligations and duties to present such business combination opportunity to such entities first, and only present it to us if such entities
reject the opportunity and he or she determines to present the opportunity to us (including as described above).
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As an existing public company, we offer
target businesses an alternative to the traditional initial public offering through a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination. In this situation, the owners of the target business would exchange their
shares of stock in the target business for shares of our stock or for a combination of shares of our 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 certain and cost effective method to becoming a public company than
the typical initial public offering. In a typical initial public offering, there are additional expenses incurred in marketing, road
show and public reporting efforts that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed 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. Once public, we believe the target business would then have greater access to capital and
an additional means of providing management incentives consistent with stockholders’ interests. It can offer further benefits by
augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
We
will remain an emerging growth company until the earlier of: (1) the last day of the fiscal
year (a) following December 11, 2025, (b) in which we have total annual gross revenue
of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our common stock that is held by non-affiliates exceeds
$700 million as of the end of the prior fiscal year’s second fiscal quarter; and
(2) the date on which we have issued more than $1.00 billion in non-convertible debt
during the prior three-year period.
Financial
Position
With
funds available in the trust account for a business combination initially in the amount of $275,000,000 assuming no redemptions and after
payment of $9,625,000 of deferred underwriting fees and at least $100,000,000 in proceeds from the sale of the forward purchase shares,
we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete
our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs
and desires. However, we have not taken any steps to secure third-party financing and there can be no assurance it will be available
to us.
Significant
Activities Since Inception
On
December 11, 2020, the Company consummated its IPO of 27,500,000 units (the “Units”), including 2,500,000 Units issued pursuant
to the partial exercise by the underwriters of their over-allotment option (the “Over-Allotment Units”; collectively with
the Initial Units, the “Units”). Each Unit consists of one share of Class A common stock, $0.0001 par value per share (“Class
A common stock”), and one-fifth of one warrant (“Public Warrant”), each whole warrant entitling the holder to purchase
one share of Class A common stock at $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross
proceeds of $275,000,000. As a result of the underwriters’ partial exercise of the over-allotment option, the Company’s sponsor,
Nebula Holdings, LLC (the “Sponsor”), forfeited 312,500 shares of Class B common stock. Simultaneously with the consummation
of the IPO and the sale of the Units, the Company consummated the private placement (“Private Placement”) of an aggregate
of 5,166,667 warrants (“Placement Warrants”) at a price of $1.50 per Placement Warrant, generating total proceeds of $7,750,000.
A
total of $275 million of the net proceeds from our initial public offering (including the partial over-allotment) and the private
placement of warrants to our sponsor were deposited in a trust account established for the benefit of the Company’s public stockholders.
Our
units began trading on December 9, 2020 on The NASDAQ Capital Market under the symbol NEBCU. Commencing on January 29, 2021, the securities
comprising the units began separate trading. The units, common stock, and warrants are trading on The NASDAQ Capital Market under the
symbols “NEBCU,” “NEBC” and “NEBCW,” respectively.
On
February 10, 2021, the Company entered into the Business Combination Agreement. Please see the section of this report entitled “Business—Business
Combination” for additional information.
Effecting
our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our
initial business combination using cash from the proceeds of our initial public offering and the sale of the private placement warrants
and the sale of the forward placement shares, if any, our capital stock, debt or a combination of these as the consideration to be paid
in our initial business combination. 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 redemption of our public shares,
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 post-transaction businesses, 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 in connection with the completion of our initial business combination through a private offering of
equity securities or debt securities or loans, and we may effectuate our initial business combination using the proceeds of such offerings
or loans rather than using the amounts held in the trust account.
In
the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy
materials disclosing the business combination would disclose the terms of the financing and, only if required by applicable law, 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.
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 (net of amounts disbursed to management for working capital purposes and 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 is not able to independently determine the fair market value of the target business or businesses,
we will obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm,
with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination, although there is no assurance that will be the case. Subject to this requirement,
our management has virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although
we are not 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 will 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 have conducted and will continue to 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.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business.
Unlike
other entities that have the resources to complete business combinations with multiple entities in one or several industries, it is probable
that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing
our initial business combination with only a single entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact on the particular industry in which we operate after our
initial business combination; and
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cause
us to depend on the marketing and sale of a single product or limited number of products
or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial
business combination with that business, our assessment of the target business’s management may not prove to be correct. In addition,
the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. 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 highly
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
our 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 stock exchange rule, or we may decide to seek stockholder approval for business or other reasons.
Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder
approval is currently required under Delaware law for each such transaction.
Type
of Transaction
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Whether
Stockholder
Approval is
Required
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Purchase
of assets
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No
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Purchase
of stock of target not involving a merger with the company
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No
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Merger
of target into a subsidiary of the company
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No
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Merger
of the company with a target
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Yes
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Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue shares of 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;
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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 shares
or voting power of 5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change of
control.
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The
decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval
is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a
variety of factors, including, but not limited to:
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the
timing of the transaction, including in the event we determine stockholder approval would
require additional time and there is either not enough time to seek stockholder approval
or doing so would place the company at a disadvantage in the transaction or result in other
additional burdens on the company;
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the
expected cost of holding a stockholder vote;
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the
risk that the stockholders would fail to approve the proposed business combination;
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other
time and budget constraints of the company; and
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●
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additional
legal complexities of a proposed business combination that would be time-consuming and
burdensome to present to stockholders.
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Permitted
Purchases of Our Securities
In
the event 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, directors, officers, advisors or any of their respective affiliates
may purchase public shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either
prior to or following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq
rules. 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. In the event our initial stockholders, directors, officers, advisors or any of their respective
affiliates determine to make any such purchases at the time of a stockholder vote relating to our initial business combination, such
purchases could have the effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account
will be used to purchase public shares in such transactions. If they engage in such transactions, they will be restricted from making
any such purchases when they are in possession of any material non-public information not disclosed to the seller or if such purchases
are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder,
although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. We have adopted an insider trading policy which requires insiders to (1) refrain from purchasing securities when they are in
possession of any material non-public information and (2) to clear all trades with our compliance personnel or legal counsel prior
to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it
will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances,
our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In
the event that our sponsor, directors, officers, advisors or any of their respective affiliates purchase public shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against
our initial business combination, such selling stockholders would be required to revoke their prior elections to redeem their shares
and any proxy to vote against our initial business combination. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules
under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such
rules, the purchasers will comply with such rules.
The
purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining
stockholder approval of our 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. This 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 common stock may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our
securities on a national securities exchange.
Our
sponsor, officers, directors, advisors and/or any of their respective affiliates may identify the stockholders with whom our sponsor,
officers, directors, advisors or any of their respective 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, advisors or any of their respective
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. Such persons
would select the stockholders from whom to acquire shares based on the number of shares available, the negotiated price per share and
such other factors as any such person may deem relevant at the time of purchase. The price per share paid in any such transaction may
be different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial
business combination. Our sponsor, officers, directors, advisors or any of their respective affiliates will purchase shares only 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 any of their respective affiliates who are affiliated purchasers under Rule 10b-18 under
the Exchange Act will only be made to the extent such purchases are 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 any of their respective affiliates will be restricted from making purchases of common stock if such purchases would violate Section
9(a)(2) or Rule 10b-5 of the Exchange Act.
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 public shares 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 our initial business combination, including interest (net of permitted withdrawals),
divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account
as of December 31, 2020 was approximately $10.00 per public share. The per share amount we will distribute to investors who properly
redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. The redemption right
will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in
order to validly redeem its shares. Each public stockholder may elect to redeem its public shares without voting, and if they do vote,
irrespective of whether they vote for or against the proposed transaction. There will be no redemption rights upon the completion of
our initial business combination with respect to our warrants. 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 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 shares of Class A common stock upon
the completion of our initial business combination either: (1) in connection with a stockholder meeting called to approve the business
combination; or (2) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination
or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing
of the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock
exchange listing 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 a business
combination transaction 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 business combination. We currently intend to conduct redemptions pursuant to a stockholder
vote unless stockholder approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions
pursuant to the tender offer rules of the SEC for business or other reasons. So long as we obtain and maintain a listing for our securities
on Nasdaq, we are required to comply with such rules.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to
our amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which
regulate issuer tender offers; and
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file
tender offer documents with the SEC prior to completing our initial business combination
which contain substantially the same financial and other information about the initial business
combination and the redemption rights as is required under Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our initial business combination, we and 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, the tender offer will be conditioned on public stockholders not tendering more
than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount
that would cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that
we do not then become 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 such initial business combination.
If,
however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide to
obtain stockholder approval for business or other 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
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file
proxy materials with the SEC.
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We
expect that a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we
expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional notice
of redemption if we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently
intend to comply with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we
are not able to maintain our Nasdaq listing or Exchange Act registration.
