ITEM 1. BUSINESS
Introduction
We are a blank check company incorporated
on March 15, 2016 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more businesses. While we may pursue a business combination
opportunity in any industry or sector, we intend to focus on businesses that operate in the following sectors: (i) consumer packaged
goods (“CPG”) and other consumables, (ii) consumer durables, and (iii) retail and restaurants. We have reviewed, and
will continue to review, a number of opportunities for the purpose of entering into a business combination with an operating business,
but to date we have not entered into any binding agreement for a business combination and we are not able to determine as of the
date of this Form 10-K whether we will complete a business combination with any of such target businesses or with any other target
business. We also have neither engaged in any operations nor generated any revenue to date. Based on our business activities,
the Company is a “shell company” as defined under the Exchange Act of 1934, as amended (the “Exchange Act”),
because we have no operations and nominal assets consisting almost entirely of cash.
We will not generate any operating revenues
until after completion of an initial business combination, at the earliest. We will generate non-operating income in the form
of interest income from the proceeds derived from our initial public offering.
Sponsor and Financing
Our sponsor is Legacy Acquisition Sponsor
I LLC. In October 2016, the sponsor purchased 5,750,000 shares of Class F common stock, or “founder shares”, for $25,000,
or approximately $0.004 per share. The sponsor had agreed to forfeit up to 750,000 founder shares to the extent that the over-allotment
option granted to the underwriters in our initial public offering was not exercised in full by the underwriters, so that our initial
stockholders would own 20% of the Company’s issued and outstanding shares immediately after our initial public offering.
During September 2017, the Company effected
a 1.5 for 1 stock dividend of 2,875,000 founder shares, resulting in our initial stockholders holding an aggregate of 8,625,000
founder shares. The stock dividend also adjusted the founder shares subject to forfeiture from 750,000 to 1,125,000, to the extent
that the over-allotment option was not exercised in full by the underwriters, so that the founder shares would represent 20.0%
of the Company’s issued and outstanding shares immediately after our initial public offering.
On November 16, 2017, our registration statement
(File No. 333-221116) for our initial public offering was declared effective by the SEC pursuant to which we sold an aggregate
of 30,000,000 Units at price to the public of $10.00 per Unit, generating gross proceeds of $300,000,000. Each Unit consisted
of one share of Class A common stock and one public warrant to purchase one-half of one share of Class A common stock. Each public
warrant entitles the holder to purchase one-half of one share of Class A common stock at an exercise price of $5.75 per half share
($11.50 per whole share). Warrants may be exercised only for a whole number of shares of Class A common stock. No fractional shares
will be issued upon exercise of the public warrants. If, upon exercise of the public warrants, a holder would be entitled to receive
a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class
A common stock to be issued to the warrant holder. Each public warrant will become exercisable on the later of 30 days after the
completion of the Company’s initial Business Combination or 12 months from the closing of our initial public offering and
will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation. However,
if we do not complete our initial business combination on or prior to the 24-month period allotted to complete the initial business
combination, the public warrants will expire at the end of such period. If we are unable to deliver registered shares of Class
A common stock to the holder upon exercise of the public warrants issued in connection with the 30,000,000 Units during the exercise
period, there will be no net cash settlement of these public warrants and the public warrants will expire worthless, unless they
may be exercised on a cashless basis in the circumstances described in the warrant agreement. Once the warrants become exercisable,
we may redeem the outstanding warrants in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days’
prior written notice of redemption, only in the event that the last sale price of the Company’s shares of common stock equals
or exceeds $18.00 per share for any 20 trading days within the 30-trading day period ending on the third trading day before the
Company sends the notice of redemption to the warrant holders. Our Units began trading on the NYSE under the symbol “LGC.U”
on November 16, 2017. Our initial public offering was consummated on November 21, 2017.
Net proceeds of $300,000,000
from our initial public offering and the sale of the private placement warrants are held in a trust account established for the
benefit of the Company’s public stockholders with Continental Stock Transfer & Trust Company acting as trustee. Except
for the withdrawal of interest to pay taxes and up to $750,000 annually for working capital purposes, none of the funds held in
the trust account will be released until the earlier of the completion of our initial business combination or the redemption of
100% of the Class A common stock that we issued in our initial public offer if we are unable to consummate an initial business
combination within 24 months from the closing of our initial public offering.
On November 27, 2017, the Company was advised
by the underwriters’ that the overallotment option would not be exercised. As such, the 1,125,000 shares subject to forfeiture
were forfeited as of November 27, 2017. At December 31, 2017 and December 31, 2018, there were 7,500,000 shares of Class F common
stock issued and outstanding and 30,000,000 shares of Class A common stock outstanding (28,635,526 of which were classified outside
of equity as redeemable common stock at December 31, 2017 and 28,916,141 of which were classified outside of equity as redeemable
common stock at December 31, 2018).
On November 27, 2017, we announced that
holders of our Units could elect to separately trade the Class A common stock and Warrants included in the Units. On November
30, 2017, our Class A common stock and Warrants began trading on the NYSE under the symbols “LGC” and “LGC WS,”
respectively.
Our Legacy Team is comprised of more than
20 senior business professionals, including the members of our management team and the members of our Advisory Council, that have
a broad range of experience in executive leadership, private equity, investment banking, strategy development and implementation,
operations management, financial policy, and corporate transactions such as acquisitions and divestitures. Each member of the
Legacy Team is a member of our sponsor and has a strong interest in our successful completion of an initial business combination.
Many of the Legacy Team members have worked together in the past as executive leaders and senior managers while generating significant
shareholder value for Procter & Gamble. Other Legacy Team members have worked in leading consumer-oriented companies, including
Pepsi, Maytag, and Coty.
We believe the industry expertise, principal
investing, transactions experience and business acumen of our Legacy Team will make us an attractive partner for potential business
combination targets and enhance our ability to complete a successful business combination. We also believe that the collective
capabilities of our Legacy Team will enable us to enhance the value of an acquired business via identification and execution of
strategic and operational initiatives following a business combination. Members of our management team and the Legacy Team have
been, and are, communicating with their network of relationships to articulate our acquisition themes, including the parameters
of our desired target company, and have been pursuing and reviewing promising leads through a disciplined process.
Business Strategy
Our acquisition and value creation strategy
is to (i) assess a broad range of potential business combination targets, (ii) complete our initial business combination, and
(iii) drive increased shareholder value through the collective capabilities of our management team, the Advisory Council and the
Legacy Team following our initial business combination. Our acquisition selection process leverages the broad network of relationships
of our management team, the Advisory Council and the Legacy Team with executive leaders, board members, shareholders and entrepreneurs
that are affiliated with public and private companies within the consumer and retail industry. One large source of industry relationships
is the P&G Alumni Network. The organization consists of more than 37,000 former employees of Procter & Gamble and includes
approximately 150 current and former chief executive officers of Fortune 1000 companies. Mr. Rigaud, our Chief Executive Officer
and Chairman, is an inaugural Advisory Board Member of the P&G Alumni Network and was recognized by the organization for a
lifetime of community service in 2017. In addition to relationships with industry participants, we intend to leverage the relationships
of our management team, the Advisory Council and the Legacy Team with private equity investors, investment bankers and other third
party professionals.
We believe that the consumer and retail
industry presents a dynamic environment with many potential business combination targets that have attractive operating and financial
characteristics such as strong revenue growth, profit margins and market share. One notable industry trend involves large multi-national
industry participants that are divesting attractive brands as they focus on a core group of their largest brands that are positioned
for global distribution. In recent years, companies such as Newell Brands, Procter & Gamble and Unilever have divested selected
brands as part of their portfolio optimization strategy. In addition, we believe that emerging trends related to demographics,
consumer lifestyles, globalization and shopping preferences present opportunities for an experienced operating team to identify
suitable potential business combination targets and drive incremental enhancements to shareholder value following our initial
business combination. Our management team, the Advisory Council and the Legacy Team have significant experience both with managing
established businesses through periods of transition and managing emerging businesses that are experiencing rapid growth. We believe
that our ability to identify and implement operational value creation initiatives remain central to our differentiated strategy
for overall value creation.
We are focusing on those sectors that are
comprised of businesses that produce CPG and other consumables, produce consumer durables or manage retail and/or restaurant chains.
We believe that our investment experience and operating expertise across multiple consumer categories provide a sizable addressable
universe of potential business combination targets and will facilitate our ability to complete a business combination in a timely
manner.
