AXONPRIME INFRASTRUCTURE ACQUISITION CORPORATION
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
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Item 1.
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Item 1A.
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16 |
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Item 1B.
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55 |
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Item 2.
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55 |
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Item 3.
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Item 4.
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55 |
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Item 5.
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55 |
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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69 |
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Item 12.
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69 |
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Item 13.
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Item 14.
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Item 15.
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Signatures
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Cautionary Note Regarding Forward-Looking
Statements
Some statements contained in this Annual Report on Form 10-K are
forward-looking in nature. Our forward-looking statements include,
but are not limited to, statements regarding our or our management
team’s expectations, hopes, beliefs, intentions or strategies
regarding the future. In addition, any statements that refer to
projections, forecasts or other characterizations of future events
or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. The forward-looking
statements contained in this report are based on our current
expectations and beliefs concerning future developments and their
potential effects on us. There can be no assurance that future
developments affecting us will be those that we have anticipated.
These forward-looking statements involve a number of risks,
uncertainties (some of which are beyond our control) or other
assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these
forward-looking statements. These risks and uncertainties include,
but are not limited to, the following risks, uncertainties and
other factors:
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our being a newly incorporated company with no operating
history and no revenues;
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our ability to select an appropriate target business or
businesses;
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our ability to complete our initial business
combination;
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our expectations around the performance of a prospective
target business or businesses;
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our success in retaining or recruiting, or changes required
in, our officers, key employees or directors following our initial
business combination;
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our officers and directors allocating their time to other
businesses and potentially having conflicts of interest with our
business or in approving our initial business combination;
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our potential ability to obtain additional financing to
complete our initial business combination;
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our pool of prospective target businesses, including the
location and industry of such target businesses;
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our ability to consummate an initial business combination due
to the uncertainty resulting from the recent COVID-19
pandemic;
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the ability of our officers and directors to generate a number
of potential business combination opportunities;
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our public securities’ potential liquidity and trading;
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the lack of a market for our securities;
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the use of proceeds not held in the Trust Account or available
to us from interest income on the Trust Account balance;
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the Trust Account not being subject to claims of third
parties;
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our financial performance; and
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the other risk and uncertainties discussed in “Risk Factors”
and elsewhere in this report.
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Should one or more of these risks or uncertainties materialize, or
should any of our assumptions prove incorrect, our actual results
may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
under applicable securities laws.
PART I
Overview
AxonPrime Infrastructure Acquisition Corporation (“Company”) is a
blank check company incorporated in the State of Delaware on April
1, 2021. The Company was formed for the purpose of effectuating a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination with one or
more businesses (“business combination”). The Company is an early
stage and emerging growth company and, as such, the Company is
subject to all of the risks associated with early stage and
emerging growth companies.
As of December 31, 2021, the Company had not yet commenced any
operations. All activity for the period April 1, 2021 (inception)
through December 31, 2021, relates to the Company’s formation and
the initial public offering (“Initial Public Offering” or “IPO”)
which is described below, and, since the closing of the Initial
Public Offering, the Company’s search for business combination
candidates. The Company will not generate any operating revenues
until after the completion of its initial business combination, at
the earliest. The Company will generate non-operating income in the
form of interest income from the proceeds derived from the Initial
Public Offering.
Company History
The Company’s sponsor is AxonPrime Infrastructure Sponsor LLC
(“Sponsor”). The registration statement for the Company’s Initial
Public Offering was declared effective by the Securities and
Exchange Commission (“SEC”) on August 12, 2021. On August 17, 2021,
the Company consummated its Initial Public Offering of 15,000,000
units (“Units” and, with respect to the Class A common stock
included in the Units, “Public Shares”), at $10.00 per Unit,
generating gross proceeds of $150,000,000, which is described in
Item 13.
As part of the Initial Public Offering, certain Institutional
Anchor Investors (“Institutional Anchor Investors”) not then
affiliated with the Company, the Sponsor, or the Company’s
officers, directors, or any member of the Company’s management
purchased an aggregate of 12,790,000 Units. The Units were sold at
an offering price of $10.00 per Unit, generating gross proceeds of
$127,900,000.
Simultaneously with the closing of the Initial Public Offering, the
Company consummated the sale of 3,333,333 warrants (“Private
Placement Warrants”) at a price of $1.50 per Private Placement
Warrant in a private placement (“Private Placement”) to the
Sponsor, generating gross proceeds of $5,000,000, which is
described in Item 13. Substantially concurrently with the closing
of the Private Placement, the Sponsor sold an aggregate of 66,666
Private Placement Warrants to the Institutional Anchor Investors
for $100,000.
The Institutional Anchor Investors also purchased 650,000 shares of
Class B common stock (“Founder Shares”) from the Sponsor at the
original purchase price of $0.003 per share (see Item 13). The
Founder Shares will automatically convert into shares of Class A
common stock at the time of the Company’s initial business
combination on a one-for-one basis, subject to adjustment as
provided in the Company’s final prospectus, dated August 12, 2021,
as filed with the SEC on August 16, 2021 (“Final
Prospectus”).
The Company incurred offering costs in the Public Offering totaling
$8,703,625, consisting of $3,000,000 of underwriting fees,
$5,250,000 of deferred underwriting fees and $453,625 of other
offering costs.
Following the closing of the Initial Public Offering on August 17,
2021, an amount of $150,000,000 ($10.00 per Unit) from the net
proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Warrants was placed in a
Trust Account (“Trust Account”) located in the United States and
will be invested only in U.S. government securities, within the
meaning set forth in Section 2(a)(16) of the Investment Company Act
of 1940, as amended (“Investment Company Act”), with a maturity of
185 days or less or in any open-ended investment company that holds
itself out as a money market fund selected by the Company meeting
the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7
of the Investment Company Act, as determined by the Company, until
the earlier of: (i) the completion of a business combination and
(ii) the distribution of the Trust Account, as described
below.
Business Strategy
Our business strategy is to identify and complete a business
combination that can create value for our shareholders over time.
We believe our management team’s years of experience and our deep
network of proprietary relationships will allow us to identify a
wide range of attractive merger opportunities. Our networks
include, among others, entrepreneurs, universities, research
institutions, public and private company management teams (from
early-stage venture to the Fortune 500), venture capital and
private equity investors, investment bankers, attorneys, and
management consultants.
Following the initial business combination, we expect to help the
post-business combination entity continue its growth trajectory for
many years to come. We expect to collaborate with management on a
number of initiatives, including, but not limited to, navigating
the public markets, mergers and acquisitions, capital allocation
decisions, talent acquisition, and broadening their network of
potential partners and customers through our proprietary networks.
We believe our team’s track record of success and support of
management teams will make us a partner of choice for a
high-quality business.
Our acquisition philosophy and criteria are rooted in several core
tenets, consistent with those that we have utilized in the
past:
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Transformative
and Scalable:
We will focus on investing in companies that are developing
breakthrough scientific and technological innovations in the areas
of communication, robotics, building and construction technology,
water, 3D printing and semiconductors. In addition, we believe a
successful merger candidate must have innovations that have sizable
potential markets and whose business models allow them to
profitably scale to address those markets. We will seek to merge
with a company that has achieved sufficient technology and business
maturity while still maintaining significant runway to capture
share in a large addressable market. We look for favorable trends
and attractive unit economics which can be further enhanced as the
business grows.