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, unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial
business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the 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, officers and directors will count towards this quorum and have agreed to vote any founder shares and any public
shares held by them in favor of our initial business combination. These quorum and voting thresholds and agreements, may make it more
likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares without
voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. In addition, 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 any public shares held by them in connection with the completion of a business combination.
Our
amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would
cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that we do not
then become subject to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to a higher
net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed
business combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred to the target
for working capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with
the terms of the proposed 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 business combination exceed the aggregate amount of cash available to us, we will not complete the 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 an aggregate of 15% or more of the shares sold in our initial public offering, without our prior consent, which we refer to
as the “Excess Shares.” We believe this restriction will discourage stockholders from accumulating large blocks of shares,
and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination
as a means to force us or our affiliates to purchase their shares at a significant premium to the then-current market price or on
other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our
initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our
affiliates at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability
to redeem no more than 15% of the shares sold in our initial public offering, we believe we will limit the ability of a small group of
stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with
a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.
However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against
our initial business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or 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 prior to the date set forth in the tender offer
documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business
combination in the event we distribute proxy materials or to deliver their shares to the transfer agent electronically using The Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, rather than simply voting against the initial business combination
at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares
in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery
requirements, which will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must
identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the time we send out our tender
offer materials until the close of the tender offer period, or up to two business days prior to the vote on the business combination
if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant
to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final
proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft
proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption
if we conduct redemptions in conjunction with a proxy solicitation. 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 Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System. The transfer agent will typically charge
the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this
fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to 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 blank check 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 business combination and check a box on the proxy card indicating
such holder was seeking to exercise his or her redemption rights. After the 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 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 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 business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the
date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered
its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect
to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically).
It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed
promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until the end of the completion window.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only the time of the completion window to complete our initial
business combination. If we are unable to complete our initial business combination within such period, we will: (1) cease all operations
except for the purpose of winding up; (2) 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
(net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in
each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There
are 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 completion window.
Our
initial stockholders, 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 held by them if we fail to complete our initial
business combination within the completion window. However, if our sponsor or any of our officers and directors acquires public shares,
it will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our
initial business combination within the completion window.
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 to modify the substance or timing of our obligation to provide for the redemption of
our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our
initial business combination within the completion window, 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 (net of permitted withdrawals), divided by the number of then outstanding
public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets, after payment of the
deferred underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny
stock” rules).
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 held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose.
However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the
extent that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us
an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other than the
proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account and any tax payments
or expenses for the dissolution of the trust, the per share redemption amount received by stockholders upon our dissolution would be
$10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would have higher
priority than the claims of our public stockholders. We cannot assure you that the actual per share redemption amount received by stockholders
will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against
us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims
must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such
amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we have sought and will continue to seek to have all vendors, service providers (other than our independent registered public accounting
firm), 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 we are unable to find
a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims
they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse
against the trust account for any reason. In order to protect the amounts held in the trust account, our sponsor has agreed that it will
be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm) for services
rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement,
reduce the amount of funds in the trust account to below (1) $10.00 per public share or (2) the actual amount per public share held in
the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value
of the trust assets, in each case net of permitted withdrawals, except as to any claims by a third party that executed a waiver of any
and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under our
indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. We have not 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 and, therefore, our sponsor may not be able to satisfy those obligations.
We have not asked our sponsor to reserve for such obligations. Therefore, we cannot assure you that our sponsor would be able to satisfy
those obligations. As a result, if any such claims were successfully made against the trust account, the funds available in the trust
account for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we
may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any
redemption of your public shares. None of our officers will indemnify us for claims by third parties including, without limitation, claims
by vendors and prospective target businesses. None of our other officers 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: (1) $10.00 per public share; or (2) the actual amount per public
share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions
in the value of the trust assets, in each case net of permitted withdrawals, and our sponsor asserts that it is unable to satisfy its
indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would
determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that
our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so in certain instances. For
example, the cost of such legal action may be deemed by the independent directors to be too high relative to the amount recoverable or
the independent directors may determine that a favorable outcome is not likely. Accordingly, we cannot assure you that due to claims
of creditors the actual value of the per share redemption price will not be substantially less than $10.00 per share.
We
seek to reduce the possibility that our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to have
all vendors, service providers (other than our independent registered public accounting firm), 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 are not 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 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 within the completion window may be considered a liquidating
distribution under Delaware law. Delaware law provides that if the corporation complies with certain procedures set forth in Section
280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period
during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may
reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders,
any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata
share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third
anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within the completion window, is not considered a liquidating distribution under
Delaware law and such redemption distribution is deemed to be unlawful, 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 within the completion window, we will: (1)
cease all operations except for the purpose of winding up; (2) 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 (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following our 24th month
and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third
anniversary of such date.
Because
we are 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
ten years. However, because we are a blank check company, rather than an operating company, and our operations are limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers and independent registered public accounting firm) 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 (other than
our independent registered public accounting firm), 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: (1) $10.00
per public share; or (2) the actual amount per public share held in the trust account as of the date of the liquidation of the trust
account, if less than $10.00 per share due to reductions in value of the trust assets, in each case net of permitted withdrawals 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.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board may be
viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons. Please see “Risk Factors — If, after we
distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors
may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and
us to claims of punitive damages.”
Our
public stockholders will be entitled to receive funds from the trust account only in the event of the redemption of our public shares
if we do not complete our initial business combination within the completion window or if they redeem their respective shares for cash
upon the completion of the initial business combination. In no other circumstances will a stockholder have any right or interest of any
kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with our 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 described above.
Amended
and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions relating to our initial public offering
that applies to us until the consummation of our initial business combination. If we seek to amend any provisions of our amended and
restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public
shares in complete our initial business combination within the completion window or with respect to any other material provisions relating
to the rights of holders of our Class A Common Stock or pre-initial business combination business activity, we will provide
public stockholders with the opportunity to redeem their public shares in connection with any such vote. Our initial stockholders, officers
and directors have agreed to waive any redemption rights with respect to any founder shares and any public shares held by them in connection
with the completion of our initial business combination. Specifically, our amended and restated certificate of incorporation provides,
among other things, that:
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prior
to the consummation of our initial business combination, we shall either: (1) seek stockholder
approval of our initial business combination at a meeting called for such purpose at which
stockholders may seek to redeem their shares, regardless of whether they vote for or against,
or abstain from voting on, the proposed business combination, into their pro rata share of
the aggregate amount on deposit in the trust account as of two business days prior to the
consummation of our initial business combination, including interest (net of permitted withdrawals);
or (2) provide our public stockholders with the opportunity to tender their shares to us
by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount
equal to their pro rata share of the aggregate amount on deposit in the trust account as
of two business days prior to the consummation of our initial business combination, including
interest (net of permitted withdrawals), in each case subject to the limitations described
herein;
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we
will consummate our initial business combination only if we have net tangible assets of at
least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority
of the outstanding shares of common stock voted are voted in favor of the business combination
at a duly held stockholders meeting;
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if
our initial business combination is not consummated within the completion window, then our
existence will terminate and we will distribute all amounts in the trust account; and
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prior
to our initial business combination, we may not issue additional shares of capital stock
that would entitle the holders thereof to (1) receive funds from the trust account or (2)
vote on any initial business combination.
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These
provisions cannot be amended without the approval of holders of 65% of our common stock. In the event we seek stockholder approval in
connection with our initial business combination, our amended and restated certificate of incorporation provides that, unless otherwise
required by applicable law or stock exchange rules, we may consummate our initial business combination only if approved by a majority
of the shares of common stock voted by our stockholders at a duly held stockholders meeting.
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, public companies and operating businesses seeking strategic acquisitions. Many of these
entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates.
Moreover, many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger
target businesses is limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the
acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their
redemption rights may reduce the resources available to us for our initial business combination and 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.
Sponsor
Indemnity
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered
public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering
into a transaction agreement, reduce the amount of funds in the trust account to below: (1) $10.00 per public share; or (2) the actual
amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share
due to reductions in the value of the trust assets, in each case, net of permitted withdrawals, except as to any claims by a third party
that executed a waiver of any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except
as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. We have not 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 and, therefore, our sponsor may not be able to satisfy
those obligations. We have not asked our sponsor to reserve for such obligations. Therefore, we cannot assure you that our sponsor would
be able to satisfy those obligations. We believe the likelihood of our sponsor having to indemnify the trust account is limited because
we will endeavor to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any
right, title, interest or claim of any kind in or to monies held in the trust account.
Employees
We
currently have two officers and do not intend to have any full-time employees prior to the completion of our initial business combination.
Members of our management team 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 to our affairs and intend to continue doing so until we have completed our initial business combination.
The amount of time that any such person devotes in any time period to our company may vary based on whether a target business has been
selected for our initial business combination and the current stage of the business combination process.