Our management team, the Advisory Council
and the Legacy Team have focused, and intend to continue to focus, on the following industry sectors:
|
●
|
CPG and other Consumables, including:
|
|
o
|
Beauty
and Personal Care;
|
|
o
|
Household
Cleaning Products;
|
|
●
|
Consumer Durables, including:
|
|
o
|
Household
Goods, such as Housewares and Small Appliances;
|
|
●
|
Retail and Restaurants, including:
|
|
o
|
Casual
Dining Operations or Franchise;
|
|
o
|
Quick
Serve Restaurants; and
|
|
o
|
Selected
Specialty Retail, such as vertically integrated brands.
|
We believe the owners of businesses, including
private equity firms, corporations, family businesses and entrepreneurs view the combined expertise, diversity of backgrounds
and collective track record of our management team, as well as that of the members of our Advisory Council and the other members
of the Legacy Team, as positive attributes when considering liquidity events and/or capital sources.
Acquisition Criteria
Consistent with our strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will
use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business
combination with a target business that does not meet these criteria and guidelines. We are seeking to acquire one or more companies
that we believe:
|
●
|
have potential
for significant growth following our initial business combination;
|
|
●
|
have
developed leading positions within their industries, based on our evaluation of several
factors, including growth profile, competitive environment, profitability profile and
sustainability of business plan;
|
|
●
|
have
market and/or cost leadership positions in their respective consumer niches and would
benefit from our extensive networks and insights within the consumer sector;
|
|
●
|
provide
enduring products or services, with the potential for revenue, market share and/or distribution
improvements;
|
|
●
|
are
fundamentally sound companies that are not operating at their full potential but offer
compelling value;
|
|
●
|
have
untapped intrinsic value that has not been recognized by the marketplace; and
|
|
●
|
can
offer attractive risk-adjusted return on investments for our stockholders.
|
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 other considerations, factors and criteria that our management may deem relevant.
Our Acquisition Process
In evaluating a prospective target business,
we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management
and employees, document reviews, inspection of facilities, as well as a review of financial and other information that will be
made available to us. In conducting our due diligence review, we intend to leverage the experience of members of our Advisory
Council and other members of the Legacy Team on an efficient and cost effective basis as we deploy them to review matters related
to their specific areas of functional expertise.
We are not prohibited from pursuing an
initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to
complete our initial business combination with a company that is affiliated with 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 our company from a financial point of view.
Members of our management team, members
of our Advisory Council and other members of the Legacy Team directly or indirectly own founder shares and/or private placement
warrants following our initial public offering and, accordingly, may have a conflict of interest in determining whether a particular
target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers
and directors may have a conflict of interest with respect to evaluating a particular business combination target 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.
We have reviewed, and will continue to
review, a number of opportunities for the purpose of entering into a business combination with an operating business, but to date
we have not entered into any binding agreement for a business combination and we are not able to determine as of the date of this
Form 10-K whether we will complete a business combination with any of such target businesses or with any other target business.
Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual
obligations to other entities pursuant to which such officer or director is or will be required to present a business combination
opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable
for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary
or contractual obligations to present such opportunity to such entity. For more information on the entities to which our officers
and directors currently have fiduciary or contractual obligations, please refer to “Item 10. Directors, Executive Officers
and Corporate Governance—Conflicts of Interest.” We do not believe, however, that the fiduciary duties or contractual
obligations of our officers or directors will materially affect our ability to complete our initial business combination. Our
amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered
to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director
or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue.
Our executive officers are not required
to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management
time among various business activities, including identifying potential business combination targets and monitoring the related
due diligence.
Our executive officers have agreed not
to participate in the formation of, or become an officer or director of, any other special purpose acquisition company with a
class of securities registered under the Exchange Act until we have entered into a definitive agreement regarding our initial
business combination or we have failed to complete our initial business combination within 24 months after the closing of our
initial public offering.
Initial Business Combination
So long as we maintain a listing for our
securities on the NYSE, our initial business combination must occur with one or more target businesses that together have an aggregate
fair market value of at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and
taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination.
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 the Financial Industry Regulatory Authority, or FINRA,
or an independent accounting firm with respect to the satisfaction of such criteria.
We anticipate structuring our initial business
combination so that the post-transaction company in which our public stockholders own shares will own or acquire 100% of the equity
interests or assets of the target business or businesses. We may, however, structure our initial business combination such that
the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to meet
certain objectives of the target management team or stockholders or for other reasons. However, we will only complete such business
combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or
otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns
or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target.
However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial
business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of
net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based
on the aggregate value of all of the target businesses 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.
Sourcing of Potential Business Combination
Targets
We believe our management team’s,
our Advisory Council’s, and the Legacy’s team significant operating and transaction experience and relationships with
companies provides us with a substantial number of potential business combination targets. Over the course of their careers, such
individuals have developed a broad network of contacts and corporate relationships around the world. This network has grown through
the activities of our management team, Advisory Council and Legacy Team sourcing, acquiring, financing and selling businesses,
our management team’s relationships with sellers, financing sources and target management teams and the experience of such
individuals in executing transactions under varying economic and financial market conditions.
In addition, members of our management
team, our Advisory Council and the Legacy team have developed contacts from serving on the boards of directors of several companies
in diverse sectors.
This network is expected to provide us
with a robust and consistent flow of acquisition opportunities which we expect to be proprietary or where a limited group of investors
will be invited to participate in the sale process. In addition, we anticipate that target business candidates will be brought
to our attention from various unaffiliated sources, including investment market participants, private equity funds and large business
enterprises seeking to divest non-core assets or divisions.
We are not prohibited from pursuing an
initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to
complete our initial business combination with a company that is affiliated with 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 our company from a financial point of view.
As more fully discussed in “Item
10. Directors, Executive Officers and Corporate Governance—Conflicts of Interest,” if any of our executive officers
or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which
he has pre-existing fiduciary or contractual obligations, he may be required to present such business combination opportunity
to such entity prior to presenting such business combination opportunity to us. Our executive officers and directors currently
have fiduciary duties or contractual obligations to several entities that may present a conflict of interest. As a result of these
duties and obligations, situations may arise in which business opportunities may be given to one or more of these other entities
prior to being presented to us.
Status as a Public Company
We believe our structure will make us an
attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative
to the traditional initial public offering through a merger or other 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 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.
While we believe that our structure and
our management team’s backgrounds will make us an attractive business partner, some potential target businesses may view
our status as a blank check company, without an operating history, and the uncertainty relating to our ability to obtain stockholder
approval of our proposed initial business combination and retain sufficient funds in our trust account in connection therewith,
negatively.
We are an “emerging growth company,”
as defined in the JOBS Act. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year
(a) following the fifth anniversary of the completion of our initial public offering, (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 Class A common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on
which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Additionally, we are also a “smaller
reporting company” under the SEC’s amended definition of a “smaller reporting company.” Similar to emerging
growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings,
are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting
firms provide an attestation report on the effectiveness of internal control over financial reporting, and have certain other
decreased disclosure obligations in their SEC filings, including, among other things, not being required to present selected financial
data and only being required to provide two years of audited financial statements in annual reports.
Financial Position
We believe we offer a target business a
variety of options such as creating a liquidity event for its owners, or providing capital for the potential growth and expansion
of its operations. Because we are able to complete our 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.
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 following the completion of our initial public offering. We
intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private
placement of the private placement warrants, 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 business combination or used for redemptions of purchases of our Class A common stock, we
may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance
or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred
in completing our initial business combination, to fund the purchase of other companies or for working capital.
We have reviewed, and will continue to
review, a number of opportunities for the purpose of entering into a business combination with an operating business, but to date
we have not entered into any binding agreement for a business combination and we are not able to determine as of the date of this
Form 10-K whether we will complete a business combination with any of such target businesses or with any other target business.
Members of our management team and the Legacy Team are communicating with their network of relationships to articulate our acquisition
themes, including the parameters of our search for a target company, and have begun the disciplined process of pursuing and reviewing
promising leads.
We may seek to raise additional funds through
a private offering of debt or equity securities in connection with the completion of our initial business combination, and we
may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the
trust account.
In 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 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. As of December 31, 2017 and December 31, 2018, we were not a party to any arrangement or understanding with any third
party with respect to raising any additional funds through the sale of securities or otherwise.
Selection of a target business and structuring
of our initial business combination
The NYSE rules require that our initial
business combination must be with one or more target businesses that together have a fair market value equal to at least 80% of
the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the time
of our signing a definitive agreement in connection with our initial business combination. So long as we obtain and maintain a
listing for our securities on the NYSE, we will be required to comply with such rule. The fair market value of the target or targets
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 or value 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 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 intend
to purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this
requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective
target businesses, although we will not be permitted to effectuate our initial business combination with another blank check company
or a similar company with nominal operations.