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Support and
Build World Class Management Teams: We seek to partner with
creative and ambitious management teams that have a track record of
success to help them execute their vision. The combination of Axon
Capital’s public market expertise and Prime Movers Labs’ science
and technology platform offers management teams a unique resource
set. Many potential merger candidates possess exceptional
early-stage, growth focused, management teams that would benefit
from our experience-based guidance and support as they grow
rapidly, and particularly as they transition from private to public
markets. We are seeking a partner where our long-term support and
involvement will be welcome, and will help unlock outsized
shareholder returns, including through our proprietary network and
relationships. Our goal is not to be short-term facilitators, but
rather be long-term value creation partners.
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Science vs.
Engineering Risk: We look for companies that have
answered the core science questions and now focus on the
engineering problem of scalability. We endeavor to avoid binary
risk from investments in companies that are still assessing early
stage prospects, and rather focus on companies where we can help
them scale and transform into a public company creating long-term,
sustainable, value for its shareholders.
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Acquisition Criteria
Consistent with our investment philosophy and strategy, we plan to
identify high-quality businesses run by exceptional teams pursuing
large market opportunities that are amenable to disruption by
technology. We expect to be guided by the criteria outlined above
in evaluating opportunities and may decide to focus on different
aspects of our investment criteria depending on the market
opportunity at the time of the contemplated merger.
These criteria are important but not exhaustive. The merits of any
particular initial business combination will be based on these
general guidelines as well as other considerations, factors, and
criteria that our management team may deem relevant. In the event
that we decide to enter into our initial business combination with
a target business that does not meet the above criteria and
guidelines, we will disclose that in our stockholder communications
related to our initial business combination, which, as discussed in
this report, would be in the form of proxy solicitation materials
or tender offer documents that we would file with the SEC.
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 IPO. We
intend to effectuate our initial business combination using cash
from the proceeds of the IPO and the sale 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 or not all of the funds released from the Trust Account are
used for payment of the consideration in connection with our
initial business combination or used for redemption of our Public
Shares, we may apply the balance of the cash released to us from
the Trust Account for general corporate purposes, including for
maintenance or expansion of operations of post-transaction
businesses, the payment of principal or interest due on
indebtedness incurred in completing our initial business
combination, to fund the purchase of other businesses or for
working capital.
We may seek to raise additional funds through a private offering of
debt or equity securities in connection with the completion of our
initial business combination (which may include a specified future
issuance), 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 applicable law
or we decide to do so for business or other reasons, we would seek
stockholder approval of such financing. There are no prohibitions
on our ability to raise funds privately, including pursuant to any
specified future issuance, or through loans in connection with our
initial business combination. At this time, we are not a party to
any arrangement or understanding with any third party with respect
to raising any additional funds through the sale of securities or
otherwise.
Listing rules for the Nasdaq Capital Market (“Nasdaq”) require that
our initial business combination must be with one or more target
businesses that together have an aggregate fair market value equal
to at least 80% of the value of the assets held in the Trust
Account (excluding any deferred underwriters fees and taxes payable
on the income earned on the Trust Account) at the time of our
signing a definitive agreement in connection with our initial
business combination. We refer to this as the 80% fair market value
test. If our board of directors is not able to independently
determine the fair market value of the target business or
businesses, we will obtain an opinion from an independent
investment banking firm that is a member of the Financial Industry
Regulatory Authority (“FINRA”), or from an independent accounting
firm, with respect to the satisfaction of such criteria. 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 solely 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 business 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 outstanding equity interests or
assets of a target business or businesses, the portion of such
business or businesses that are owned or acquired by the
post-transaction company is what will be taken into account for
purposes of the 80% fair market value test. There is currently no
basis for our investors to evaluate the possible merits or risks of
any target business with which we may ultimately complete our
initial business combination.
To the extent we effect our initial business combination with a
company or business that may be financially unstable or in its
early stages of development or growth we may be affected by
numerous risks inherent in such company or business. Although our
management will endeavor to evaluate the risks inherent in a
particular target business, we cannot assure you that we will
properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we expect to conduct a
thorough due diligence review which may encompass, among other
things, meetings with incumbent management, document reviews,
inspection of facilities, as well as a review of financial,
operational, legal and other information which will be made
available to us.
The time required to select and evaluate a target business and to
structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable
with any degree of certainty. Any costs incurred with respect to
the identification and evaluation of a prospective target business
with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the
funds we can use to complete another business combination.
Redemption Rights for Public Shareholders 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, calculated as of two business days
prior to the consummation of the initial business combination,
including interest earned on the funds held in the Trust Account
and not previously released to us to pay our taxes, divided by the
number of then outstanding Public Shares, subject to the
limitations described herein. At completion of the business
combination, we will be required to purchase any Public Shares
properly delivered for redemption and not withdrawn. The amount in
the Trust Account is initially $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 paid to the underwriters. The redemption rights will
include the requirement that a beneficial holder must identify
itself in order to validly redeem its shares. Our Sponsor has
entered into a letter agreement with us, pursuant to which it has
agreed to waive its redemption rights with respect to its Founder
Shares and any Public Shares it may acquire during or after the IPO
in connection with the completion of our initial business
combination. Our directors and officers have also entered into the
letter agreement, which imposes the same obligations on them with
respect to any Public Shares acquired by them. In addition,
pursuant to the investment agreements, the Institutional Anchor
Investors agreed to waive any right, title, interest or claim of
any kind in or to any monies held in the Trust Account (including
applicable redemption rights), or any other asset of our company as
a result of any liquidation of our company, with respect to any
Founder Shares held by them. However, if the Institutional Anchor
Investors acquire any Public Shares, they will be entitled to
redemption rights with respect to such Public Shares in connection
with the completion of our initial business combination.
Manner of Conducting Redemptions
We will provide our public stockholders with the opportunity to
redeem all or a portion of their shares of Class A common stock
upon the completion of our initial business combination either: (1)
in connection with a stockholder meeting called to approve the
business combination; or (2) by means of a tender offer. The
decision as to whether we will seek stockholder approval of a
proposed business combination or conduct a tender offer will be
made by us, solely in our discretion, and will be based on a
variety of factors such as the timing of the transaction and
whether the terms of the transaction would require us to seek
stockholder approval under applicable law or stock exchange listing
requirement. 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 Certificate of Incorporation would typically require
stockholder approval. We intend to conduct redemptions without a
stockholder vote pursuant to the tender offer rules of the SEC
(“tender offer rules”) unless stockholder approval is required by
applicable law or stock exchange rules or we choose to seek
stockholder approval for business or other reasons.
If a stockholder vote is not required and we do not decide to hold
a stockholder vote for business or other reasons, we will, pursuant
to our Certificate of Incorporation:
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conduct the redemptions pursuant
to Rule 13e-4 and Regulation 14E of the Securities Exchange Act of
1934, as amended (“Exchange Act”), which regulate issuer tender
offers; and
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file tender offer documents with
the SEC prior to completing our initial business combination which
contain substantially the same financial and other information
about the initial business combination and the redemption rights as
is required under Regulation 14A of the Exchange Act, which
regulates the solicitation of proxies.