Periodic
Reporting and Financial Information
Our
units, Class A common stock and warrants are registered under the Exchange Act and 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,
this Report contains financial statements audited and reported on by our independent registered public accounting firm.
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. These financial statements may be required to be prepared in accordance
with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international financial
reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical
financial statements may be required to be audited in accordance with the Public Company Accounting Oversight Board (United States),
or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets
may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy
rules and complete our initial business combination within the completion window. 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, 2021 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 an emerging growth company will
we be required to have our internal control procedures audited. A target business may not be in compliance with the provisions of the
Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity to
achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
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 intend 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 December 11, 2025, (b)
in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer,
which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the prior
fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible debt
during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated
with it in the JOBS Act.
An
investment in our securities involves a high degree of risk. You should carefully consider all of the risks described below, together
with the other information contained in this Report, including the financial statements. If any of the following risks occur, our business,
financial condition or results of operations may be materially and adversely affected. In that event, the trading price of our securities
could decline, and you could lose all or part of your investment. The risk factors described below are not necessarily exhaustive and
you are encouraged to perform your own investigation with respect to us and our business.
Risks
Relating to our Search for, Consummation of, or Inability to Consummate,
a Business Combination and Post-Business Combination Risks
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote,
holders of our founder shares will participate in such vote, which means we may complete our initial business combination even if a majority
of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination would require
stockholder approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business
or other legal reasons. Except as required by applicable law or stock exchange rules, the decision as to whether we will seek stockholder
approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us,
solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the
transaction would otherwise require us to seek stockholder approval. Even if we seek stockholder approval, the holders of our founder
shares will participate in the vote on such approval. Accordingly, we may consummate our initial business combination even if holders
of a majority of our outstanding public shares do not approve of the business combination we consummate.
If
we seek stockholder approval of our initial business combination, after approval of our board, our sponsor, officers and directors have
agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Our
initial stockholders, officers and directors have agreed (and their permitted transferees will agree) to vote any founder shares and
any public shares held by them in favor of our initial business combination. As a result, in addition to our initial stockholders’
founder shares, we would need 10,312,501, or 37.5%, of the 27,500,000 public shares sold in our initial public offering to be voted in
favor of a transaction in order to have such initial business combination approved. We expect that our initial stockholders and their
permitted transferees will own at least 20% of our outstanding shares of common stock at the time of any such stockholder vote. Accordingly,
if we seek stockholder approval of our initial business combination, after approval of our board, it is more likely that the necessary
stockholder approval will be received than would be the case if our initial stockholders and their permitted transferees agreed to vote
their founder shares in accordance with the majority of the votes cast by our public stockholders.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your
right to redeem your shares from us for cash, unless we seek stockholder approval of such business combination.
Since
our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have the
right or opportunity to vote on the business combination. Accordingly, if we do not seek stockholder approval, your only opportunity
to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within
the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders
in which we describe our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not
be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. The amount of the
deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with
a business combination and such amount of deferred underwriting discount is not available for us to use as consideration in an initial
business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets,
after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that we do not then become 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. Consequently, if accepting all properly submitted redemption requests would cause our net tangible
assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed
with such redemption and the related business combination and may instead search for an alternate business combination. Prospective targets
will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us. If we are able to
consummate an initial business combination, the per-share value of shares held by non-redeeming stockholders will reflect our
obligation to pay the deferred underwriting commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption
rights and, therefore, we will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the
purchase price or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust
account to meet such requirements or arrange for third-party financing. In addition, if a larger number of shares is submitted for
redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust
account or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or
the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision
of the Class B common stock results in the issuance of shares of Class A common stock on a greater than one-to-one basis
upon conversion of the Class B common stock at the time of our initial business combination. In addition, the amount of deferred
underwriting commissions payable to the underwriters is not required to be adjusted for any shares that are redeemed in connection with
an initial business combination. The above considerations may limit our ability to complete the most desirable business combination available
to us or optimize our capital structure.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
increases. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until
we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however,
at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer
a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you
are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the completion window may give potential target businesses leverage
over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business
combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial
business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination within the completion window. Consequently, such target business may obtain leverage over us in negotiating
a business combination, knowing that if we do not complete our initial business combination with that particular target business, we
may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the
timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination
on terms that we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our initial business combination within the completion window, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may receive
only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
sponsor, officers and directors have agreed that we must complete our initial business combination within the completion window. We may
not be able to find a suitable target business and complete our initial business combination within such time period. Our ability to
complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt
markets and the other risks described herein.
If
we have not completed our initial business combination within such time period, we will: (1) cease all operations except for the
purpose of winding up; (2) as promptly as reasonably possible but not more than 10 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
(net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in
each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such
case, our public stockholders may receive only $10.00 per share, or less than $10.00 per share, on the redemption of their shares,
and our warrants will expire worthless.
If
permitted withdrawals and other sources of working capital are insufficient, it could limit the amount available to fund our search for
a target business or businesses and complete our initial business combination and we will depend on loans from our sponsor or management
team to fund our search, to pay our taxes and to complete our initial business combination. If we are unable to obtain such loans, we
may be unable to complete our initial business combination.
Of
the net proceeds of our initial public offering and the sale of the private placement warrants, $1.0 million (as of December 31, 2020)
was available to us outside the trust account to fund our working capital requirements. If we are required to seek additional capital,
we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither
our sponsor, members of our management team nor any of their respective affiliates is under any obligation or other duty to loan funds
to us in such circumstances. Any such loans would be repaid only from funds held outside the trust account or from funds released to
us upon completion of our initial business combination. If we are unable to complete our initial business combination because we do not
have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such case, our public
stockholders may receive only $10.00 per share, or less in certain circumstances, and our warrants will expire worthless.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or any of their respective
affiliates may elect to purchase shares or warrants from the public, which may influence a vote on a proposed business combination and
reduce the public “float” of our common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective affiliates may
purchase public shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either
prior to or following the completion of our initial business combination, although they are under no obligation or other duty to do so.
Such a purchase may include a contractual acknowledgement that such public stockholder, although still the record holder of our shares
is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor,
directors, officers, advisors or any of their respective affiliates purchase public shares in privately negotiated transactions from
public stockholders who have already elected to exercise their redemption rights, such selling public stockholders would be required
to revoke their prior elections to redeem their shares. The price per share paid in any such transaction may be different than the amount
per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination.
The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of
obtaining stockholder approval of our 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 such purchases could be to vote such shares in favor of the business
combination and thereby increase the likelihood of obtaining stockholder approval of our 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. Any such purchases will be reported
pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to maintain the quotation, listing or trading of our securities on a national
securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business
combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable,
such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly tender or redeem public shares. For example, 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 prior to the date set forth in the tender offer or proxy materials
documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination
in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder
fails to comply with these procedures, its shares may not be redeemed.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial business combination,
we may face additional burdens in connection with investigating, agreeing to and completing such combination, and if we effect such initial
business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial business combination,
we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing
to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved
by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
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costs
and difficulties inherent in managing cross-border business operations and complying
with commercial and legal requirements of overseas markets;
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rules
and regulations regarding currency redemption;
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complex
corporate withholding taxes on individuals;
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laws
governing the manner in which future business combinations may be effected;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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currency
fluctuations and exchange controls;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration
of political relations with the United States;
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obligatory
military service by personnel; and
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government
appropriation of assets.
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We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business
combination or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact our
business, results of operations and financial condition.
If
our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time and resources
becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, any or all of our management could resign from their positions as officers of the Company, and the
management of the target business at the time of the business combination could remain in place. Management of the target business may
not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and
resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues
which may adversely affect our operations.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business
combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the
target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could
suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction
in value.
The
officers and directors of an initial business combination candidate may resign upon completion of our initial business combination. The
departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an initial business combination candidate’s key personnel upon the completion of our initial business combination cannot
be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain
associated with the initial business combination candidate following our initial business combination, it is possible that members of
the management of an acquisition candidate will not wish to remain in place. As a result, we may need to reconstitute the management
team of the post-transaction company in connection with our initial business combination, which may adversely impact our ability
to complete an initial business combination in a timely manner or at all.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this Report to issue any notes or other debt securities, or to otherwise incur outstanding debt,
we may choose to incur substantial debt to complete our initial business combination. We have agreed that we will not incur any indebtedness
unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust
account. As such, no issuance of debt will affect the per share amount available for redemption from the trust account. Nevertheless,
the incurrence of debt could have a variety of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments
when due if we breach certain covenants that require the maintenance of certain financial
ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt is payable on
demand;
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our
inability to obtain necessary additional financing if the debt contains covenants restricting
our ability to obtain such financing while the debt security is outstanding;
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our
inability to pay dividends on our common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which will
reduce the funds available for dividends on our common stock if declared, expenses, capital
expenditures, acquisitions and other general corporate purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the industry
in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, execution of our strategy and other purposes and other disadvantages
compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private placement
warrants and the forward purchase shares, which will cause us to be solely dependent on a single business which may have a limited number
of products or services. This lack of diversification may materially negatively impact our operations and profitability.