In any case, we will only complete an initial
business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion
of such business or businesses that are owned or acquired by the post-transaction company is what will be valued for purposes
of the 80% of net assets test. There is no basis for investors in our initial public offering to evaluate the possible merits
or risks of any target business with which we may ultimately complete our business combination.
To the extent we effect our 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 expect to conduct a thorough due diligence review which will encompass, 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 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 business
combination with only a single entity, our lack of diversification may:
|
●
|
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
|
|
●
|
cause us to depend on the marketing and sale of a single
product or limited number of products or services.
|
Limited ability to evaluate the target’s
management team
Although we intend to closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our 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 business combination, it is unlikely
that any of them will devote their full efforts to our affairs subsequent to our 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. Please
refer below to “—Employees” for additional information.
Following a business combination, we may
seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we
will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or
experience necessary to enhance the incumbent management.
Stockholders may not have the ability
to approve our initial business combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable
stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons.
Under the NYSE’s listing rules, stockholder
approval would be required for our initial business combination if, for example:
|
●
|
we issue common
stock that will be equal to or in excess of 20% of the number of shares of our Class
A common stock then outstanding (other than in a public offering);
|
|
●
|
any
of our directors, officers or substantial security holders (as defined by NYSE rules)
has a 5% or greater interest, directly or indirectly, in the target business or assets
to be acquired and the number of shares or common stock to be issued, or if the number
of shares into which the securities may be convertible or exercisable, exceeds either
(a) 1% of the number of shares of common stock or 1% of the voting power outstanding
before the issuance in the case of any of our directors and officers or (b) 5% of the
number of shares of common stock or 5% of the voting power outstanding before the issuance
in the case of any substantial security holders; or
|
|
●
|
the
issuance or potential issuance of common stock will result in our undergoing a change
of control.
|
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
or applicable stock exchange rule 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:
|
●
|
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;
|
|
●
|
the
expected cost of holding a stockholder vote;
|
|
●
|
the
risk that the stockholders would fail to approve the proposed business combination;
|
|
●
|
other
time and budget constraints of the company; and
|
|
●
|
additional
legal complexities of a proposed business combination that would be time-consuming and
burdensome to present to stockholders.
|
Permitted purchases of our securities
In the event we seek stockholder approval
of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender
offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions
or in the open market, pursuant to Rule 10b5-1 plans or otherwise, either prior to or following the completion of our initial
business combination. 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. None of the funds in the trust account will be used to purchase
shares in such transactions. They will not make 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
our insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material
non-public information and (ii) to clear all trades with our legal counsel prior to execution.
In the event that our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have
already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections
to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to
the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange
Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the
purchasers will comply with such rules.
The purpose of any such purchases would
be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval
of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement would
otherwise not be met. This may result in the completion of our 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 and/or
their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify
and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share
of the trust account or vote against the business combination. Our sponsor, officers, directors, advisors or their affiliates
will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers,
directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to
the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation
under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied
with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates will
not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption rights for public stockholders
upon completion of our initial business combination
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of common stock upon the completion of our initial business combination
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days
prior to the consummation of the initial business combination, including interest (which interest shall be net of taxes payable
and up to $750,000 released to us annually to fund working capital requirements) divided by the number of then outstanding public
shares, subject to the limitations described herein. The amount deposited in the trust account is initially $300,000,000 (or 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. Our initial stockholders have entered into a letter
agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and
any public shares they may hold in connection with the completion of our 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 (i) in connection with a stockholder meeting called to approve the business combination or (ii) 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 the law or stock exchange listing
requirement. Under NYSE 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. We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock
exchange listing requirement or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain
and maintain a listing for our securities on the NYSE, we would be 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 legal reasons, we will, pursuant to our amended and restated
certificate of incorporation:
|
●
|
conduct the
redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate
issuer tender offers, and
|
|
●
|
file
tender offer documents with the SEC prior to completing our initial business combination
which contain substantially the same financial and other information about the initial
business combination and the redemption rights as is required under Regulation 14A of
the Exchange Act, which regulates the solicitation of proxies.
|
Upon the public announcement of our business
combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class
A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under
the Exchange Act.
In the event we conduct redemptions pursuant
to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the
tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified
number of public shares which are not purchased by our sponsor, which number will be based on the requirement that we may not
redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon the consummation of
our initial business combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater
net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If
public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the
initial business combination.
If, however, stockholder approval of the
transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business
or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
|
●
|
conduct the
redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the
Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender
offer rules, and
|
|
●
|
file
proxy materials with the SEC.
|
In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, we will
complete our initial business combination only if a majority of the outstanding shares of common stock 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 will count toward this quorum and have agreed to vote
their founder shares and any public shares purchased during or after our initial public offering in favor of our initial business
combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely
that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective
of whether they vote for or against the proposed transaction. In addition, our initial stockholders have entered into a letter
agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and
public shares 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
to be less than $5,000,001 upon the consummation of our initial business combination (so that we do not 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: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target
for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance
with the terms of the proposed 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 business combination
pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess Shares.
We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by
such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force
us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable
terms. Absent this provision, a public stockholder holding an aggregate of 15% or more 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 management
at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem
to less 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 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 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 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 Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) System, 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. 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 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. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery
of their public shares.
There is a nominal cost associated with
the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker $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 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 24 months from the closing
of our initial public offering.
Redemption of public shares and liquidation
if no initial business combination
We have only 24 months from the closing
of our initial public offering on November 21, 2017 to complete our initial business combination. If we are unable to complete
our business combination within such 24-month period, we will: (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $50,000
of interest to pay dissolution expenses (which interest shall be net of taxes payable and up to $750,000 released to us annually
to fund working capital requirements) divided by the number of then outstanding public shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption
rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business
combination within the 24-month time period.
Our initial stockholders 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 their founder shares if we fail to complete our initial business combination within 24 months from the closing
of our initial public offering. However, if our initial stockholders acquire public shares after our initial public offering,
they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete
our initial business combination within the allotted 24-month time period.
Our sponsor, executive officers and directors
have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment to our amended and restated
certificate of incorporation (i) that would modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within 24 months from the closing of our initial public offering or (ii)
with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless we provide
our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest
(which interest shall be net of taxes payable and up to $750,000 released to us annually to fund working capital requirements)
divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 upon the consummation of our initial business combination (so that we
are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect
to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would
not proceed with the amendment or the related redemption of our public shares at such time.
We expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of
the $1,750,000 of proceeds initially 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 and up
to $750,000 to fund working capital requirements annually, we may request the trustee to release to us an additional amount of
up to $50,000 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, other than the proceeds deposited in the trust account, and without taking into account interest,
if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would be approximately
$10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would
have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount
received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution
must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if
there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets
to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay
or provide for all creditors’ claims.
Although we will seek to have all vendors,
service providers (except for 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
management is 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 vendor 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 (i) $10.00 per public share or (ii) such lesser amount per public share held
in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in
each case net of the amount of interest which may be withdrawn to pay taxes and up to $750,000 to fund working capital requirements
annually, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account
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. In the event that an executed waiver is deemed to be unenforceable against a third
party, then our sponsor will not be responsible to the extent of any liability for such third-party claims. We cannot assure you,
however, that our sponsor would be able to satisfy those obligations. We believe that our sponsor’s only assets are securities
of our company. 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 (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as
of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount
of interest which may be withdrawn to pay taxes and up to $750,000 to fund working capital requirements annually, and our sponsor
asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to
a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its
indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against
our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their
business judgment may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of
creditors the actual value of the per-share redemption price will not be substantially less than $10.00 per share.
We will seek to reduce the possibility
that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service
providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right,
title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any
claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. We will have access to up to $1,750,000 from the proceeds of our initial public offering with which
to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated
to be no more than approximately $50,000). In the event that we liquidate and it is subsequently determined that the reserve for
claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made
by creditors. In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds from
the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account
would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000,
the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
Under the DGCL, stockholders may be held
liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our business combination within 24 months from the closing of our initial public offering may be considered
a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of
the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during
which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any
claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability
of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share
of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third
anniversary of the dissolution.
Furthermore, if the pro rata portion of our
trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our business combination within 24 months from the closing of our initial public offering is not considered a liquidation distribution
under Delaware law, and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings
that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the
statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of
three years, as in the case of a liquidation distribution. If we are unable to complete our business combination within 24 months
from the closing of our initial public offering, we will: (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of the amount of
interest which may be withdrawn to pay taxes and up to $750,000 to fund our working capital requirements annually, and less up
to $50,000 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 liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in 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 24
th
month and, therefore,
we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the
extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third
anniversary of such date.
Because we will not be complying with Section
280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years.