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Upon the public announcement of our initial business combination,
we and our Sponsor will terminate any plan established in
accordance with Rule 10b5-l 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-l(a) under the Exchange
Act, and we will not be permitted to complete our initial business
combination until the expiration of the tender offer period. In
addition, the tender offer will be conditioned on public
stockholders not tendering more than a specified number of Public
Shares, which number will be based on the requirement that we will
only redeem Public Shares so long as (after such redemptions) our
net tangible assets will be at least $5,000,001, either prior to or
upon consummation of an initial business combination, after payment
of the deferred underwriting commission (so that we do not then
become subject to the SEC’s “penny stock” rules) or any greater net
tangible asset or cash requirement which may be contained in the
agreement relating to our initial business combination. If public
stockholders tender more shares than we have offered to purchase,
we will withdraw the tender offer and not complete such initial
business combination.
If, however, stockholder approval of the transaction is required by
applicable law or stock exchange rules, or we decide to obtain
stockholder approval for business or other reasons, we will,
pursuant to our Certificate of Incorporation:
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conduct the redemptions in
conjunction with a proxy solicitation pursuant to Regulation 14A of
the Exchange Act, which regulates the solicitation of proxies, and
not pursuant to the tender offer rules; and
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file proxy materials with the
SEC.
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We expect that a final proxy statement would be mailed to public
stockholders at least 10 days prior to the stockholder vote.
However, we expect that a draft proxy statement would be made
available to such stockholders well in advance of such time,
providing additional notice of redemption if we conduct redemptions
in conjunction with a proxy solicitation. Although we are not
required to do so, we currently intend to comply with the
substantive and procedural requirements of Regulation 14A in
connection with any stockholder vote even if we are not able to
maintain our Nasdaq listing or Exchange Act registration.
In the event that we seek stockholder approval of our initial
business combination, we will distribute proxy materials and, in
connection therewith, provide our public stockholders with the
redemption rights described above upon completion of the initial
business combination.
If we seek stockholder approval, 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. In such case, pursuant to the terms of a letter
agreement entered into with us, our Sponsor, officers and directors
have agreed (and their permitted transferees will agree) to vote
their Founder Shares and any Public Shares held by them in favor of
our initial business combination, and the Institutional Anchor
Investors agreed, pursuant to the terms of the investment
agreements, to vote any Founder Shares held by them in favor of our
initial business combination. Our directors and officers also have
agreed to vote in favor of our initial business combination with
respect to Public Shares acquired by them, if any. We expect that
at the time of any stockholder vote relating to our initial
business combination, our pre-IPO stockholders (“initial
stockholders”) and their permitted transferees will collectively
own at least 20% of our outstanding shares of Common Stock entitled
to vote thereon. Each public stockholder may elect to redeem their
Public Shares without voting and, if they do vote, irrespective of
whether they vote for or against the proposed transaction. In
addition, our Sponsor, officers and directors have entered into a
letter agreement with us, pursuant to which they have agreed to
waive their redemption rights with respect to their Founder Shares
and any Public Shares held by them in connection with the
completion of a business combination. The Institutional Anchor
Investors agreed, pursuant to the investment agreements, to waive
any right, title, interest or claim of any kind in or to any monies
held in the Trust Account (including applicable redemption rights),
or any other asset of our company as a result of any liquidation of
our company, with respect to any Founder Shares held by them.
However, if the Institutional Anchor Investors acquire any Public
Shares, they will be entitled to redemption rights in connection
with the completion of our initial business combination with
respect to such Public Shares.
Our Certificate of Incorporation provides that we will only redeem
our Public Shares so long as (after such redemptions) our net
tangible assets will be at least $5,000,001, either prior to or
upon consummation of an initial business combination, after payment
of the deferred underwriting commission (so that we do not then
become subject to the SEC’s “penny stock” rules). Redemptions of
our Public Shares may also be subject to a higher net tangible
asset test or cash requirement pursuant to an agreement relating to
our initial business combination. For example, the proposed
business combination may require: (1) cash consideration to be paid
to the target or its owners; (2) cash to be transferred to the
target for working capital or other general corporate purposes; or
(3) the retention of cash to satisfy other conditions in accordance
with the terms of the proposed business combination. In the event
the aggregate cash consideration we would be required to pay for
all shares of Class A common stock that are validly submitted for
redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed business combination exceed
the aggregate amount of cash available to us, we will not complete
the business combination or redeem any shares, and all shares of
Class A common stock submitted for redemption will be returned to
the holders thereof, and we instead may search for an alternate
business combination.
Notwithstanding the foregoing, if we seek stockholder approval of
our initial business combination and we do not conduct redemptions
in connection with our initial business combination pursuant to the
tender offer rules, our 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 redeeming its shares
with respect to Excess Shares (as defined herein), without our
prior consent. We believe this restriction will discourage
stockholders from accumulating large blocks of shares, and
subsequent attempts by such holders to use their ability to
exercise their redemption rights against a proposed business
combination as a means to force us or our Sponsor or its affiliates
to purchase their shares at a significant premium to the
then-current market price or on other undesirable terms. Absent
this provision, a public stockholder holding more than an aggregate
of 15% of the shares could threaten to exercise its redemption
rights if such holder’s shares are not purchased by us or our
Sponsor or its affiliates at a premium to the then-current market
price or on other undesirable terms. By limiting our stockholders’
ability to redeem no more than 15% of the shares, we believe we
will limit the ability of a small group of stockholders to
unreasonably attempt to block our ability to complete our initial
business combination, particularly in connection with a business
combination with a target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. However,
we would not be restricting our stockholders’ ability to vote all
of their shares (including Excess Shares) for or against our
initial business combination.
Indemnity Obligations
The Sponsor has agreed that it will be liable to the Company if and
to the extent any claims by a third party for services rendered or
products sold to the Company, or a prospective target business with
which the Company has entered into a written letter of intent,
confidentiality or similar agreement or business combination
agreement, reduce the amount of funds in the Trust Account to below
the lesser of (i) $10.00 per Public Share and (ii) the actual
amount per Public Share held in the Trust Account as of the day of
liquidation of the Trust Account, if less than $10.00 per share due
to reductions in the value of the trust assets, less taxes payable,
provided that such liability will not apply to any claims by a
third party or prospective target business who executed a waiver of
any and all rights to monies held in the Trust Account (whether or
not such waiver is enforceable) nor will it apply to any claims
under the Company’s indemnity of the underwriter of the Initial
Public Offering against certain liabilities, including liabilities
under the Securities Act of 1933, as amended (“Securities Act”).
However, the Company has not asked the Sponsor to reserve for such
indemnification obligations, nor has the Company independently
verified whether the Sponsor has sufficient funds to satisfy its
indemnity obligations and believes that the Sponsor’s only assets
are securities of the Company. Therefore, the Company cannot assure
its shareholders that the Sponsor would be able to satisfy those
obligations. None of the Company’s officers or directors will
indemnify the Company for claims by third parties including,
without limitation, claims by vendors and prospective target
businesses. The Company will seek to reduce the possibility that
the Sponsor will have to indemnify the Trust Account due to claims
of creditors by endeavoring to have all vendors, service providers
(except the Company’s independent registered public accounting
firm), prospective target businesses or other entities with which
the Company does business, execute agreements with the Company
waiving any right, title, interest or claim of any kind in or to
monies held in the Trust Account.