The
net proceeds from our initial public offering and the sale of the private placement warrants provides us with $275,000,000 that we may
use to complete our initial business combination (which includes $9,625,000 of deferred underwriting commissions being held in the trust
account). The proceeds from the sale of the forward purchase shares will be at least $100,000,000. However, if the sale of the forward
purchase shares does not close for any reason, including by reason of the failure to fund the purchase price for example, we will receive
no proceeds at all.
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within
a short period of time. However, we may not be able to effectuate our initial business combination with more than one target business
because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if they
had been operated on a combined basis. By completing our initial business combination with only a single entity our lack of diversification
may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may
be:
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solely
dependent upon the performance of a single business, property or asset; or
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dependent
upon the development or market acceptance of a single or limited number of products, processes
or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial
adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete
our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which may
result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very little
public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial business combination on the basis of limited information, which may result in a business combination with a company that is not
as profitable as we suspected, if at all.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
our initial business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event
will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting commissions,
to be less than $5,000,001 (such that we do not then become 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. As a result,
we may be able to complete our initial business combination even if a substantial majority of our public stockholders do not agree with
the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct
redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated
agreements to sell their shares to our sponsor, officers, directors, advisors or any of their respective affiliates. In the event the
aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption plus
any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount
of cash available to us, we will not complete the business combination or redeem any shares, all shares of common stock submitted for
redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their
charters and modified governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend
our amended and restated certificate of incorporation or governing instruments, including our warrant agreement, in a manner that will
make it easier for us to complete our initial business combination that some of our stockholders or warrant holders may not support.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their
charters and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the
definition of business combination, increased redemption thresholds extended the time to consummate an initial business combination and,
with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities.
We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial
business combination in order to effectuate our initial business combination.
Certain
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding
provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of not
less than 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier
for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion
of an initial business combination that some of our stockholders may not support.
Our
amended and restated certificate of incorporation provides that any of its provisions (other than amendments relating to the appointment
of directors, which require the approval by a majority of at least 90% of our common stock voting at a stockholder meeting) related to
pre-business combination activity (including the requirement to fund the trust account and not release such amounts except in specified
circumstances and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of at
least 65% of our common stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account
may be amended if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation
provides that it may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL, or applicable
stock exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation
or on our initial business combination. Our initial stockholders, who beneficially own 20% of our common stock, may participate in any
vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any
manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which
will govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability
to complete our initial business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach
of our amended and restated certificate of incorporation.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement, that they will not propose any amendment to our amended
and restated certificate of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public
shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination within the completion window, 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, divided by the number of then outstanding public shares. These agreements are contained in a letter agreement
that we have entered into with our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any
breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action,
subject to applicable law.
Certain
agreements related to our initial public offering may be amended without stockholder approval.
Certain
agreements, including the underwriting agreement relating to our initial public offering, the letter agreement among us and our sponsor,
officers and directors, and the registration rights agreement among us and our initial stockholders, may be amended without stockholder
approval. These agreements contain various provisions that our public stockholders might deem to be material. While we do not expect
our board to approve any amendment to any of these agreements prior to our initial business combination, it may be possible that our
board, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such
agreement in connection with the consummation of our initial business combination. Any such amendments would not require approval from
our stockholders, may result in the completion of our initial business combination that may not otherwise have been possible, and may
have an adverse effect on the value of an investment in our securities.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target
business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement warrants and the forward purchase
shares (if any) will be sufficient to allow us to complete our initial business combination, because we have not yet identified any prospective
target business we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our initial public
offering and the sale of the private placement warrants and the forward purchase shares (if any) prove to be insufficient, either because
of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation
to redeem for cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination
or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to
seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available
on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial
business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and
seek an alternative target business candidate. In addition, even if we do not need additional financing to complete our initial business
combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional
financing could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors
or stockholders is required to provide any financing to us in connection with or after our initial business combination. If we are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our trust account, and our warrants will expire worthless.
Our
initial stockholders will control the election of our board of directors until consummation of our initial business combination and will
hold a substantial interest in us. As a result, they will elect all of our directors prior to the consummation of our initial business
combination and may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our
initial stockholders own 20% of our outstanding common stock. In addition, the founder shares, all of which are held by our initial stockholders,
will entitle the holders to elect all of our directors prior to the consummation of our initial business combination. Holders of our
public shares will have no right to vote on the election of directors during such time. These provisions of our amended and restated
certificate of incorporation may only be amended by a majority of at least 90% of our common stock voting at a stockholder meeting. As
a result, you will not have any influence over the election of directors prior to our initial business combination.
Neither
our initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities,
other than as disclosed in this Report. Factors that would be considered in making such additional purchases would include consideration
of the current trading price of our Class A common stock. In addition, as a result of their substantial ownership in our company, our
initial stockholders may exert a substantial influence on other actions requiring a stockholder vote, potentially in a manner that you
do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate transactions.
If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions,
this would increase their influence over these actions. Accordingly, our initial stockholders will exert significant influence over actions
requiring a stockholder vote.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination include historical and/or pro forma
financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents,
whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance
with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be
audited in accordance with PCAOB. These financial statements may also be required to be prepared in accordance with GAAP in connection
with our current report on Form 8-K announcing the closing our initial business combination within four business days following such
closing. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets
may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy
rules and complete our initial business combination within the completion window.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial
financial and management resources, and increase the time and costs of completing an initial business combination.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer
or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an
emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which
we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such initial business combination.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (1) the completion
of our initial business combination, and then only in connection with those shares of Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein; (2) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing
of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem
100% of our public shares if we do not complete our initial business combination within the completion window; and (3) the redemption
of all of our public shares if we are unable to complete our initial business combination within the completion window, subject to applicable
law and as further described herein. In addition, if we are unable to complete an initial business combination within the completion
window for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders
for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to
wait beyond the completion window before they receive funds from our trust account. In no other circumstances will a public stockholder
have any right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the
trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or
warrants, potentially at a loss.
You
will not be entitled to protections normally afforded to investors of certain other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete an
initial business combination with a target business that has not been identified, we may be deemed to be a “blank check”
company under the U.S. securities laws. However, because we have net tangible assets in excess of $5,000,000, we are exempt from rules
promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors are not afforded
the benefits or protections of those rules. Among other things, this means that we have a longer period of time to complete our initial
business combination than do companies subject to Rule 419. Moreover, if our initial public offering were subject to Rule 419,
that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the
trust account were released to us in connection with our completion of our initial business combination.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share, or less in certain circumstances, on our redemption of their stock, and our warrants will expire
worthless.
We
have encountered and expect to continue to encounter intense competition from other entities having a business objective similar to ours,
including private investors (which may be individuals or investment partnerships), other blank check companies and other entities, domestic
and international, competing for the types of businesses we intend to acquire, including TWC Tech Holdings II Corp. Many of these individuals
and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions
of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and
other resources or more local industry knowledge than we do and our financial resources are relatively limited when contrasted with those
of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds
of our initial public offering and the sale of the private placement warrants, our ability to compete with respect to the acquisition
of certain target businesses that are sizable is limited by our available financial resources. Our sponsor, any of its affiliates or
any of their respective clients may make additional investments in us, although our sponsor and its affiliates have no obligation or
other duty to do so.
This
inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the
event we seek stockholder approval of our initial business combination and we are obligated to pay cash for public shares that are redeemed,
it will potentially reduce the resources available to us for our initial business combination. Any of these obligations may place us
at a competitive disadvantage in successfully negotiating and completing a business combination. If we are unable to complete our initial
business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the
liquidation of our trust account and our warrants will expire worthless.
If
the funds available to us outside of the trust account are insufficient to allow us to operate for at least the completion window, we
may be unable to complete our initial business combination.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least the completion window, assuming
that our initial business combination is not completed during that time. We expect to incur significant costs in pursuit of our acquisition
plans. Management’s plans to address this need for capital through our initial public offering and potential loans from certain
of our affiliates are discussed in the section of this Report titled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations.” However, our affiliates are not obligated to make loans to us in the future, and we may not be able
to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively impact
the analysis regarding our ability to continue as a going concern at such time.
We
believe that the funds available to us outside of the trust account as of December 31, 2021 of $1.0 million including permitted withdrawals
and loans or additional investments from our sponsor, are sufficient to allow us to operate for at least the completion window; however,
we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us
to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment
or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses
from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses)
with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into
a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently
required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching
for, or conduct due diligence with respect to, a target business. If we are unable to complete our initial business combination, our
public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust
account and our warrants will expire worthless.