However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting
agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which we
do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the
trust account.
As a result of this obligation, the claims
that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending
to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in
the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net
of the amount of interest withdrawn to pay taxes and up to $750,000 to fund our working capital requirements annually, and will
not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third
party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority
over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will
be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover 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.
Our public stockholders are entitled to receive
funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the
redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination within 24 months from the closing of our initial public offering or (B) with respect to any other
provision relating to stockholders’ rights or pre-business combination activity, and (iii) the redemption of all of our
public shares if we are unable to complete our business combination within 24 months from the closing of our initial public offering,
subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust
account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the 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 apply 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 relating to stockholders’ rights or pre-business combination activity, we will provide dissenting public stockholders
with the opportunity to redeem their public shares in connection with any such vote. Our initial stockholders have agreed to waive
any redemption rights with respect to their founder shares and public shares in connection with the completion of our initial
business combination. Specifically, our amended and restated certificate of incorporation provides, among other things, that:
|
●
|
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 the proposed business combination, into their pro rata share of the aggregate
amount then on deposit in the trust account, including interest (which interest shall
be net of taxes payable and up to $750,000 released to us annually to fund working capital
requirements) 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 then on deposit
in the trust account, including interest (which interest shall be net of taxes payable
and up to $750,000 released to us annually to fund working capital requirements) in each
case subject to the limitations described herein;
|
|
●
|
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;
|
|
●
|
if
our initial business combination is not consummated within 24 months from the closing
of our initial public offering , then our existence will terminate and we will distribute
all amounts in the trust account; and
|
|
●
|
prior
to our initial business combination, we may not issue additional shares of capital stock
that would entitle the holders thereof to (i) receive funds from the trust account or
(ii) vote on any initial business combination.
|
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 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 business combination, we may encounter intense competition from other entities having a business objective
similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses
seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial
resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our
obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources
available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent,
may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in
successfully negotiating an initial business combination.
Employees
We currently have three executive officers.
Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote
as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount
of time that Mr. Rigaud, Mr. McCall, Mr. Finn or any other members of our management team will devote in any time period will
vary based on whether a target business has been selected for our initial business combination and the current stage of the business
combination process.
Periodic Reporting and Financial Information
Our Units, Class A common stock and warrants
are registered under the Exchange Act and as a result we have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. The public may read and copy any material we file with the SEC at the SEC’s
Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC at: http://www.sec.gov. The contents of these websites
are not incorporated into this filing. Further, the Company’s references to the uniform resource locators (“URLs”)
for these websites are intended to be inactive textual references only.
We will provide stockholders with audited
financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials
sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need
to be prepared in accordance with GAAP. We cannot assure you that any particular target business identified by us as a potential
acquisition 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 GAAP. To the extent that this requirement cannot be met, we may
not be able to acquire the proposed target business. While this may limit the pool of potential acquisition 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, 2018 as required by the Sarbanes-Oxley Act. For as long as we remain an emerging
growth company, however, we will not be required to comply with the auditor attestation requirement on our internal control over
financial reporting. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such acquisition.
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 the fifth anniversary of the Close Date, (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 prior June 30th, and
(2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
ITEM 1A. RISK FACTORS
You should consider carefully all of
the risks described below, together with the other information contained in this Form 10-K, before making a decision to invest
in our securities. This Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the
risks described below.
We are a blank check company with
no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a
blank
check
company with no operating results to date. 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 have no plans, arrangements or understandings with any prospective target business concerning a business combination
and may be unable to complete our business combination. If we fail to complete our business combination, we will never generate
any operating revenues.
The report of our independent registered
public accounting firm expresses substantial doubt about our ability to continue as a going concern.
We have only 24 months from the closing of
our initial public offering on November 21, 2017 to complete our initial business combination. If we are unable to complete our
business combination within such 24-month period, we will: (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $50,000 of
interest to pay dissolution expenses (which interest shall be net of taxes payable and up to $750,000 released to us annually
to fund working capital requirements) divided by the number of then outstanding public shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. We have determined that such
mandatory liquidation and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going
concern. No adjustments to our financial statements contained in this Form 10-K have been made to the carrying amounts of assets
or liabilities should the Company be required to liquidate after November 21, 2019.
Our public stockholders may not be
afforded an opportunity to vote on our proposed business combination, which means we may complete our initial business combination
even though a majority of our public stockholders do not support such a combination.
We may not hold a stockholder vote to approve
our initial business combination unless the business combination would require stockholder approval under applicable state law
or the rules of NYSE or if we decide to hold a stockholder vote for business or other reasons. For instance, the NYSE rules currently
allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval
if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination.
Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we
would seek stockholder approval of such business combination. However, except for as required by law, 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. Accordingly,
we may consummate our initial business combination even if holders of a majority of the outstanding shares of our common stock
do not approve of the business combination we consummate. Please see “Item 1. Business — Stockholders may not have
the ability to approve our initial business combination” for additional information.
If we seek stockholder approval of
our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote. Further, certain institutional investors may have different interests than other
public stockholders.
Unlike many other blank check companies
in which the initial stockholders agree to vote their founder shares in accordance with the majority of the votes cast by the
public stockholders in connection with an initial business combination, our initial stockholders have agreed to vote their founder
shares, as well as any public shares purchased during or after our initial public offering , in favor of our initial business
combination. Our initial stockholders own 20% of our outstanding shares of common stock immediately following the completion of
our initial public offering. As a result, in addition to the founder shares, we would need 11,250,001, or 37.5%, of the 30,000,000
public shares sold in our initial public offering to be voted in favor of a transaction (assuming all outstanding shares are voted)
in order to have our initial business combination approved (assuming the over-allotment option is not exercised). Furthermore,
assuming only the minimum number of stockholders required to be present at the stockholders’ meeting held to approve our
initial business combination are present at such meeting, we would need only 1,875,001 of the 30,000,000 public shares, or approximately
6.3% of the shares sold as part of the units in our initial public offering , to be voted in favor of our initial business combination
in order to have such transaction approved (assuming the over-allotment option is not exercised). In addition, in the event that
our board of directors amends our bylaws to reduce the number of shares required to be present at a meeting of our stockholders,
we would need even fewer public shares to be voted in favor of our initial business combination to have such transaction approved.
Furthermore, in the event that the institutions that purchased units in our initial public offering purchase vote them in favor
of our initial business combination, it is possible that no votes from other public shareholders would be required to approve
our initial business combination, depending on the number of shares that are present at the meeting to approve such transaction.
As a result of the founder shares and private placement warrants that these institutions may own directly, or indirectly, they
may have different interests with respect to a vote on an initial business combination than other public shareholders.
Accordingly, if we seek stockholder approval
of our initial business combination, it is more likely that the necessary stockholder approval will be received than would be
the case if our initial stockholders 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 may be limited to the exercise of your right to redeem your shares
from us for cash, unless we seek stockholder approval of the business combination.
You may not be provided with an opportunity
to evaluate the specific merits or risks of one or more target businesses. Since our board of directors may complete a business
combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the business
combination, unless we seek such stockholder vote. Accordingly, 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. Furthermore, in no event will we redeem our public
shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon the consummation of our initial business
combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset
or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon the consummation
of our initial business combination 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.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business
combination or optimize our capital structure.
At the time we enter into an agreement
for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore
will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption.
If our 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 are 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
provisions of the Class F common stock result in the issuance of Class A shares on a greater than one-to-one basis upon conversion
of the Class F common stock at the time of our 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, or may incentivize us to structure
a transaction whereby we issue shares to new investors and not to sellers of target businesses, such that our sponsor will receive
additional shares. 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. The per-share amount we will distribute to stockholders who
properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions,
the 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 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 business combination agreement requires
us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business
combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account.
If you are in need of immediate liquidity, you could attempt to sell your 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 prescribed time frame may give potential target businesses leverage over us in negotiating
a business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach
our dissolution deadline, which could undermine our ability to complete our business combination on terms that would produce value
for our stockholders.
Any potential target business with which
we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination
within 24 months from the closing of our initial public offering. Consequently, such target business may obtain leverage over
us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular
target business, we may be unable to complete our initial business combination with any target business. This risk will increase
as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter
into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to complete our
initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose
of winding up and we would redeem our public shares and liquidate.
We must complete our initial business combination
within 24 months from the closing of our initial public offering. We may not be able to find a suitable target business and complete
our initial business combination within such time period. If we have not completed our initial business combination within such
time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but
not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable and up to $750,000
released to us annually to fund working capital requirements, and less up to $50,000 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 liquidation distributions, if any), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law.