Conflicts of Interest
Certain of our officers and directors expect to have, and any of
them in the future may further have, fiduciary or contractual
obligations to several other entities pursuant to which such
officer or director is or will be required to present a business
combination opportunity to such entity. 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 these fiduciary or contractual obligations to present such
business combination opportunity to such entity, and only present
it to us if such entity rejects the opportunity. 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.
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 business combination.
Our Certificate of Incorporation provides that, prior to the
consummation of our initial business combination, 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 and the director or officer is
permitted to refer that opportunity to us without violating any
legal obligation. Our officers and directors would continue to be
subject to all other fiduciary duties owed to us and our
stockholders and no other waivers of their respective fiduciary
obligations have been provided to any such officers and directors.
We do not have any plans to waive the fiduciary duties of our
officers and directors post-business combination.
Certain of our officers and directors expect to have, and any of
them may in the future become, affiliated with entities that are
engaged in a business similar to ours. Potential investors should
also be aware of the following other potential conflicts of
interest:
|
• |
None of our officers or directors
is required to commit his or her full time to our affairs and,
accordingly, may have conflicts of interest in allocating his or
her time among various business activities.
|
|
• |
Certain of our officers and
directors expect to have, and any of them in the future may further
have, fiduciary or contractual obligations to several other
entities pursuant to which such officer or director is or will be
required to present a business combination opportunity to such
entities. 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 these fiduciary or
contractual obligations to present such business combination
opportunity to such entity, and only present it to us if such
entity rejects the opportunity and he or she determines to present
the opportunity to us. Although we have no formal policy in place
for vetting potential conflicts of interest, our board of directors
will review any potential conflicts of interest on a case-by-case
basis. In addition, our Sponsor and our officers and directors
expect to sponsor or form other special purpose acquisition
companies similar to ours or may pursue other business or
investment ventures during the period in which we are seeking an
initial business combination. Any such companies, businesses or
investments may present additional conflicts of interest in
pursuing an initial business combination. our management team has
significant experience in identifying and executing multiple
acquisition opportunities simultaneously and, while we intend to
focus our search for a target business in the infrastructure
sector, we are free to pursue an initial business combination with
a target in any industry or geographic region.
|
|
• |
In the course of their other
business activities, our officers and directors may become aware of
investment and business opportunities that may be appropriate for
presentation to us as well as the other entities with which they
are affiliated. Our management may have conflicts of interest in
determining to which entity a particular business opportunity
should be presented. For a complete description of our management’s
other affiliations, please see “— Founders, Directors, Director
Nominees and Executive Officers.”
|
|
• |
Our initial stockholders,
officers and directors have agreed to waive their redemption rights
with respect to their Founder Shares and any Public Shares held by
them in connection with the consummation of our initial business
combination. Our directors and officers have also entered into the
letter agreement, which imposes the same obligations on them with
respect to any Public Shares acquired by them. Additionally, our
initial stockholders, officers and directors have agreed to waive
their redemption rights with respect to their Founder Shares if we
fail to consummate our initial business combination within 24
months after the closing of the IPO or during any Extension Period.
Moreover, pursuant to the investment agreements, the Institutional
Anchor Investors agreed to waive any right, title, interest or
claim of any kind in or to any monies held in the Trust Account
(including applicable redemption rights), or any other asset of our
company as a result of any liquidation of our company, with respect
to any Founder Shares held by them. However, if our initial
stockholders, any of our officers, directors or affiliates or any
of the Institutional Anchor Investors acquired or acquire Public
Shares in or after the IPO, they will be entitled to liquidating
distributions from the Trust Account with respect to such Public
Shares if we fail to consummate our initial business combination
within the prescribed time frame. If we do not complete our initial
business combination within such applicable time period, the
proceeds of the sale of the Private Placement Warrants held in the
Trust Account will be used to fund the redemption of our Public
Shares, and the Private Placement Warrants will expire worthless.
With certain limited exceptions, the Founder Shares will not be
transferable, assignable or salable by our initial stockholders
until the earlier of (A) one year after the completion of our
initial business combination and (B) subsequent to our initial
business combination, (x) if the last reported sale price of the
Class A common stock equals or exceeds $12.00 per share (as
adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any
30-trading day period commencing at least 150 days after our
initial business combination, or (y) the date on which we complete
a liquidation, merger, stock exchange, reorganization or other
similar transaction that results in all of our public stockholders
having the right to exchange their shares of Class A common stock
for cash, securities or other property. With certain limited
exceptions, the Private Placement Warrants and the shares of Common
Stock underlying such warrants, will not be transferable,
assignable or salable by our sponsor until 30 days after the
completion of our initial business combination. Since our Sponsor
and officers and directors directly or indirectly own Common Stock
shares and warrants, our officers and directors 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.
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|
• |
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 initial
business combination and as a result, may cause them to have
conflicts of interest in determining whether to proceed with a
particular business combination.
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|
• |
Our key personnel may have a
conflict of interest with respect to evaluating a particular
business combination if the retention or resignation of any such
key personnel was included by a target business as a condition to
any agreement with respect to our initial business
combination.
|
The conflicts described above may not be resolved in our
favor.
In general, officers and directors of a corporation incorporated
under the laws of the State of Delaware are required to present
business opportunities to a corporation if:
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• |
the corporation could financially
undertake the opportunity;
|
|
• |
the opportunity is within the
corporation’s line of business; and
|
|
• |
it would not be fair to the
corporation and its stockholders for the opportunity not to be
brought to the attention of the corporation.
|
Accordingly,
as a result of multiple business affiliations, our officers and
directors have similar legal obligations relating to presenting
business opportunities meeting the above-listed criteria to
multiple entities. Furthermore, our Certificate of Incorporation
provides that, prior to the consummation of our initial business
combination, the doctrine of corporate opportunity will not apply
with respect to any of our officers or directors in circumstances
where the application of the doctrine would conflict with any
fiduciary duties or contractual obligations they may have, and
there will not be any expectancy that any of our directors or
officers will offer any such corporate opportunity of which he or
she may become aware to us. Below is a table summarizing the
entities to which our officers, directors and director nominees
currently have fiduciary duties or contractual obligations that may
present a conflict of interest:
|
Name of Individual
|
|
Entity Name
|
|
Entity’s Business
|
|
Affiliation
|
|
|
|
|
|
|
|
|
|
Dinakar Singh
|
|
Axon Capital LP
|
|
Investment Company
|
|
Founding Partner, Chief Executive Officer
|
| |
|
Spinal Muscular Atrophy Foundation
|
|
Non-profit
|
|
Founder, Chairman
|
| |
|
Columbia University Medical Center
|
|
Education
|
|
Board Member
|
| |
|
New York Public Library
|
|
Non-profit
|
|
Board Member
|
| |
|
|
|
|
|
|
|
Jon Layman
|
|
Prime Movers Lab
|
|
Investment Company
|
|
General Partner
|
| |
|
Mission Housing Development Corporation
|
|
Non-profit
|
|
Board Member
|
|
|
|
Focused
Energy
|
|
Energy |
|
Board
Member
|
| |
|
|
|
|
|
|
|
Richard Spencer
|
|
Global Atlantic Financial Group
|
|
Insurance
|
|
Director
|
| |
|
Bondi Partners LLC
|
|
Consulting
|
|
Chairman
|
| |
|
|
|
|
|
|
|
Muneer Satter
|
|
Satter Medical Technology Partners, L.P.