We
will depend on permitted withdrawals and loans from our sponsor or management team to fund our search, to pay our taxes and to complete
our initial business combination. If we are unable to obtain such loans, we may be unable to complete our initial business combination.
None
of the net proceeds of our initial public offering and the sale of the private placement warrants will be available to us initially outside
the trust account to fund our working capital requirements. In the event that our offering expenses exceed our estimate of $1,150,000,
we may fund such excess from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside
the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate
of $1,150,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount. We expect
to fund our working capital requirements prior to the time of our initial business combination with permitted withdrawals from the interest
earned on the trust account, subject to an annual limit of $500,000. In addition, our sponsor, an affiliate of our sponsor or our officers
and directors may, but none of them is obligated to, loan us funds as may be required to fund our working capital requirements. Based
upon current interest rates, we expect the trust account to generate approximately $275,000 of interest annually (assuming an interest
rate of 0.10% per year); however, we can provide no assurances regarding this amount. If we are required to seek additional capital,
we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither
our sponsor, members of our management team nor any of their respective affiliates is under any obligation or other duty to loan funds
to us in such circumstances. Any such loans would be repaid only from funds held outside the trust account or from funds released to
us upon completion of our initial business combination. If we are unable to complete our initial business combination because we do not
have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such case, our public
stockholders may receive only $10.00 per share, or less in certain circumstances, and our warrants will expire worthless.
Subsequent
to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our
securities, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify
all material issues that may be present with a particular target business, that it would be possible to uncover all material issues through
a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise.
As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur
impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks,
unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.
Although these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges
of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause
us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target
business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders or warrant holders who choose
to remain a stockholder or warrant holder following our initial business combination could suffer a reduction in the value of their securities.
Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per share redemption amount received
by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we seek to have all
vendors, service providers (other than our independent registered public accounting firm), 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, such parties may not execute such agreements, or even if they execute
such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case
in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will 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. Making such a request
of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses
refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue. 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 we are unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that
such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts
or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we
are unable to complete our initial business combination within the completion window, or upon the exercise of a redemption right in connection
with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may
be brought against us within the 10 years following redemption. Accordingly, the per share redemption amount received by public
stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of such creditors.
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered
public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering
into a transaction agreement, reduce the amount of funds in the trust account to below: (1) $10.00 per public share; or (2) the
actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00
per share due to reductions in the value of the trust assets, in each case net of permitted withdrawals, except as to any claims by a
third party that executed a waiver of any and all rights to the monies held in the trust account (whether any such waiver is enforceable)
and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity
obligations and we have not asked our sponsor to reserve for such indemnification obligations. We have not asked our sponsor to reserve
for such obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial
business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete
our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public
shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses.
Our
independent directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount
of funds in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of: (1) $10.00 per public share; or (2) the actual
amount per share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due
to reductions in the value of the trust assets, in each case net of permitted withdrawals, and our sponsor asserts that it is unable
to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would
determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that
our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so in certain instances. For
example, the cost of such legal action may be deemed by the independent directors to be too high relative to the amount recoverable or
the independent directors may determine that a favorable outcome is not likely. If our independent directors choose not to enforce these
indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced
below $10.00 per share.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board
of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors
and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having
breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public stockholders from the trust account prior
to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our
stockholders and the per share amount that would otherwise be received by our stockholders in connection with our liquidation may be
reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per share amount that would otherwise be received by our public stockholders
in connection with our liquidation would be reduced.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination within the completion window may be considered a liquidating
distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended
to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it
is our intention to redeem our public shares as soon as reasonably possible following December 11, 2022 in the event we do not complete
our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because
we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to
us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, consultants and independent registered public accounting firm) or prospective
target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot
assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend
beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders
upon the redemption of our public shares in the event we do not complete our initial business combination within the completion window
is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant
to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after we consummate our initial business combination and you will not be entitled
to any of the corporate protections provided by such a meeting.
In
accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one year
after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to
hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made
by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation
of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual
meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination,
they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c)
of the DGCL.
The
grant of registration rights to our initial stockholders and their permitted transferees and the forward purchasers with respect to the
forward purchase shares may make it more difficult to complete our initial business combination, and the future exercise of such rights
may adversely affect the market price of our Class A common stock.
Pursuant
to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial stockholders
and their permitted transferees can demand that we register the resale of their founder shares after those shares convert to shares of
our Class A common stock at the time of our initial business combination. In addition, our sponsor and its permitted transferees
can demand that we register the resale of the private placement warrants and the shares of Class A common stock issuable upon conversion
of the founder shares and exercise of the private placement warrants, and holders of warrants that may be issued upon conversion of working
capital loans may demand that we register the resale of such warrants or the Class A common stock issuable upon exercise of such
warrants. Holders of our forward purchase shares and their permitted transferees can demand that we register the forward purchase shares
as well. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities
for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition, the existence
of the registration rights may make our initial business combination more costly or difficult to complete. This is because the stockholders
of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the
negative impact on the market price of our Class A common stock that is expected when the common stock owned by our initial stockholders
or their permitted transferees, the private placement warrants owned by our sponsor, the warrants issued in connection with working capital
loans or the Class A common stock owned by the forward purchasers or their permitted transferees are registered for resale.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by the recent novel coronavirus (“COVID-19”) outbreak.
On
March 11, 2020, the World Health Organization officially declared the outbreak of the COVID-19 a “pandemic.” A
significant outbreak of COVID-19 and other infectious diseases could result in a widespread health crisis that could adversely affect
the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business
combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued
concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s
personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to
which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and
cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or
treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive
period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate
a business combination, may be materially adversely affected.
Because
we are neither limited to evaluating target businesses in a particular industry nor have we identified any specific target businesses
with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s
operations.
We
may seek to complete a business combination with an operating company in any industry or sector. However, we are not, under our amended
and restated certificate of incorporation, permitted to effectuate our initial business combination with another blank check company
or similar company with nominal operations. Because we have not yet identified or approached any specific target business with respect
to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations,
results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination,
we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control
and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot
assure you that an investment in our securities will ultimately prove to be more favorable to investors than a direct investment, if
such opportunity were available, in a business combination target. Accordingly, any stockholders or warrant holders who choose to remain
a stockholder or warrant holder following our initial business combination could suffer a reduction in the value of their securities.
Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
In
evaluating a prospective target business for our initial business combination, our management will rely on the availability of all the
funds from the sale of the forward purchase shares to be used as part of the consideration to the sellers in the initial business combination.
If the sale of the forward purchase shares fails to close, we may lack sufficient funds to consummate our initial business combination.
In
connection with the consummation of our initial public offering, we have entered into several forward purchase agreements with the forward
purchasers, pursuant to which they have subscribed to purchase from us at least 10,000,000 shares of Class A common stock,
or forward purchase shares, for $10.00 per share, or an aggregate amount of at least $100,000,000, in a private placement that will close
concurrently with the closing of our initial business combination.
The
proceeds from the sale of forward purchase securities, if any, may be used as part of the consideration to the sellers in our initial
business combination, expenses in connection with our initial business combination or for working capital in the post-transaction company.
The forward purchasers’ commitments under the forward purchase agreements are subject, among other conditions, to approval of their
respective investment committees. In addition, their obligations to purchase the forward purchase shares will be subject to fulfillment
of customary closing conditions, including that our initial business combination must be consummated substantially concurrently with
the purchase of the forward purchase shares. If the sale of the forward purchase shares does not close for any reason, including by reason
of the failure to fund the purchase price, for example, we may lack sufficient funds to consummate our initial business combination.
We
may seek acquisition opportunities in acquisition targets that may be outside of our management’s areas of expertise.
We
will consider a business combination in sectors which may be outside of our management’s areas of expertise if such business combination
candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company. In the
event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may
not be directly applicable to its evaluation or operation, and the information contained in this Report regarding the areas of our management’s
expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be
able to adequately ascertain or assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholders
or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could suffer a reduction
in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target
business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria
and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial
business combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful
as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective
business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise
their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to
have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by applicable
law or stock exchange rules, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for
us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We
may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record
of revenue or earnings, which could subject us to volatile revenues or earnings, intense competition and difficulties in obtaining and
retaining key personnel.
To
the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity lacking
an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which
we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile
revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all
of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be
outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target
business.
We
are not required to obtain a fairness opinion and consequently, you may have no assurance from an independent source that the price we
are paying for the business is fair to our company from a financial point of view.
Unless
we complete our initial business combination with an affiliated entity or our board cannot independently determine the fair market value
of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm or another
independent entity that commonly renders valuation opinions that the price we are paying is fair to our company from a financial point
of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair
market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy materials
or tender offer documents, as applicable, related to our initial business combination.