If we seek stockholder approval of
our initial business combination, our sponsor, directors, executive officers, advisors and their affiliates may elect to purchase
shares from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float”
of our common stock.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender
offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated
transactions or in the open market either prior to or following the completion of our initial business combination, although they
are under no obligation to do so. 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. In the event that our sponsor, directors, executive officers, advisors or their affiliates purchase shares in privately
negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders
would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such
shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business
combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a
certain amount of cash at the closing of our business combination, where it appears that such requirement would otherwise not
be met. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases are made,
the public “float” of our common stock and the number of beneficial holders of our securities may be reduced, possibly
making it difficult to maintain or obtain 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 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 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. In the event that a stockholder fails
to comply with these procedures, its shares may not be redeemed. See “Proposed Business — Business Strategy —
Tendering stock certificates in connection with a tender offer or redemption rights.”
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 are entitled to
receive funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business combination,
(ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated
certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we
do not complete our initial business combination within 24 months from the closing of our initial public offering or (B) with
respect to any other provision relating to stockholders’ rights or pre-business combination activity and (iii) the redemption
of all of our public shares if we are unable to complete our business combination within 24 months from the closing of our initial
public offering , subject to applicable law and as further described herein. In no other circumstances will a public stockholder
have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell
your public shares or warrants, potentially at a loss.
The NYSE 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 units are listed on the NYSE and began
trading on November 16, 2017. On November 27, 2017, we announced that holders of our Units could elect to separately trade the
Class A common stock and Warrants included in the Units. On November 30, 2017, our Class A common stock and Warrants began trading
on the NYSE under the symbols “LGC” and “LGC WS,” respectively. 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 NYSE listing standards,
we cannot assure you that our securities will be, or will continue to be, listed on the NYSE in the future or prior to our initial
business combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must
maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum number of holders of our
securities (300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate
compliance with the NYSE’s initial listing requirements, which are more rigorous than the NYSE’s continued listing
requirements, in order to continue to maintain the listing of our securities on the NYSE. For instance, our stock price would
generally be required to be at least $4 per share. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If the NYSE 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:
|
●
|
a limited availability
of market quotations for our securities;
|
|
●
|
reduced
liquidity for our securities;
|
|
●
|
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;
|
|
●
|
a
limited amount of news and analyst coverage; and
|
|
●
|
a
decreased ability to issue additional securities or obtain additional financing in the
future.
|
The National Securities Markets Improvement
Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as “covered securities.” Because we expect that our units and eventually our Class A common stock
and warrants will be listed on the NYSE, our units, Class A common stock and warrants will be covered securities. Although the
states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies
if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale
of covered securities in a particular case. 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 the NYSE, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds of our initial public
offering and the sale of the private placement 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 United States
securities laws. However, because we have net tangible assets in excess of $5,000,000 following the completion of our initial
public offering and the sale of the private placement warrants, we are exempt from rules promulgated by the SEC to protect investors
in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules.
Among other things, this means our units will be immediately tradable and we will have a longer period of time to complete our
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 an initial business combination.
If we seek stockholder approval of
our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of stockholders are deemed to hold 15% or more of our Class A common stock, you will lose the ability to redeem all such shares
equal to or 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 , which we refer to as the “Excess Shares.” However,
we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against
our business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our
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 business combination.
And as a result, you will continue to hold that number of shares equal to or exceeding 15% and, in order to dispose of such shares,
would be required to sell your stock in open market transactions, potentially at a loss.
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, on our redemption, and our warrants will expire worthless.
We expect 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. 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 will be relatively limited when contrasted with those of many of these competitors. While we believe there
are numerous target businesses we could potentially acquire with the net proceeds of our initial public offering and the sale
of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are
sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in
pursuing the acquisition of certain target businesses. Furthermore, if we are obligated to pay cash for the shares of Class A
common stock redeemed and, in the event we seek stockholder approval of our business combination, we make purchases of our Class
A common stock, potentially reducing the resources available to us for our initial business combination. Any of these obligations
may place us at a competitive disadvantage in successfully negotiating a business combination. If we 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.
If the net proceeds of our initial
public offering and the sale of the private placement warrants not being held in the trust account and the interest that may be
released to us from the trust account to fund our working capital requirements are insufficient to allow us to operate for at
least 24 months following the closing of our initial public offering , we may be unable to complete our initial business combination.
The funds available to us outside of the
trust account and the $750,000 of interest that may be released to us annually from the trust account to fund our working capital
requirements may not be sufficient to allow us to operate for at least 24 months following the closing of our initial public offering,
assuming that our initial business combination is not completed during that time. We believe that, upon the closing of our initial
public offering , the funds available to us outside of the trust account and up to $750,000 of interest that may be released to
us annually from the trust account to fund our working capital requirements, will be sufficient to allow us to operate for at
least 24 months following the closing of our initial public offering; 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 designed to keep target businesses from “shopping” around for transactions
with other companies 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 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 on the liquidation of our trust account and our warrants will expire worthless.
If the net proceeds of our initial
public offering and the sale of the private placement warrants not being held in the trust account and the interest that may be
released to us from the trust account to fund our working capital requirements 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 business combination.
At
December 31, 2018, we had cash outside the Trust account of approximately $
1,180,000
and
$750,000 available to be drawn down from the Trust Account to fund our working capital prior to the completion of our initial
business combination.
If we are required to seek additional capital to fund our working capital requirements, we would
need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. None of
our sponsor, members of our management team or any of their affiliates is under any obligation to advance funds to us in such
circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon
completion of our initial business combination. We do not expect to seek loans from parties other than our sponsor or an affiliate
of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all
rights to seek access to funds in our trust account. If we 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. Consequently,
our public stockholders may only receive approximately $10.00 per share on our redemption of our public shares, 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 our stock price, 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 surface all material issues that may
be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result
of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or
other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even
though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges
of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature
may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held
by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to
remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due
to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the tender offer materials or proxy statement relating to the business combination
contained an actionable material misstatement or material omission.
If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share.
Our placing of funds in the trust account
may not protect those funds from third-party claims against us. Although, with the exception of our independent registered public
accounting firm, we will seek to have all vendors, service providers, prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in
the trust account 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. We are not aware of any product or service providers who have not or will not provide such waiver other
than the underwriters of our initial public offering.
Examples of possible instances where we
may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to
execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. 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 business combination within the prescribed timeframe, or upon the exercise
of a redemption right in connection with our 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 vendor 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 (i) $10.00 per public share or (ii) such lesser amount per public share
held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets,
in each case net of the interest which may be withdrawn to pay taxes and up to $750,000 of interest to fund working capital requirements
annually, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account
and except as to any claims under indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third
party, our sponsor will not be responsible to the extent of any liability for such third party claims. 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. We have not asked our sponsor to reserve for such indemnification obligations. Therefore,
we cannot assure you that our sponsor would be able to satisfy those obligations.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available
for distribution to our public stockholders.
In the event that the proceeds in the trust
account are reduced below the lesser of (i) $10.00 per share or (ii) other than due to the failure to obtain such waiver such
lesser amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in
the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes and up to $750,000 to fund
working capital requirements annually, 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 any particular instance. If our independent
directors choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution
to our public stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors
may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors
and us to claims of punitive damages.
If, after we distribute the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court
could seek to recover 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, thereby exposing itself and us to claims of punitive damages,
by paying public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders
and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included
in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the
extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
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 business combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, including:
|
●
|
restrictions
on the nature of our investments, and
|
|
●
|
restrictions
on the issuance of securities
|
each of which may make it difficult for
us to complete our business combination.
In addition, we may have imposed upon us
burdensome requirements, including:
|
●
|
registration
as an investment company;
|
|
●
|
adoption
of a specific form of corporate structure; and
|
|
●
|
reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
|
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 in 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 anticipated
principal activities will subject us to the Investment Company Act. The proceeds held in the trust account may be invested by
the trustee only in United States government treasury bills with a maturity of 180 days or less or in money market funds investing
solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the
investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the exemption
provided in Rule 3a-1 promulgated under 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 a 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.
Changes in laws or regulations, or
a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations
enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal
requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
Those laws and regulations and their interpretation and application may also change from time to time and those changes could
have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable
laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.
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 Delaware General Corporation
Law, or DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions
received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 24 months from the closing of our
initial public offering may be considered a liquidation distribution under Delaware law. If a corporation complies with certain
procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it,
including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during
which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions
are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of
such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon
as reasonably possible following the 24
th
month from the closing of our initial public offering in the event we do
not complete our business combination and, therefore, we do not intend to comply with those procedures.