|
|
Private Equity
|
|
Founder, Managing Partner
|
| |
|
Satter Investment Management LLC
|
|
Investment Company
|
|
Chairman
|
| |
|
Satter Foundation
|
|
Non-profit
|
|
Manager
|
| |
|
Restorsea Holdings, LLC
|
|
Retail
|
|
Chairman of Board
|
| |
|
Annexon Inc.
|
|
Healthcare
|
|
Director
|
| |
|
Goldman Sachs Foundation
|
|
Non-profit
|
|
Vice Chairman
|
| |
|
GS Gives
|
|
Non-profit
|
|
Vice Chairman
|
| |
|
Accelerate Institute
|
|
Education
|
|
Advisor
|
| |
|
Navy SEAL Foundation
|
|
Non-profit
|
|
Director
|
| |
|
Northwestern University
|
|
Education
|
|
Trustee
|
| |
|
Northwestern Medical Group
|
|
Healthcare
|
|
Director
|
| |
|
|
|
|
|
|
|
Koryn Estrada
|
|
Axon Capital LP
|
|
Investment Company
|
|
Partner, Co-Chief Executive Officer, Co-Chief Information
Officer
|
| |
|
RiseWell
|
|
Consumer Products
|
|
Partner, Co-Founder
|
| |
|
HeyMama
|
|
Social Media
|
|
Director
|
| |
|
NuMilk (Plant Tap Inc.)
|
|
Consumer Products
|
|
Director
|
| |
|
|
|
|
|
|
|
William Ulrich
|
|
Presidio Petroleum
|
|
Energy
|
|
Co-CEO, Director
|
| |
|
Presidio Investment Holdings LLC
|
|
Holding Company
|
|
Director
|
Accordingly, if any of the above officers or directors become aware
of a business combination opportunity which is suitable for any of
the above entities 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 business combination
opportunity to such entity, and only present it to us if such
entity rejects the opportunity. We do not believe, however, that
any of the foregoing fiduciary duties or contractual obligations
will materially affect our ability to complete our initial business
combination. Our Certificate of Incorporation provides that we will
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.
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 and
disinterested directors, will obtain an opinion from an independent
investment banking firm that is a member of FINRA or from an
independent accounting firm, that our initial business combination
is fair to our Company from a financial point of view.
In addition, our Sponsor or any of its affiliates may make
additional investments in the Company in connection with the
initial business combination, although our Sponsor and its
affiliates have no obligation or current intention to do so. If our
Sponsor or any of its affiliates elects to make additional
investments, such proposed investments could influence our
Sponsor’s motivation to complete an initial business
combination.
In the event that we submit our initial business combination to our
public stockholders for a vote, our initial stockholders, officers
and directors have agreed, pursuant to the terms of a letter
agreement entered into with us, to vote their Founder Shares (and
their permitted transferees will agree) and any Public Shares held
by them in favor of our initial business combination. Our directors
and officers have also entered into the letter agreement, which
imposes the same obligations on them with respect to any Public
Shares acquired by them.
Competition
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 will be numerous target
businesses we could potentially acquire with the net proceeds of
the IPO 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. Our Sponsor or any of its affiliates may make
additional investments in us, although our Sponsor and its
affiliates have no obligation or other duty to do so. This inherent
competitive limitation gives others an advantage in pursuing the
acquisition of certain target businesses. Furthermore, 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 target businesses. Any of
these factors may place us at a competitive disadvantage in
successfully negotiating and completing an initial business
combination.
Employees
We currently have two officers and do not intend to have any full-time
employees prior to the completion of our initial business
combination. Members of our management team are not obligated to
devote any specific number of hours to our matters but they intend
to devote as much of their time as they deem necessary to our
affairs until we have completed our initial business combination.
The amount of time that any such person will devote in any time
period to our company 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.
An investment in our securities involves a high degree of risk. You
should carefully consider all of the risks described below,
together with the other information contained in this report,
before making a decision to invest in our securities. If any of the
following events occur, our business, financial condition and
operating results may be materially adversely affected. In that
event, the trading price of our securities could decline, and you
could lose all or part of your investment. These risks are discussed more fully
following this summary. Material risks that may affect our
business, operating results and financial condition include, but
are not necessarily limited to, the following:
|
• |
We are a
recently incorporated company with no operating history and no
revenues, and you have no basis on which to evaluate our ability to
achieve our business objective.
|
|
• |
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.
|
|
• |
The
requirement that we complete an initial business combination within
24 months after the closing of our Initial Public Offering may give
potential target businesses leverage over us in negotiating a
business combination and may limit the time we have in which to
conduct due diligence on potential business combination targets as
we approach our dissolution deadline, which could undermine our
ability to complete our initial business combination on terms that
would produce value for our stockholders.
|
|
• |
The
recent coronavirus (COVID-19) pandemic and the impact on
business and debt and equity markets could have a material adverse
effect on our search for a business combination, and any target
business with which we ultimately consummate a business
combination.
|
|
• |
We may
not be able to complete an initial business combination within 24
months after the closing of our Initial Public Offering, in which
case we would cease all operations except for the purpose of
winding up and we would redeem our Public Shares and liquidate, in
which case our public stockholders may only receive approximately
$10.00 per share, or less than such amount in certain
circumstances, and our warrants will expire worthless.
|
|
• |
If we
seek stockholder approval of our initial business combination and
we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold in
excess of 15% of our Class A common stock, you will lose the
ability to redeem all such shares in excess of 15% of our
Class A common stock.
|
|
• |
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 the
net proceeds of our Initial Public Offering and the sale of the
Private Placement Warrants not being held in the Trust Account are
insufficient to allow us to operate for at least the next 24
months, it could limit the amount available to fund our search for
a target business or businesses and complete our initial business
combination, and we will depend on loans from our Sponsor or
management team to fund our search and to complete our initial
business combination.
|
|
• |
You will
not be entitled to protections normally afforded to investors of
many other blank check companies.
|
|
• |
We may
not hold an annual meeting of stockholders until after the
completion of our initial business combination.
|
|
• |
The
grant of registration rights to our initial stockholders may make
it more difficult to complete our initial business combination, and
the future exercise of such rights may adversely affect the market
price of the shares of our Class A common stock.
|
|
• |
Because
we are neither limited to evaluating a target business in a
particular industry sector nor have we selected any specific target
businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any
particular target business’s operations.
|
|
• |
We may
seek acquisition opportunities in industries or sectors which may
be outside of our management’s area of expertise.
|
|
• |
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.
|
|
• |
We may
engage in a business combination with one or more target businesses
that have relationships with entities that may be affiliated with
our Sponsor, officers or directors which may raise potential
conflicts of interest.
|
|
• |
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.
|
|
• |
We do
not have a specified maximum redemption threshold. The absence of
such a redemption threshold may make it possible for us to complete
our initial business combination with which a substantial majority
of our stockholders do not agree.
|
|
• |
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.
|
|
• |
Our
management may not be able to maintain control of a target business
after our initial business combination. Upon the loss of control of
a target business, new management may not possess the skills,
qualifications or abilities necessary to profitably operate such
business.
|
|
• |
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
officers, directors and their respective affiliates may have
competitive pecuniary interests that conflict with our
interests.