Resources
could be wasted in researching initial business combinations that are not completed, which could materially adversely affect subsequent
attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of
our trust account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the
proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we
may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will
result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only
approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire
worthless.
Risks
Relating to True Wind Capital, our Sponsor and Management Team
Our
officers and directors allocate their time to other businesses thereby causing conflicts of interest in their determination as to how
much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business
combination.
Our
officers and directors are not required to, and do not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a business combination and their other responsibilities. We do not
intend to have any full-time employees prior to the completion of our business combination. Each of our officers and directors is
engaged in several other business endeavors for which he or she may be entitled to substantial compensation and our officers and directors
are not obligated to contribute any specific number of hours per week to our affairs.
If
our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in
excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact
on our ability to complete our initial business combination.
We
are dependent upon our officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals. We believe that our success depends on the continued service of
our officers and directors, at least until we have completed our initial business combination. We do not have an employment agreement
with, or key-man insurance on the life of any of our other directors or officers. The unexpected loss of the services of one or
more of our directors or officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts of
our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact
the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target
business in senior management or advisory positions following our initial business combination, we do not currently expect that any of
them will do so. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure
you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating
a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
In
addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The
departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our
post-combination business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination,
and a particular business combination may be conditioned on the retention or resignation of such key personnel. These agreements may
cause our key personnel to have conflicts of interest in determining whether to proceed with a particular business combination. However,
we do not expect that any of our key personnel will remain with us after the completion of our initial business combination.
Our
key personnel may be able to remain with our company after the completion of our initial business combination only if they are able to
negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously
with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could
make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such
individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such individuals
to remain with us after the completion of our initial business combination will not be the determining factor in our decision as to whether
or not we will proceed with any potential business combination, as we do not expect that any of our key personnel will remain with us
after the completion of our initial business combination. The determination as to whether any of our key personnel will remain with us
will be made at the time of our initial business combination.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities
similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity or other transaction should be presented.
Until
we consummate our initial business combination, we will continue to engage in the business of identifying and combining with one or more
businesses. Our sponsor and officers and directors are, or may in the future become, affiliated with entities (such as operating companies
or investment vehicles) that are engaged in a similar business, including TWC Tech Holdings II Corp. We do not have employment contracts
with our officers and directors that will limit their ability to work at other businesses. In addition, our sponsor, officers and directors
may participate in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial
business combination. As a result, our sponsor, officers or directors could have conflicts of interest in determining whether to present
business combination opportunities to us or to any other blank check company with which they are or may become involved, including TWC
Tech Holdings II Corp.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations
or duties to one or more other entities pursuant to which such officer or director is or will be required to present a business combination
opportunity to such entities, including TWC Tech Holdings II Corp. Accordingly, if any of our officers or directors becomes aware of
a business combination opportunity which is suitable for one or more entities to which he or she has fiduciary, contractual or other
obligations or duties, he or she will honor these obligations and duties to present such business combination opportunity to such entities
first, and only present it to us if such entities reject the opportunity and he or she determines to present the opportunity to us. These
conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered
to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity as a director
or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without violating another
legal obligation.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our
interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or
have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor or our
directors or officers. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
In
particular, affiliates of our sponsor, our directors and our officers have invested, and may in the future invest, in a broad array of
sectors, including those in which our company may invest. As a result, there may be substantial overlap between companies that would
be a suitable business combination for us and companies that would make an attractive target for such other affiliates.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with True Wind Capital, our sponsor, officers or directors which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other businesses, we may decide to acquire one or more businesses
affiliated with or competitive with True Wind Capital, our sponsor, officers and directors, and their respective affiliates. Our directors
also serve as officers and board members for other entities. Such entities may compete with us for business combination opportunities.
Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent
accounting firm, regarding the fairness to our stockholders from a financial point of view of a business combination with one or more
domestic or international businesses affiliated with True Wind Capital, our sponsor, officers or directors, potential conflicts of interest
still may exist and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they
would be absent any conflicts of interest.
Since
our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than with
respect to any public shares they may hold), a conflict of interest may arise in determining whether a particular business combination
target is appropriate for our initial business combination.
In
September 2020, our sponsor purchased an aggregate of 7,906,250 founder shares for an aggregate purchase price of $25,000, or approximately
$0.003 per share. In September and October 2020, our sponsor transferred 25,000 founder shares to each of Messrs. Kerko, Wagner,
Thompson and Ms. Wellman, our independent directors, in each case at the original per share purchase price. In November 2020, our
sponsor cancelled 718,750 founder shares, resulting in our sponsor holding an aggregate of 7,087,500 founder shares. 312,500 founder
shares held by our sponsor were forfeited as a result of the partial exercise of underwriters’ over-allotment option. The founder
shares will be worthless if we do not complete an initial business combination.
In
addition, our sponsor has purchased an aggregate of 5,166,667 private placement warrants for a purchase price of $7,750,000, or $1.50
per warrant, that will also be worthless if we do not complete our initial business combination. Each private placement warrant entitles
the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as provided
herein.
The
founder shares are identical to the shares of Class A common stock included in the units being sold in our initial public offering,
except that: (1) only holders of the founder shares have the right to vote on the election and removal of directors prior to our
initial business combination; (2) the founder shares are subject to certain transfer restrictions, as described in more detail below;
(3) our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to: (a) waive
their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our
initial business combination, (b) waive their redemption rights with respect to any founder shares and public shares held by them
in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation to modify the
substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination
or to redeem 100% of our public shares if we have not consummated our initial business combination within the completion window; and
(c) waive their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we
fail to complete our initial business combination within the completion window (although they will be entitled to liquidating distributions
from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within the
completion window); (4) the founder shares are automatically convertible into shares of our Class A common stock at the time of
our initial business combination on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as
described herein; and (5) the holders of founder shares are entitled to registration rights.
The
personal and financial interests of our sponsor, officers and directors may influence their motivation in identifying and selecting a
target business combination, completing an initial business combination and influencing the operation of the business following the initial
business combination. This risk may become more acute as the deadline for completing our initial business combination nears.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance
that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We
may structure our initial business combination so that the post-transaction company in which our public stockholders own shares
will own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if
the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target business sufficient for us not to be required to register as an investment company under the Investment
Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50%
or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own a minority
interest in the post business combination company, depending on valuations ascribed to the target and us in our initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of
the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the
issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less
than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may
subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock than
we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the
target business.
Risks
Relating to our Securities
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value
of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less
or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct
U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest,
they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero
in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt
similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain amendments
to our amended and restated certificate of incorporation, our public shareholders are entitled to receive their pro-rata share of
the proceeds held in the trust account, plus any interest income, net of taxes paid or payable (less, in the case we are unable to complete
our initial business combination, $100,000 of interest). Negative interest rates could reduce the value of the assets held in trust such
that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements
and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities;
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each
of which may make it difficult for us to complete our initial business combination. In addition, we may have imposed upon us burdensome
requirements, including:
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registration
as an investment company with the SEC;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and compliance with other rules
and regulations that we are currently not subject to.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must
ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities
do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and
complete a business combination and thereafter to operate the post-transaction business or assets for the long-term. We do not plan
to buy businesses or assets with a view to resale or profit from their resale.
We
do not plan to buy unrelated businesses or assets or to be a passive investor.
We
do not believe that our principal activities subject us to the Investment Company Act. To this end, the proceeds held in the trust account
may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company
Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under
the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee
is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by
having a business plan targeted at acquiring and growing businesses for the long-term (rather than on buying and selling businesses
in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within
the meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest to occur of:
(i) the completion of our primary business objective, which is a business combination; (ii) the redemption of any public shares properly
submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance
or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or
to redeem 100% of our public shares if we do not complete our initial business combination within the completion window; and (iii) absent
a business combination, our return of the funds held in the trust account to our public stockholders as part of our redemption of the
public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If
we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional
expenses for which we have not allotted funds and may hinder our ability to consummate our initial business combination. If we are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation
of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than
$10.00 per share on the redemption of their shares.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our
securities are currently listed on Nasdaq. Although after giving effect to our initial public offering we expect to meet, on a pro forma
basis, the minimum initial listing standards set forth in the Nasdaq listing standards, we cannot assure you that our securities will
continue to be listed on Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities
on Nasdaq prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally,
we must maintain a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities
(generally 300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate
compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements,
in order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock price would generally be required to
be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and we would
be required to have a minimum of 300 round lot holders (with at least 50% of such round lot holders holding securities with a market
value of at least $2,500) of our securities. We cannot assure you that we will be able to meet those initial listing requirements at
that time.