Because we will not be complying with Section
280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following
our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited
to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as
lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b)
of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be
barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be
potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination within 24 months from the closing of our initial public offering
is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially
due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful
redemption distribution, instead of three years, as in the case of a liquidation distribution.
We may not hold an annual meeting
of stockholders until after our consummation of a business combination and you will not be entitled to any of the corporate protections
provided by such a meeting.
We may not hold an annual meeting of stockholders
until after we consummate a business combination (unless required by the NYSE), and thus may not be in compliance with Section
211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance
with a company’s bylaws unless such election is made by written consent in lieu of such a meeting. Therefore, if our stockholders
want us to hold an annual meeting prior to our consummation of a 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.
We did not register, and are not
registering, the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws, 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 did not register, and are not registering,
the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws.
However, under the terms of the warrant agreement, we have agreed, as soon as practicable, but in no event later than fifteen
(15) business days after the closing of our initial business combination, we will use our reasonable best efforts to file, and
within sixty (60) business days after the closing of our initial business combination, to have declared effective, a registration
statement relating to the Class A common stock issuable upon exercise of the warrants, and to maintain a current prospectus relating
to such shares of Class A common stock until the expiration of the warrants in accordance with the provisions of the warrant agreement.
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 or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants
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 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 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 under applicable
state securities laws. 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. We may not redeem
the warrants when a holder may not exercise such warrants. However, there may be instances in which holders of our public warrants
may be unable to exercise such public warrants but holders of our private warrants may be able to exercise such private warrants.
The grant of registration rights
to our initial stockholders and holders of our private placement warrants 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 to be entered
into concurrently with the issuance and sale of the securities in our initial public offering, our initial stockholders and their
permitted transferees can demand that we register their founder shares after those shares convert to shares of our Class A common
stock at the time of our initial business combination. In addition, holders of our private placement warrants and their permitted
transferees can demand that we register the private placement warrants and the shares of Class A common stock issuable upon 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 such warrants or the Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering
these securities. The registration and availability of such a significant number of securities for trading in the public market
may have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration rights
may make our initial business combination more costly or difficult to conclude. This is because the 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,
holders of our private placement warrants or holders of our working capital loans or their respective permitted transferees are
registered.
Because we are not limited to a particular
industry or 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, but we will not, under our amended and restated certificate of incorporation,
be permitted to effectuate our 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 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 units will ultimately prove to be more favorable to investors
than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders
who choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. Such
stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction
was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able
to successfully bring a private claim under securities laws that the tender offer materials or proxy statement relating to the
business combination contained an actionable material misstatement or material omission.
We may seek acquisition opportunities
in companies that may be outside of our management’s areas of expertise.
We will consider a business combination
outside of our management’s areas of expertise if a 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 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. Accordingly,
any stockholders who choose to remain stockholders following our business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy
statement relating to the business combination contained an actionable material misstatement or material omission.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial
business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with
which we enter into our initial business combination may not have attributes entirely consistent with our general criteria and
guidelines.
Although we have identified general criteria
and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our
initial business combination will not have all of these positive attributes. If we complete our initial business combination with
a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a
business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we 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.
We may seek acquisition opportunities
with a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial business
combination with 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 volatile revenues or earnings
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 an
opinion from an independent investment banking or from an independent accounting firm, and consequently, you may have no assurance
from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our 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 that is a member of FINRA or from an independent
accounting firm that the price we are paying for a target is fair to our company from a financial point of view. Furthermore,
if we complete our business combination with an entity that is affiliated with a member of our Advisory Council, we are not required
to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent accounting firm.
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 tender
offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
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 upon the conversion of the Class
F 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 contained therein. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of
incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, par value $0.0001 per share, 10,000,000
shares of Class F common stock, par value $0.0001 per share and 1,000,000 shares of undesignated preferred stock, par value $0.0001
per share. Immediately after our initial public offering, there were 46,250,000 and 2,500,000 authorized but unissued shares of
Class A and Class F common stock available, respectively, for issuance, which amount takes into account shares of Class A common
stock reserved for issuance upon exercise of outstanding warrants but not upon the conversion of the Class F common stock. Shares
of Class F common stock will automatically convert 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. Immediately after our initial public
offering, there will be 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 securities that can vote with common stockholders on matters related to our pre-business
combination activity). We may also issue shares of Class A common stock upon conversion of the Class F 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 contained
therein. These anti-dilution provisions may incentivize us to structure a transaction whereby we issue shares to new investors
and not to sellers of target businesses, such that our sponsor will receive additional shares. 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 (i) receive funds from the trust account or (ii) vote on any
initial business combination. These provisions of our amended and restated certificate of incorporation, like all provisions of
our amended and restated certificate of incorporation, may be amended with a stockholder vote. However, our executive officers,
directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination within 24 months from the closing of our initial public
offering or (B) with respect to any other provision relating to stockholders’ rights or pre-business combination activity,
unless we provide our public stockholders with the opportunity to redeem their shares of 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 (which interest shall be net of taxes payable and up to $750,000 of working capital released to us annually), divided
by the number of then outstanding public shares. The issuance of additional shares of common or preferred stock:
|
●
|
may significantly
dilute the equity interest of investors in our initial public offering;
|
|
●
|
may
subordinate the rights of holders of common stock if preferred stock is issued with rights
senior to those afforded our common stock;
|
|
●
|
could cause
a change in control if a substantial number of common stock is issued, which may affect,
among other things, our ability to use our net operating loss carry forwards, if any,
and could result in the resignation or removal of our present officers and directors;
and
|
|
●
|
may
adversely affect prevailing market prices for our units, common stock and/or warrants.
|
Resources could be wasted in researching
acquisitions 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 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 on the liquidation of our trust account and our warrants will expire worthless.
We are dependent upon our executive
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 executive officers and directors,
at least until we have completed our business combination. In addition, our executive officers and directors are not required
to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating management
time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers.
The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our ability to successfully effect
our initial business combination and to be successful thereafter will be totally 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
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 business combination, it is likely that some or all of the management of the target business
will remain in place. While we intend to closely scrutinize any individuals we engage after our business combination, we cannot
assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar
with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide
for them to receive compensation following our business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain
with the company after the completion of our 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. 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 business combination will not be the determining
factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however,
that any of our key personnel will remain with us after the completion of our business combination. We cannot assure you that
any of our key personnel will remain in senior management or advisory positions with us. 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.
We may have a limited ability to
assess the management of a prospective target business and, as a result, may effect our initial business combination with a target
business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting
our initial business combination with a prospective target business, our ability to assess the target business’s management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should
the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations
and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain
stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely
to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach
by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring
a private claim under securities laws that the tender offer materials or proxy statement relating to the business combination
contained an actionable material misstatement or material omission.
The officers and directors of an acquisition
candidate may resign upon completion of our initial business combination. The 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
candidates’ key personnel upon the completion of our initial business combination cannot be ascertained as of the date of
this Form 10-K. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place.
Our executive officers and directors
will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time
to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business
combination.
Our executive officers and directors are
not required to, and will 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 businesses. We do not intend to have
any full-time employees prior to the completion of our business combination. Each of our executive officers is engaged in several
other business endeavors for which he may be entitled to substantial compensation and our executive officers are not obligated
to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board
members for other entities. If our executive officers’ and directors’ other business affairs require them to devote
substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote
time to our affairs which may have a negative impact on our ability to complete our initial business combination. For a complete
discussion of our executive officers’ and directors’ other business affairs, please see “
Item
10. Directors, Executive Of
ficers and Corporate Governance.”
Certain of our executive 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 following our initial business combination and, accordingly, may have conflicts of interest
in determining to which entity a particular business opportunity should be presented.
Until we consummate our initial business
combination, we expect to continue to engage in the business of identifying and combining with one or more businesses. Our executive
officers and directors are, or may in the future become, affiliated with entities that are engaged in business activities similar
to those intended to be conducted by us following our initial business combination. See a description of our executive officers’
and directors’ current affiliations under the headings “
Item
10. Directors, Executive Of
ficers and Corporate Governance” and “
Item
10. Directors, Executive Of
ficers and Corporate Governance—Conflicts of Interest” below.
Our officers and directors also may become
aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain
fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may
be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation renounces
our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such
person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually
permitted to undertake and would otherwise be reasonable for us to pursue.
For a complete discussion of our executive
officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of,
please see “
Item 10. Directors, Executive Of
ficers and Corporate
Governance” and “
Item 10. Directors, Executive Of
ficers
and Corporate Governance—Conflicts of Interest” and “Item 13. Certain Relationships and Related Party Transactions.”