|
|
• |
You will
not have any rights or interests in funds from the Trust Account,
except under certain limited circumstances. Therefore, to liquidate
your investment, you may be forced to sell your Public Shares or
warrants, potentially at a loss.
|
|
• |
We are
not registering the Class A common stock issuable upon
exercise of the warrants under the Securities Act or any state
securities laws at this time, and such registration may not be in
place when an investor desires to exercise warrants, thus
precluding such investor from being able to exercise its warrants
except on a cashless basis and potentially causing such warrants to
expire worthless.
|
|
• |
Our
warrants and Founder Shares may have an adverse effect on the
market price of the shares of our Class A common stock and make it
more difficult to effectuate our initial business
combination.
|
|
• |
Past
performance by our Sponsor or our management team, including the
businesses referred to herein, may not be indicative of future
performance of an investment in us or in the future performance of
any business that we may acquire.
|
An investment in our securities involves a high degree of risk. You
should consider carefully all of the risks described below,
together with the other information contained in this Annual Report
on Form 10-K, including the financial statements, before making a
decision to invest in our securities.
Risks Relating to Our Business
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 may be unable to complete our initial business
combination. If we fail to complete our initial business
combination, we will never generate any operating revenues.
Risks Relating to Our Search for, and Consummation of or Inability
to Consummate, a Business Combination
Our public stockholders may not be afforded an opportunity to vote
on our proposed initial 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 law or stock exchange listing
requirements or if we decide to hold a stockholder vote for
business or other reasons. For instance, Nasdaq rules currently
allow us to engage in a tender offer in lieu of a stockholder
meeting but would still require us to obtain stockholder approval
if we were seeking to issue more than 20% of our outstanding shares
to a target business as consideration in any business combination.
Therefore, if we were structuring a business combination that
required us to issue more than 20% of our outstanding shares, we
would seek stockholder approval of such business combination.
However, except as required by applicable law or stock exchange
rules, the decision as to whether we will seek stockholder approval
of a proposed business combination or will allow stockholders to
sell their shares to us in a tender offer will be made by us,
solely in our discretion, and will be based on a variety of
factors, such as the timing of the transaction and whether the
terms of the transaction would otherwise require us to seek
stockholder approval. 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
If we seek stockholder approval of our initial business
combination, our Sponsor, the Institutional Anchor Investors, and
our officers and directors have agreed to vote in favor of such
initial business combination, regardless of how our public
stockholders vote.
Our Sponsor, officers and directors have agreed (and their
permitted transferees have agreed or will agree), pursuant to the
terms of a letter agreement entered into with us, to vote their
Founder Shares and any Public Shares held by them in favor of our
initial business combination, and the Institutional Anchor
Investors agreed, pursuant to the terms of the investment
agreements, to vote any Founder Shares held by them in favor of our
initial business combination. If we submit our initial business
combination to our public stockholders for a vote, we will complete
our initial business combination only if a majority of the
outstanding shares of Common Stock voted are voted in favor of the
initial business combination, subject to any greater or additional
vote required by the Delaware General Corporation Law (“DGCL”) or
our Certificate of Incorporation. As a result, in addition to our
initial stockholders’ Founder Shares and Public Shares held by our
Sponsor, officers and directors, we would need 4,125,001, or
27.5% (assuming all outstanding shares are voted in favor of our
initial business combination) of the 15,000,000 Public Shares sold
in the IPO to be voted in favor of an initial business combination
in order to have our initial business combination approved
(assuming all outstanding shares are voted). In addition, as a
result of the Founder Shares and, with respect to one or more
Institutional Anchor Investors, Private Placement Warrants that the
Institutional Anchor Investors may hold, each Institutional Anchor
Investor may have different interests with respect to a vote on an
initial business combination than other public stockholders. Among
other matters, the Institutional Anchor Investors’ investments in
the Founder Shares and (to the extent applicable) Private Placement
Warrants will generally be worthless if we do not consummate an
initial business combination within 24 months from the closing of
the IPO, and these investors will benefit more than our public
stockholders from our completion of an initial business combination
and may benefit from an initial business combination even if our
public stockholders experience a loss. Accordingly, these investors
may be more likely to favor any proposed initial business
combination transaction even if our public stockholders do not
favor the transaction. The Institutional Anchor Investors will also
have the potential to realize enhanced economic returns and overall
economic outcome from their investment in us in comparison to our
other public stockholders who are not making anchor investments and
purchasing Founder Shares. Moreover, if we seek stockholder
approval of our initial business combination, the agreement by our
initial stockholders and management team and the Institutional
Anchor Investors to vote in favor of our initial business
combination will increase the likelihood that we will receive the
requisite stockholder approval for such initial business
combination. Our directors and officers have also entered into the
letter agreement, which imposes the same obligations on them with
respect to any Public Shares acquired by them. Our initial
stockholders and their permitted transferees currently collectively
own more than 20% of our outstanding shares of Common Stock and we
expect they continue to collectively own at least 20% of our
outstanding shares of Common Stock at the time of any such
stockholder vote. Accordingly, if we seek stockholder approval of
our initial business combination, it is more likely that the
necessary stockholder approval will be received than would be the
case if such persons agreed to vote their Founder Shares in
accordance with the majority of the votes cast by our public
stockholders.
Your only opportunity to affect the investment decision regarding a
potential business combination will be limited to the exercise of
your right to redeem your shares from us for cash, unless we seek
stockholder approval of such business combination.
At the time of your investment in us, you will not be provided with
an opportunity to evaluate the specific merits or risks of our
initial business combination. Additionally, 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
target businesses, 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, we will only redeem our Public Shares so
long as (after such redemptions) our net tangible assets, after
payment of the deferred underwriting commissions, will be at least
$5,000,001 either prior to or upon consummation of an initial
business combination, after payment of the deferred underwriting
commission (so that we do not then become subject to the SEC’s
“penny stock” rules), or any greater net tangible asset or cash
requirement which may be contained in the agreement relating to our
initial business combination. Consequently, if accepting all
properly submitted redemption requests would cause our net tangible
assets to not be at least $5,000,001 either prior to or upon
consummation of an initial business combination, after payment of
the deferred underwriting commission, 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, and may substantially dilute your investment
in us.
At the time we enter into an agreement for our initial business
combination, we will not know how many stockholders may exercise
their redemption rights and, therefore, we will need to structure
the transaction based on our expectations as to the number of
shares that will be submitted for redemption. If our initial
business combination agreement requires us to use a portion of the
cash in the Trust Account to pay the purchase price or requires us
to have a minimum amount of cash at closing, we will need to
reserve a portion of the cash in the Trust Account to meet such
requirements or arrange for third-party financing. In addition, if
a larger number of shares is submitted for redemption than we
initially expected, we may need to restructure the transaction to
reserve a greater portion of the cash in the Trust Account or
arrange for third-party financing. The number of shares submitted
for redemption also impacts the extent of dilution that you will
experience as a result of the expected ownership interests of our
Sponsor, the sponsor anchor investor and the Institutional Anchor
Investors in our Founder Shares and Private Placement Warrants. The
more shares that are redeemed, the greater the dilution will be on
a per-share basis for shareholders that do not redeem.