If
Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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a
limited availability of market quotations for our securities;
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reduced
liquidity for our securities;
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a
determination that our Class A common stock is a “penny stock” which will require
brokers trading in our Class A common stock to adhere to more stringent rules and possibly
result in a reduced level of trading activity in the secondary trading market for our securities;
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a
limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because our units, our Class A common stock and
warrants are listed on Nasdaq, our units, Class A common stock and warrants are covered securities. Although the states are preempted
from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion
of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a
particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by
blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and
might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further,
if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in each state
in which we offer our securities, including in connection with our initial business combination.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold 15% or more of our Class A common stock, you will lose the ability
to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our 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 an aggregate of
15% or more of the shares sold in our initial public offering, without our prior consent, which we refer to as the “Excess Shares.”
However, our amended and restated certificate of incorporation does not restrict our stockholders’ ability to vote all of their
shares (including Excess Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will reduce
your influence over our ability to complete our initial business combination and you could suffer a material loss on your investment
in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect
to the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold the Excess Shares and,
in order to dispose of such shares, would be required to sell your Excess Shares in open market transactions, potentially at a loss.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor
from being able to exercise its warrants except on a “cashless basis” and potentially causing such warrants to expire worthless.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants, issued in our initial public offering
under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed
that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will
use our reasonable best efforts to file with the SEC, and within 60 business days following our initial business combination to have
declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the
warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed.
We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in
the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference
therein are not current, complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants issued
in our initial public offering are not registered under the Securities Act, we will be required to permit holders to exercise their warrants
on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any
shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of the exercising holder or an exemption from registration or qualification is available. Notwithstanding
the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such
that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option,
require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section
3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement,
but we will use our reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange
for the warrants in the event that we are unable to register or qualify the shares underlying the warrants issued in our initial public
offering under applicable state securities laws and no exemption is available. If the issuance of the shares upon exercise of the warrants
is not so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise
such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a
purchase of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the units. If
and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the
underlying shares of Class A common stock for sale under all applicable state securities laws.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. These provisions include three-year director terms and the ability of the board of directors
to designate the terms of and issue new series of preferred shares, which may make more difficult the removal of management and may discourage
transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Section
203 of the DGCL affects the ability of an “interested stockholder” to engage in certain business combinations, for a period
of three years following the time that the stockholder becomes an “interested stockholder.” We have elected in our amended
and restated certificate of incorporation not to be subject to Section 203 of the DGCL. Nevertheless, our certificate of incorporation
contains provisions that have the same effect as Section 203 of the DGCL, except that it provides that affiliates of our sponsor and
their transferees will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned
by them, and will therefore not be subject to such restrictions. These charter provisions may limit the ability of third parties to acquire
control of our company.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in
our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions
may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the
suit will, subject to certain exceptions, be deemed to have consented to service of process on such stockholder’s counsel, which
may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in
our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions
may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the
suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the
Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court
of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following
such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for
which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring any interest
in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate
of incorporation. This choice of forum provision may limit or make more costly a stockholder’s ability to bring a claim in a judicial
forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage
lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and
restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with
resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our
amended and restated certificate of incorporation provides that the exclusive forum provision is applicable to the fullest extent permitted
by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits
brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive
forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which
the federal courts have exclusive jurisdiction. In addition, our amended and restated certificate of incorporation provides that, unless
we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America shall, to
the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under
the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. We note, however, that there is uncertainty
as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the
rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over
all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of
at least a majority of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the
warrants could be converted into cash or stock (at a ratio different than initially provided), the exercise period could be shortened
and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your
approval.
Our
warrants are issued in registered form under a warrant agreement between American Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure
any ambiguity or correct any defective provision, but requires the approval by the holders of a majority of the then outstanding public
warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend
the terms of the public warrants in a manner adverse to a holder if holders of a majority of the then outstanding public warrants approve
of such amendment. Although our ability to amend the terms of the public warrants with the consent of a majority of the then outstanding
public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of
the warrants, convert the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or
decrease the number of shares of our common stock purchasable upon exercise of a warrant. Our initial stockholders may purchase public
warrants with the intention of reducing the number of public warrants outstanding or to vote such warrants on any matters submitted to
warrant holders for approval, including amending the terms of the public warrants in a manner adverse to the interests of the registered
holders of public warrants. While our initial stockholders have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for such transactions, there is no limit on the number of our public warrants that our
initial stockholders may purchase and it is not currently known how many public warrants, if any, our initial stockholders may hold at
the time of our initial business combination or at any other time during which the terms of the public warrants may be proposed to be
amended.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District
of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our
warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating
in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York
or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such
jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to
such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement does not apply to suits brought to enforce any liability or duty created by
the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and
to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the
forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States
District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants,
such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State
of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”),
and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s
counsel in the foreign action as agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant
agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional
costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial
condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period
ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become
redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
In
addition, we have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their
expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that the
closing price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant as described under the heading “Description of Securities —
Warrants — Public Stockholders’ Warrants — Anti-Dilution Adjustments”) for any 20 trading days
within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that certain
other conditions are met, including that holders will be able to exercise their warrants prior to redemption for a number of shares of
Class A common stock determined based on the redemption date and the fair market value of our Class A common stock. The value
received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised their
warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the value of the
warrants, including because the number of shares of Class A common stock received is capped at 0.361 shares of Class A
common stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
If
the reference value is less than $18.00 per share (as adjusted for share splits, share dividends, rights issuances, subdivisions, reorganizations,
recapitalizations and the like), then the private placement warrants must also concurrently be called for redemption on the same terms
as the outstanding public warrants, as described above.
Our
warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult
to effectuate our initial business combination.
We
issued warrants to purchase 5,500,000 shares of our Class A common stock, at a price of $11.50 per whole share (subject to adjustment
as provided herein), as part of the units offered in our initial public offering. Simultaneously with the closing of our initial public
offering, we issued in the private placement an aggregate of 5,166,667 private placement warrants, each exercisable to purchase one share
of Class A common stock at a price of $11.50 per share, subject to adjustment as provided herein. Our initial stockholders currently
hold 6,875,000 founder. The founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject
to adjustment as set forth herein. In addition, if our sponsor, an affiliate of our sponsor or certain of our officers and directors
make any working capital loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.50 per warrant, at
the option of the lender. Such warrants would be identical to the private placement warrants.
To
the extent we issue shares of Class A common stock to effectuate a business transaction, the potential for the issuance of a substantial
number of additional shares of Class A common stock upon exercise of these warrants or conversion rights could make us a less attractive
acquisition vehicle to a target business. Any such issuance will increase the number of outstanding shares of our Class A common
stock and reduce the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants and
founder shares may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that, so long
as they are held by our sponsor or its permitted transferees: (1) if the reference value is less than $18.00 per share (as adjusted
for share splits, share dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like), then the private
placement warrants must also concurrently be called for redemption on the same terms as the outstanding public warrants, as described
above; (2) they (including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited
exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination;
(3) they may be exercised by the holders on a cashless basis; and (4) the holders thereof (including with respect to the shares
of common stock issuable upon exercise of these warrants) are entitled to registration rights.
A
provision of our warrant agreement may make it more difficult for use to consummate an initial business combination.
If
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we
issue additional shares of Class A common stock or equity-linked securities for
capital raising purposes in connection with the closing of our initial business combination
at a Newly Issued Price of less than $9.20 per share;
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the
aggregate gross proceeds from such issuances represent more than 60% of the total equity
proceeds, and interest thereon, available for the funding of our initial business combination
on the date of the consummation of our initial business combination (net of redemptions);
and
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the
Market Value is below $9.20 per share;
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then
the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price,
and the $18.00 per share redemption trigger prices described below under “Description of Securities — Warrants —
Public Stockholders’ Warrants — Redemption of warrants when the price per share of Class A common stock equals
or exceeds $18.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price, and the $10.00 per share redemption trigger price described below under “Description of Securities — Warrants —
Public Stockholders’ Warrants — Redemption of warrants when the price per share of Class A common stock equals
or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
This may make it more difficult for us to consummate an initial business combination with a target business.
The
requirements of being a public company may strain our resources and divert management’s attention.
As
a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes
Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable
securities rules and regulations. Compliance with these rules and regulations increase our legal and financial compliance costs, make
some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are
no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure
controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure
controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight
may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect
our business and operating results. We may need to hire more employees in the future or engage outside consultants to comply with these
requirements, which will increase our costs and expenses.
A
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions,
including as a result of the COVID-19 outbreak. Furthermore, an active trading market for our securities may never develop or, if
developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
We
may issue additional shares of Class A common stock or preferred stock to complete our initial business combination or under an employee
incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock to redeem the warrants
upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result
of the anti-dilution provisions described herein and we may also issue shares of Class A common stock upon redemption of the warrants
in certain circumstances as described herein. Any such issuances would dilute the interest of our stockholders and likely present other
risks.