Our executive officers, directors,
security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly
prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial
interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or
executive officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from
engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may
have a conflict between their interests and ours.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our executive officers, directors
or existing holders which may raise potential conflicts of interest.
In light of the involvement of our executive
officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our executive officers
and directors. Our directors also serve as officers and board members for other entities, including, without limitation, those
described under
Item 10. Directors, Executive Of
ficers and Corporate
Governance—Conflicts of Interest.” Such entities may compete with us for business combination opportunities. Our sponsor,
officers and directors are not currently aware of any specific opportunities for us to complete our business combination with
any entities with which they are affiliated, and there have been no preliminary discussions concerning a business combination
with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated
entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination
as set forth in “Proposed Business — Effecting our initial business combination — Selection of a target business
and structuring of our initial business combination” and such transaction was approved by a majority of our disinterested
directors. 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 company from a financial point of view of a business combination
with one or more domestic or international businesses affiliated with our executive officers, directors or existing holders, potential
conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our
public stockholders as they would be absent any conflicts of interest.
Since our sponsor, executive officers
and directors will lose their entire investment in us if our business combination is not completed, a conflict of interest may
arise in determining whether a particular business combination target is appropriate for our initial business combination.
In October 2016, our sponsor purchased
an aggregate of 5,750,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.003 per share. On September
18, 2017, we effectuated a 1.5-for-1 stock split in the form of a dividend, resulting in 8,625,000 founder shares outstanding
and held by our sponsor (up to 1,125,000 of which are subject to forfeiture). The founder shares will be worthless if we do not
complete an initial business combination. In addition, our sponsor has committed to purchase an aggregate of 17,500,000 (or 19,300,000
if the over-allotment option is exercised in full) private placement warrants, each exercisable for one-half of one share of our
Class A common stock at $5.75 per half share, for a purchase price of $8,750,000 (or $9,650,000 if the over-allotment option is
exercised in full), or $0.50 per warrant, that will also be worthless if we do not complete a business combination.
The founder’s shares are identical
to the shares of common stock included in the units being sold in our initial public offering, except that (i) the founder shares
are subject to certain transfer restrictions, (ii) our initial stockholders, officers, directors and director nominees have entered
into a letter agreement with us, pursuant to which they have agreed (a) to waive their redemption rights with respect to their
founder shares and public shares in connection with the completion of our initial business combination, (b) to waive their rights
to liquidating distributions from the trust account with respect to their founder shares if we fail to complete our initial business
combination within 24 months from the closing of our initial public offering (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 business combination within the
prescribed time frame); (iii) the founder shares will automatically convert 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 (iv) the founder shares are subject to registration rights.
The personal and financial interests of
our executive officers and directors may influence their motivation in identifying and selecting a target business combination,
completing an initial business combination and influencing the operation of the business following the initial business combination.
This risk may become more acute as the 24 month anniversary of the closing of our initial public offering nears, which is the
deadline for our completion of an initial business combination
Since our sponsor, executive officers
and directors will not be eligible to be reimbursed for their out-of-pocket expenses if our business combination is not completed,
a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial
business combination.
At the closing of our initial business
combination, our sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any
out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and
performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses
incurred in connection with activities on our behalf. These financial interests of our sponsor, executive officers and directors
may influence their motivation in identifying and selecting a target business combination and completing an initial business combination.
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 December
31, 2018 to issue any notes or other debt securities, or to otherwise incur outstanding debt following our initial public offering,
we may choose to incur substantial debt to complete our 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:
|
●
|
default and
foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations;
|
|
●
|
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;
|
|
●
|
our
immediate payment of all principal and accrued interest, if any, if the debt security
is payable on demand;
|
|
●
|
our
inability to obtain necessary additional financing if the debt security contains covenants
restricting our ability to obtain such financing while the debt security is outstanding;
|
|
●
|
our
inability to pay dividends on our common stock;
|
|
●
|
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;
|
|
●
|
limitations
on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
|
|
●
|
increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and
|
|
●
|
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.
|
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, which will
cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
The net proceeds from our initial public
offering and the private placement of warrants provided us with $289,500,000 that we may use to complete our business combination
(excluding up to $10,500,000 of deferred underwriting commissions being held in the trust account).
We may effectuate our 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 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:
|
●
|
solely dependent
upon the performance of a single business, property or asset, or
|
|
●
|
dependent
upon the development or market acceptance of a single or limited number of products,
processes or services.
|
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 business combination.
We may attempt to simultaneously
complete business combinations with multiple prospective targets, which may hinder our ability to complete our 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.
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 a business combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests
or assets of a target business, but we will only complete such business combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction
that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target,
our stockholders prior to the business combination may collectively own a minority interest in the post business combination company,
depending on valuations ascribed to the target and us in the business combination transaction. 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.
We do not have a specified maximum
redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible
assets to be less than $5,000,001 upon the consummation of our initial business combination. The absence of such a redemption
threshold may make it possible for us to complete a business combination with which a substantial majority of our stockholders
do not agree.
Our amended and restated certificate of
incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares
in an amount that would cause our net tangible assets to be less than $5,000,001 upon the consummation of our initial business
combination (such that we 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 business combination even though a substantial majority of our public stockholders do not agree with the
transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not
conduct redemptions in connection with our 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 their 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.
The exercise price for the public
warrants is higher than in many similar blank check company offerings in the past, and, accordingly, the warrants are more likely
to expire worthless.
The exercise price of the public warrants
is higher than is typical in many similar blank check companies in the past. Historically, the exercise price of a warrant was
generally a fraction of the purchase price of the units in the initial public offering. The exercise price for our public warrants
is $5.75 per half share, or $11.50 per whole share. As a result, the warrants are less likely to ever be in the money and more
likely to expire worthless.
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. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation
or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders
may not support.
In order to effectuate a business combination,
blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments.
For example, blank check companies have amended the definition of business combination, increased redemption thresholds and extended
the time period in which the company must consummate its initial business combination. We cannot assure you that we will not seek
to amend our charter or governing instruments in order to effectuate our initial business combination.
The provisions of our amended and
restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the
agreement governing the release of funds from our trust account) will provide that it may be amended with the approval of holders
of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier
for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business
combination that some of our stockholders may not support.
Some other blank check companies have a
provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s
pre-business combination activity, without approval by a certain percentage of the company’s stockholders. In those companies,
amendment of these provisions requires approval by between 90% and 100% of the company’s public stockholders. Our amended
and restated certificate of incorporation will provide that any of its provisions related to pre-business combination activity
(including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into 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 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 will provide 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 charter amendments. Our initial stockholders, who will beneficially own 20% of our common
stock upon the closing of our initial public offering, will 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 a business combination
with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate
of incorporation.
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 investment management trust agreement between us and Continental Stock
Transfer & Trust Company, the letter agreement among us and our sponsor, officers, directors and director nominees, the registration
rights agreement among us and our initial stockholders and the administrative services agreement between us and our sponsor, may
be amended without stockholder approval. These agreements contain various provisions that our public stockholders might deem to
be material. For example, the underwriting agreement related to our initial public offering contains (i) a representation that
we will not consummate any public or private equity or debt financing prior to the consummation of a business combination, unless
all investors in such financing expressly waive, in writing, any rights in or claims against the trust account and (ii) a covenant
that the target company that we acquire must have a fair market value equal to at least 80% of the balance in the trust account
at the time of signing the definitive agreement for the transaction with such target business (excluding the deferred underwriting
commissions and taxes payable on the income earned on the trust account) so long as we obtain and maintain a listing for our securities
on the NYSE. 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 amendment 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 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
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 repurchase 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 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 business combination. If we are unable to complete our initial business combination, our
public stockholders may only receive approximately $10.00 per share on the liquidation of our trust account, and our warrants
will expire worthless.
Our initial stockholders control
a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in
a manner that you do not support. Further, certain institutional investors may have different interests than other public stockholders.
Immediately following the closing of our
initial public offering, our initial stockholders owned 20% of our issued and outstanding shares of common stock.
Accordingly, they may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our
amended and restated certificate of incorporation 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.
Neither our initial stockholders nor, to
our knowledge, any of our officers or directors, have any intention as of the date of this Form 10-K to purchase additional securities,
other than as disclosed in this Form 10-K. Factors that would be considered in making such additional purchases would include
consideration of the current trading price of our Class A common stock. In addition, our board of directors, whose members were
elected by our sponsor, is and will be divided into two classes, each of which will generally serve for a term of two years with
only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors
prior to the completion of our business combination, in which case all of the current directors will continue in office until
at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because
of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will
continue to exert control at least until the completion of our business combination.
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 65% of the then outstanding
public warrants.