In addition, 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 B common stock result in the issuance of Class A shares on a
greater than one-to-one basis upon conversion of the Class B common
stock at the time of our business combination. The above
considerations may limit our ability to complete the most desirable
business combination available to us or optimize our capital
structure, and may result in substantial dilution from your
purchase of our Class A common stock. The effect of this dilution
will be greater for shareholders who do not redeem. The amount of
the deferred underwriting commissions payable to the underwriters
will not be adjusted for any shares that are redeemed in connection
with an initial business combination, which may further dilute your
investment. The per-share amount we will distribute to stockholders
who properly exercise their redemption rights will not be reduced
by the deferred underwriting commissions 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. We may not be able to generate sufficient
value from the completion of our initial business combination in
order to overcome the dilutive impact of these and other factors,
and, accordingly, you may incur a net loss on your investment.
Please see “— Risks
Relating to Our Management Team— Our Sponsor and its affiliates may
have incentives to take increased investment risk and to complete a
transaction on terms that are less favorable to you in order to
complete a transaction within the specified time period to avoid
losing their investment” and “—Risks Relating to Our Securities—
Our Sponsor paid an aggregate of $25,000, or approximately $0.003
per Founder Share, and, accordingly, you will experience immediate
and substantial dilution from the purchase of our Class A common
stock.”
Unlike many other similarly structured blank check companies, our
initial stockholders will receive additional shares of Class A
common stock if we issue shares to consummate an initial business
combination, which could substantially dilute your equity
interest.
The Founder Shares will automatically convert into Class A common
stock at the time of our initial business combination, or earlier
at the option of the holders, on a one-for-one basis, subject to
adjustment as provided herein. In the case that additional shares
of Class A common stock, or equity-linked securities convertible
into or exercisable or exchangeable for Class A common stock, are
issued or deemed issued in excess of the amounts listed in this
report and related to the closing of the initial business
combination, the ratio at which Founder Shares shall convert into
Class A common stock will be adjusted so that the number of Class A
common stock issuable upon conversion of all Founder Shares will
equal, in the aggregate, on an as-converted basis, 20% of the sum
of (i) the total number of all outstanding shares of Common Stock
at the time of completion of the IPO, plus (ii) all shares of Class
A common stock and equity-linked securities issued, or deemed
issued, in connection with the initial business combination
(excluding any shares or equity-linked securities issued, or to be
issued, to any seller in the business combination, and any private
placement-equivalent warrants issued to our Sponsor or its
affiliates upon conversion of loans made to us). This is different
from most other similarly structured blank check companies in which
the initial stockholder will only be issued an aggregate of 20% of
the total number of shares to be outstanding prior to the initial
business combination. As a result, the equity interest of investors
in the IPO could be significantly diluted.
The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares could increase
the probability that our initial business combination would be
unsuccessful and that you would have to wait for liquidation in
order to redeem your stock.
If our initial business combination agreement requires us to use a
portion of the cash in the Trust Account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the
probability that our initial business combination would be
unsuccessful increases. If our initial business combination is
unsuccessful, you would not receive your pro rata portion of the
Trust Account until we liquidate the Trust Account. If you are in
need of immediate liquidity, you could attempt to sell your stock
in the open market; however, at such time our stock may trade at a
discount to the pro rata amount per share in the Trust Account. In
either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with our
redemption until we liquidate or you are able to sell your stock in
the open market.
The requirement that we complete our initial business combination
within the prescribed time frame may give potential target
businesses leverage over us in negotiating a business combination
and may limit the time we have in which to conduct due diligence on
potential business combination target, in particular as we approach
our dissolution deadline, which could undermine our ability to
complete our initial business combination on terms that would
produce value for our stockholders.
Any potential target business with which we enter into negotiations
concerning a business combination will be aware that we must
complete our initial business combination within 24 months from the
closing of the IPO. 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 end of 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. Furthermore, an affiliate of our Sponsor expects to
sponsor other special purpose acquisition companies and may choose
in its sole discretion to prioritize an initial business
combination with one or more other special purpose acquisition
companies, even if the target could be a suitable target for
us.
Any due diligence in connection with an initial business
combination may not reveal all relevant considerations or
liabilities of a target business, which could have a material
adverse effect on our business, financial condition, results of
operations and prospects.
We intend to conduct such due diligence as we deem reasonably
practicable and appropriate based on the target business and the
facts and circumstances applicable to the proposed transaction
prior to any initial business combination. The objective of the due
diligence process will be to identify material issues which might
affect the decision to proceed with an initial business combination
or the consideration payable in connection with such initial
business combination. We also intend to use information provided
during the due diligence process to formulate our business and
operational planning for, and valuation of, any target company or
business. While conducting due diligence and assessing a potential
target business, we will rely on publicly available information (if
any), information provided by the relevant target business to the
extent provided and, in some circumstances, third-party
studies.
The due diligence undertaken with respect to a potential initial
business combination may not reveal all relevant facts that may be
necessary to evaluate such transaction or to formulate a business
strategy. Furthermore, the information provided during due
diligence may not be adequate or accurate. As part of the due
diligence process, we will also make subjective judgments regarding
the results of operations, financial condition and prospects of a
potential initial business combination, and these judgments may be
inaccurate.
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.
Due diligence conducted in connection with an initial business
combination may not result in the initial business combination
being successful. If the due diligence investigation fails to
identify material information regarding an opportunity, or if we
consider such material risks to be commercially acceptable relative
to the opportunity, and we proceed with an initial business
combination, our company may subsequently incur substantial
impairment charges or other losses. In addition, following an
initial business combination, we may be subject to significant,
previously undisclosed liabilities of the acquired business that
were not identified during due diligence and which could have a
material adverse effect on our business, financial condition,
results of operations and prospects.
Our search for a business combination, and any target business with
which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (COVID-19)
outbreak and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus was reported to
have surfaced, which has and is continuing to spread throughout the
world, including the United States. On March 11, 2020, the World
Health Organization characterized the outbreak as a “pandemic.” The
COVID-19 outbreak has and a significant outbreak of other
infectious diseases could result in a widespread health crisis that
could adversely affect the economies and financial markets
worldwide, and the business of any potential target business with
which we consummate a business combination could be materially and
adversely affected. Furthermore, we may be unable to complete a
business combination if continued concerns relating to COVID-19
continues to restrict travel, limit the ability to have meetings
with potential investors or the target company’s personnel, vendors
and services providers are unavailable to negotiate and consummate
a transaction in a timely manner. The extent to which COVID-19
impacts our search for a business combination will depend on future
developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity
of COVID-19 and the actions to contain COVID-19 or treat its
impact, among others. While vaccines for COVID-19 are being, and
have been, developed, there is no guarantee that any such vaccine
will be durable and effective consistent with current expectations,
and we expect it will take significant time before the vaccines are
available and accepted on a significant scale. If the disruptions
posed by COVID-19 or other matters of global concern continue for
an extensive period of time, our ability to consummate a business
combination, or the operations of a target business with which we
ultimately consummate a business combination, may be materially
adversely affected.
In addition, our ability to consummate a transaction may be
dependent on the ability to raise equity and debt financing which
may be impacted by COVID-19 and other events, including as a result
of increased market volatility, decreased market liquidity in
third-party financing being unavailable on terms acceptable to us
or at all.
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, in which case our public
stockholders may receive only $10.00 per share, or less than such
amount in certain circumstances, and our warrants will expire
worthless.