Our
amended and restated certificate of incorporation will authorize the issuance of up to 200,000,000 shares of Class A common stock,
par value $0.0001 per share, and 20,000,000 shares of Class B common stock, par value $0.0001 per share and 1,000,000 shares
of undesignated preferred stock, par value $0.0001 per share. There are 165,625,000 and 13,125,000 authorized but unissued shares of
Class A and Class B common stock, respectively, available for issuance, which amount does not take into account shares reserved for issuance
upon exercise of outstanding warrants but not upon the conversion of the Class B common stock. Shares of Class B common stock are automatically
convertible into shares of our Class A common stock at the time of our initial business combination, initially at a one-for-one ratio
but subject to adjustment as set forth herein. There are currently no shares of preferred stock issued and outstanding.
We
may issue a substantial number of additional shares of Class A common stock, and may issue shares of preferred stock, in order to complete
our initial business combination or under an employee incentive plan after completion of our initial business combination (although our
amended and restated certificate of incorporation provides that we may not issue additional securities that can vote on amendments to
our amended and restated certificate of incorporation or on our initial business combination or that would entitle holders thereof to
receive funds from the trust account). We may also issue shares of Class A common stock to redeem the warrants upon conversion of the
Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
described herein, and we may also issue shares of Class A common stock upon redemption of the warrants in certain circumstances as described
herein. However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial business
combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (1) receive funds from the
trust account or (2) vote on any initial business combination. The issuance of additional shares of common or preferred stock:
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may
significantly dilute the equity interest of investors in our initial public offering;
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may
subordinate the rights of holders of common stock if preferred stock is issued with rights
senior to those afforded our common stock;
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could
cause a change in control if a substantial number of shares of common stock are issued, which
may affect, among other things, our ability to use our net operating loss carry forwards,
if any, and could result in the resignation or removal of our present officers and directors;
and
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may
adversely affect prevailing market prices for our units, common stock and/or warrants.
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General
Risk Factors
We
are a recently incorporated early stage company with no operating history and no revenues, and you have no basis on which to evaluate
our ability to achieve our business objective.
We
are a recently incorporated early company with no operating results. Because we lack an operating history, you have no basis upon which
to evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
We may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never
generate any operating revenues.
Past
performance by members of our management team and their affiliates may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with members of our management team and their affiliates is presented for informational
purposes only. Any past experience and performance, of members of our management team and their affiliates is not a guarantee either:
(1) that we will be able to successfully identify a suitable candidate for our initial business combination; or (2) of any results with
respect to any initial business combination we may consummate. You should not rely on the historical record and performance of members
of our management team or their affiliates as indicative of the future performance of an investment in us or the returns we will, or
are likely to, generate going forward.
We
have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely
affect our ability to report our results of operations and financial condition accurately and in a timely manner.
After consultation with
our independent registered public accounting firm following the issuance of the SEC Staff Statement on April 12, 2021, our management
and our audit committee concluded that, in light of the SEC Staff Statement, it was appropriate to restate our previously issued and
audited financial statements as of and for the period ended December 31, 2020.
Our management is responsible
for establishing and maintaining adequate internal controls over financial reporting designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our
management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes
and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described
elsewhere in this Report, we have identified a material weakness in our internal control over financial reporting related to the
accounting for a significant and unusual transaction related to the warrants we issued in connection with our initial public
offering in December 2020. As a result of this material weakness, our management has concluded that our internal control over
financial reporting was not effective as of December 31, 2020. This material weakness resulted in a material misstatement of
our warrant liabilities, change in fair value of warrant liabilities, additional paid-in capital, accumulated deficit and related
financial disclosures as of and for the period ended December 31, 2020. For a discussion of management’s consideration of the
material weakness identified related to our accounting for a significant and unusual transaction related to the warrants we issued
in connection with the December 2020 initial public offering, see “Note 2—Restatement of Previously Issued
Financial Statements” to the accompanying financial statements, as well as Part II, Item 9A: Controls and Procedures
included in this Report.
As
described in Item 9A. “Controls and Procedures,” we have concluded that our internal control over financial reporting was
ineffective as of December 31, 2020 because material weaknesses existed in our internal control over financial reporting. We have taken
a number of measures to remediate the material weaknesses described therein; however, if we are unable to remediate our material weaknesses
in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information in a timely
and reliable manner and we may incorrectly report financial information. Likewise, if our financial statements are not filed on a timely
basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other
regulatory authorities. Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3
or Form S-4, which may impair our ability to obtain capital in a timely fashion to execute our business strategies of issue shares to
effect an acquisition. In either case, there could result a material adverse effect on our business. The existence of material weaknesses
or significant deficiencies in internal control over financial reporting could adversely affect our reputation or investor perceptions
of us, which could have a negative effect on the trading price of our stock. In addition, we will incur additional costs to remediate
material weaknesses in our internal control over financial reporting, as described in Item 9A. “Controls and Procedures”.
We
can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified
or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement
and maintain adequate internal control over financial reporting or circumvention of these controls.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of
third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or
to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of
them, could have adverse consequences on our business and lead to financial loss.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability
to negotiate and complete our initial business combination, and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with
certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time
consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those
changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply
with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more
difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may
deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status
earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of the end of any
second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We
cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors
find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower
than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may
be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accounting standards used.
There
are risks related to the technology and technology-enabled services sectors to which we may be subject.
Business
combinations with companies with operations in the technology and technology-enabled services sectors entail special considerations
and risks. If we are successful in completing a business combination with a target business with operations in such sectors, we will
be subject to, and possibly adversely affected by, the following risks, including but not limited to:
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if
we do not develop successful new products or improve existing ones, our business will suffer;
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we
may invest in new lines of business that could fail to attract or retain users or generate
revenue;
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we
will face significant competition and if we are not able to maintain or improve our market
share, our business could suffer;
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disruption
or failure of our networks, systems, platform or technology that frustrate or thwart our
users’ ability to access our products and services, may cause our users, advertisers,
and partners to cut back on or stop using our products and services altogether, which could
seriously harm our business;
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mobile
malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of
our products could seriously harm our business and reputation;
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if
we are unable to successfully grow our user base and further monetize our products, our business
will suffer;
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if
we are unable to protect our intellectual property, the value of our brand and other intangible
assets may be diminished, and our business may be seriously harmed;
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we
may be subject to regulatory investigations and proceedings in the future, which could cause
us to incur substantial costs or require us to change our business practices in a way that
could seriously harm our business; and
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components
used in our products may fail as a result of a manufacturing, design, or other defect over
which we have no control, and render our devices inoperable.
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Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses are not limited to technology and technology-enabled services sectors. Accordingly, if we acquire
a target business in another sector, these risks will likely not affect us and we will be subject to other risks attendant with the specific
industry in which we operate or target business which we acquire, none of which can be presently ascertained.
Our warrants are accounted for as derivative
liabilities and are recorded at fair value with changes in fair value for each period reported in earnings, which may have an adverse
effect on the market price of our common stock or may make it more difficult for us to consummate an initial business combination.
We issued 5,500,000 public
warrants and, simultaneously with the closing of our initial public offering, we issued in a private placement, 5,166,667 private placement
warrants. We are accounting for both the public warrants and the private placement warrants as a warrant liability. At each reporting
period (1) the accounting treatment of the warrants will be re-evaluated for proper accounting treatment as a liability or equity and
(2) the fair value of the liability of the public and private warrants will be remeasured and the change in the fair value of the liability
will be recorded as other income (expense) in our income statement. Changes in the inputs and assumptions for the valuation model we
use to determine the fair value of such liability may have a material impact on the estimated fair value of the embedded derivative liability.
The share price of our common stock represents the primary underlying variable that impacts the value of the liability related to the
warrants, which are accounted for as derivative instruments. Additional factors that impact the value of the warrants as derivative instruments
include the volatility of our stock price, discount rates and stated interest rates. As a result, our consolidated financial statements
and results of operations will fluctuate quarterly, based on various factors, such as the share price of our common stock, many of which
are outside of our control. In addition, we may change the underlying assumptions used in our valuation model, which could in result
in significant fluctuations in our results of operations. If our stock price is volatile, we expect that we will recognize non-cash gains
or losses on our warrants or any other similar derivative instruments each reporting period and that the amount of such gains or losses
could be material. The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock.
We
may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
Following the issuance
of the SEC Staff Statement, after consultation with our independent registered public accounting firm, our management and our audit committee
concluded that it was appropriate to restate our previously issued audited financial statements as of December 31, 2020 and for the period
from September 18, 2020 (inception) through December 31, 2020. As part of the restatement, we identified a material weakness in our internal
controls over financial reporting.
As
a result of such material weakness, the restatement, the change in accounting for the warrants, and other matters raised or that may
in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking
the federal and state securities laws, contractual claims or other claims arising from the restatement and material weaknesses in our
internal control over financial reporting and the preparation of our financial statements. As of the date of this report, we have no
knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the
future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations
and financial condition or our ability to complete a business combination.