Our warrants will be issued in registered
form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any
defective provision, but requires the approval by the holders of at least 65% 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 at least 65% 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 at least 65% 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, shorten the exercise period or decrease the number of shares of our common stock purchasable upon
exercise of a warrant.
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 last reported sales price of our Class A common stock equals or exceeds $18.00 per share 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.
We may not redeem the warrants when a holder may not exercise such warrants. Redemption of the outstanding warrants could force
you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so,
(ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept
the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially
less than the market value of your warrants. None of the private placement warrants will be redeemable by us so long as they are
held by their initial purchasers or their permitted transferees.
Our warrants may have an adverse
effect on the market price of our Class A common stock and make it more difficult to effectuate our business combination.
We issued warrants to purchase 15,000,000
shares of our Class A common stock as part of the units offered in our initial public offering and private placement warrants,
exercisable to purchase an aggregate of 8,750,000 shares of our Class A common stock, in a private placement. In addition, if
our sponsor or 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 convertible into warrants of the post business combination entity at a price of $0.50 per warrant at the
option of the lender. 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 could make
us a less attractive acquisition vehicle to a target business. Such warrants, if and when exercised, would increase the number
of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued
to complete the business transaction. Therefore, our warrants may make it more difficult to effectuate a business transaction
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, (i) they will not be redeemable by us, (ii) 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; (iii) they may be exercised by the holders on a cashless basis;
and (iv) the founder shares are subject to registration rights. In addition, for as long as the private placement warrants are
held by Loop Capital Markets LLC or its designees or affiliates, they may not be exercised after five years from the effective
date of the registration statement for our initial public offering.
Because each warrant is exercisable
for only one-half of one share of our Class A common stock, the units may be worth less than units of other blank check companies.
Each warrant is exercisable for one-half
of one share of Class A common stock. Warrants may be exercised only for a whole number of shares of Class A common stock. No
fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled
to receive a fractional interest in a share, we will, upon exercise, round down to the nearest whole number the number of shares
of Class A common stock to be issued to the warrant holder. As a result, warrant holders not purchasing an even number of units
must sell any odd number of warrants in order to obtain full value from the fractional interest that will not be issued. Nevertheless,
this Unit structure may cause our units to be worth less than if it included a warrant to purchase one whole share.
There market for our securities is
volatile and may not develop further, which would adversely affect the liquidity and price of our securities.
Following our initial public offering,
the price of our securities has varied significantly. 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.
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 meeting certain financial significance tests include historical
and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure in
connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United
States of America, or GAAP, or international financial reporting standards, or IFRS, depending on the circumstances and the historical
financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight
Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may
acquire because some targets may be unable to provide such statements in time for us to disclose such financial statements in
accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
We are an emerging growth company and a smaller reporting company,
each within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available
to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act. Additionally, we are also a “smaller reporting company”
under the SEC’s amended definition of a “smaller reporting company.” As a result, we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
or smaller reporting 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, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved, and not being required to present selected financial data and
only being required to provide two years of audited financial statements in annual reports. As a result, our stockholders may
not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although
circumstances could cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates
exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of
the following December 31. Even if we age out of our status as an emerging growth company after five years, we may still qualify
as a smaller reporting company, including if either (a) the market value of our Class A common stock held by non-affiliates falls
below $250 million as of June 30 of any year, or (b) we have less than $80 million of revenues for the prior fiscal year and the
market value of our Class A common stock held by non-affiliates is less than $560 million as of June 30 of such 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 an election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public
or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt
the new or revised standard. This may make comparison of our financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accountant standards used.
Compliance obligations under the
Sarbanes-Oxley Act may make it more difficult for us to effectuate our business combination, require substantial financial and
management resources, and increase the time and costs of completing an acquisition.
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, 2018. Only in the event we are deemed to be a large accelerated filer or an accelerated filer 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 company with which we seek to complete our 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 acquisition.
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 a staggered board of directors 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.
We are also subject to anti-takeover provisions
under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal
of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of
incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors,
officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in
the State of Delaware and, if brought outside of Delaware, the stockholder bringing such suit will be deemed to have consented
to service of process on such stockholder’s counsel. This provision may have the effect of discouraging lawsuits against
our directors and officers.
An investment in our initial public
offering may result in uncertain or adverse United States federal income tax consequences.
An investment in our initial public offering
may result in uncertain United States federal income tax consequences. For instance, because there are no authorities that directly
address instruments similar to the units we issued in our initial public offering, the allocation an investor makes with respect
to the purchase price of a Unit between the share of common stock and the warrant to purchase one share of common stock included
in each Unit could be challenged by the IRS or the courts. Furthermore, the United States federal income tax consequences of a
cashless exercise of a warrant included in the units is unclear under current law. Finally, it is unclear whether the redemption
rights with respect to our shares of common stock suspend the running of a U.S. holder’s holding period for purposes of
determining whether any gain or loss realized by such holder on the sale or exchange of common stock is long-term capital gain
or loss and for determining whether any dividend we pay would be considered “qualified dividends” for federal income
tax purposes. See the section titled “Taxation” for a summary of the principal United States federal income tax consequences
of an investment in our securities. Prospective investors are urged to consult their tax advisors with respect to these and other
tax consequences when purchasing, holding or disposing of our securities.
If we effect our initial business
combination with a company with operations or opportunities outside of the United States, we would be subject to a variety of
additional risks that may negatively impact our operations.
If we effect our initial business combination
with a company with operations or opportunities outside of the United States, we would be subject to any special considerations
or risks associated with companies operating in an international setting, including any of the following:
|
●
|
higher costs
and difficulties inherent in managing cross-border business operations and complying
with different commercial and legal requirements of overseas markets;
|
|
●
|
rules and
regulations regarding currency redemption;
|
|
●
|
complex
corporate withholding taxes on individuals;
|
|
●
|
laws governing
the manner in which future business combinations may be effected;
|
|
●
|
tariffs
and trade barriers;
|
|
●
|
regulations
related to customs and import/export matters;
|
|
●
|
tax issues,
such as tax law changes and variations in tax laws as compared to the United States;
|
|
●
|
currency
fluctuations and exchange controls;
|
|
●
|
challenges
in collecting accounts receivable;
|
|
●
|
cultural
and language differences;
|
|
●
|
employment
regulations;
|
|
●
|
crime, strikes,
riots, civil disturbances, terrorist attacks, natural disasters and wars;
|
|
●
|
deterioration
of political relations with the United States; and
|
|
●
|
government
appropriation of assets.
|
We may not be able to adequately address
these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact our results of operations
and financial condition.
We may face risks related to consumer
sector companies.
Business combinations with companies in
the consumer sector entail special considerations and risks. If we are successful in completing a business combination with such
a target business, we may be subject to, and possibly adversely affected by, the following risks:
|
●
|
An inability
to compete effectively in a highly competitive environment with many incumbents having
substantially greater resources;
|
|
●
|
An inability
to manage rapid change, increasing consumer expectations and growth;
|
|
●
|
An inability
to build strong brand identity and improve customer satisfaction and loyalty;
|
|
●
|
Limitations
on a target business’ ability to protect its intellectual property rights, including
its trade secrets, that could cause a loss in revenue and any competitive advantage;
|
|
●
|
The high
cost or unavailability of materials, equipment, supplies and personnel that could adversely
affect our ability to execute our operations on a timely basis;
|
|
●
|
An inability
to attract and retain customers;
|
|
●
|
An inability
to license or enforce intellectual property rights on which our business may depend;
|
|
●
|
Seasonality
and weather conditions that may cause our operating results to vary from quarter to quarter;
|
|
●
|
An inability
by us to successfully anticipate changing consumer preferences and buying trends and
manage our product line and inventory commensurate with customer demand;
|
|
●
|
Potential
liability for negligence, copyright, or trademark infringement or other claims based
on the nature and content of materials that we may distribute;
|
|
●
|
Dependence
of our operations upon third-party suppliers whose failure to perform adequately could
disrupt our business;
|
|
●
|
Our operating
results may be adversely affected by changes in the cost or availability of raw materials
and energy;
|
|
●
|
We may be
subject to production-related risks which could jeopardize our ability to realize anticipated
sales and profits;
|
|
●
|
Changes
in the retail industry and markets for consumer products affecting our customers or retailing
practices could negatively impact customer relationships and our results of operations;
and
|
|
●
|
Our business
could involve the potential for product recalls, product liability and other claims against
us, which could affect our earnings and financial condition.
|
Any of the foregoing could have an adverse
impact on our operations following a business combination. However, our efforts in identifying prospective target businesses will
not be limited to the consumer sector. Accordingly, if we acquire a target business in another industry, 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.