Our Certificate of Incorporation provides that we must complete our
initial business combination within 24 months from the closing of
the IPO. We may not be able to find a suitable target business and
complete our initial business combination within such time period.
Our ability to complete our initial business combination may be
negatively impacted by general market conditions, volatility in the
capital and debt markets and the other risks described herein. For
example, the outbreak of COVID-19 continues to grow both in the
U.S. and globally and, while the extent of the impact of the
outbreak on us will depend on future developments, it could limit
our ability to complete our initial business combination, including
as a result of increased market volatility, decreased market
liquidity and third-party financing being unavailable on terms
acceptable to us or at all. Additionally, the outbreak of COVID-19
may negatively impact businesses we may seek to acquire.
If we have not completed our initial business combination within
such time period or during any Extension Period, we will: (1) cease
all operations except for the purpose of winding up; (2) as
promptly as reasonably possible but not more than 10 business days
thereafter, redeem 100% of the Public Shares, at a per share price,
payable in cash, equal to the aggregate amount then on deposit in
the Trust Account, including interest earned on the funds held in
the Trust Account and not previously released to us to pay our
taxes (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding Public Shares,
which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further
liquidating distributions, if any); and (3) as promptly as
reasonably possible following such redemption, subject to the
approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the
requirements of other applicable law. In such case, our public
stockholders may receive only $10.00 per share, or less than $10.00
per share, on the redemption of their shares, and our warrants will
expire worthless. Please see “— 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” and other risk factors herein.
If we seek stockholder approval of our initial business
combination, our Sponsor, directors, officers, advisors or any of
their affiliates may elect to purchase shares or warrants from
public stockholders, which may influence a vote on a proposed
business combination and reduce the public “float” of our
securities.
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our
Sponsor, directors, officers, advisors or any of their affiliates
may purchase Public Shares or public warrants or a combination
thereof in privately negotiated transactions or in the open market
either prior to or following the completion of our initial business
combination. Additionally, at any time at or prior to our initial
business combination, subject to applicable securities laws
(including with respect to material nonpublic information), our
Sponsor, directors, officers, advisors or any of their affiliates
may enter into transactions with investors and others to provide
them with incentives to acquire Public Shares, vote their Public
Shares in favor of our initial business combination or not redeem
their Public Shares. However, they are under no obligation to do
so. Such a purchase may include a contractual acknowledgement that
such public stockholder, although still the record holder of our
shares is no longer the beneficial owner thereof and therefore
agrees not to exercise its redemption rights. In the event that our
Sponsor, directors, officers, advisors or any of their affiliates
purchase shares in privately negotiated transactions from public
stockholders who have already elected to exercise their redemption
rights or submitted a proxy to vote against our initial business
combination, such selling public stockholders would be required to
revoke their prior elections to redeem their shares and any proxy
to vote against our initial business combination. The price per
share paid in any such transaction may be different than the amount
per share a public stockholder would receive if it elected to
redeem its shares in connection with our initial business
combination. The purpose of any such transaction could be to (1)
vote such shares in favor of the initial business combination and
thereby increase the likelihood of obtaining stockholder approval
of the initial business combination, (2) satisfy a closing
condition in an agreement with a target that requires us to have a
minimum net worth or a certain amount of cash at the closing of our
initial business combination, where it appears that such
requirement would otherwise not be met or (3) reduce the number of
public warrants outstanding or to vote such warrants on any matters
submitted to the warrant holders for approval in connection with
our initial business combination. Any such transaction may result
in the completion of our initial business combination that may not
otherwise have been possible.
In addition, if such purchases are made, the public “float” of our
shares of Class A common stock or warrants may be reduced and the
number of beneficial holders of our securities may be reduced,
which may make it difficult to maintain or obtain the quotation,
listing or trading of our securities on a national securities
exchange.
If a stockholder fails to receive notice of our offer to redeem our
Public Shares in connection with our initial business combination,
or fails to comply with the procedures for tendering its shares,
such shares may not be redeemed.
We will comply with the tender offer rules or proxy rules, as
applicable, when conducting redemptions in connection with our
initial business combination. Despite our compliance with these
rules, if a stockholder fails to receive our tender offer or proxy
materials, as applicable, such stockholder may not become aware of
the opportunity to redeem its shares. In addition, the tender offer
documents or proxy materials, as applicable, that we will furnish
to holders of our Public Shares in connection with our initial
business combination will describe the various procedures that must
be complied with in order to validly tender or redeem Public
Shares, which will include the requirement that a beneficial holder
must identify itself in order to validly redeem its shares. For
example, we may require our public stockholders seeking to exercise
their redemption rights, whether they are record holders or hold
their shares in “street name,” to either tender their certificates
to our transfer agent prior to the date set forth in the tender
offer documents or proxy materials mailed to such holders, or up to
two business days prior to the scheduled vote on the proposal to
approve the initial business combination in the event we distribute
proxy materials, or to deliver their shares to the transfer agent
electronically. In the event that a stockholder fails to comply
with these or any other procedures, its shares may not be
redeemed.
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold
in excess of 15% of our Class A common stock, you will lose the
ability to redeem all such shares in excess of 15% of our Class A
common stock.
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our
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 redeeming its shares with respect to more than an aggregate of
15% of the shares sold in the IPO, which we refer to as the “Excess
Shares,” without our prior consent. However, we would not be
restricting our stockholders’ ability to vote all of their shares
(including Excess Shares) for or against our initial business
combination. Your inability to redeem the Excess Shares will reduce
your influence over our ability to complete our initial business
combination and you could suffer a material loss on your investment
in us if you sell Excess Shares in open market transactions.
Additionally, you will not receive redemption distributions with
respect to the Excess Shares if we complete our initial business
combination. As a result, you will continue to hold that number of
shares exceeding 15% and, in order to dispose of such shares, would
be required to sell your 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, or
less in certain circumstances, on our redemption of their stock,
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 will be
numerous target businesses we could potentially acquire with the
net proceeds of the IPO 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, in the event we seek stockholder
approval of our initial business combination and we are obligated
to pay cash for shares of our Class A common stock, it will
potentially reduce the resources available to us for our initial
business combination. Any of these obligations may place us at a
competitive disadvantage in successfully negotiating a business
combination. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the
liquidation of our Trust Account and our warrants will expire
worthless. Please see “— 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” and other risk factors herein.
As the number of special purpose acquisition companies increases,
there may be more competition to find an attractive target for an
initial business combination. This could increase the costs
associated with completing our initial business combination and may
result in our inability to find a suitable target for our initial
business combination.
In recent years, the number of special purpose acquisition
companies that have been formed has increased substantially. Many
companies have entered into business combinations with special
purpose acquisition companies, and there are still many special
purpose acquisition companies seeking targets for their initial
business combination, as well as many additional special purpose
acquisition companies currently in registration. As a result, at
times, fewer attractive targets may be available, and it may
require more time, effort and resources to identify a suitable
target for an initial business combination.
In addition, because there are more special purpose acquisition
companies seeking to enter into an initial business combination
with available targets, the competition for available targets with
attractive fundamentals or business models may increase, which
could cause target companies to demand improved financial terms.
Attractive deals could also become scarcer for other reasons, such
as economic or industry sector downturns, geopolitical tensions or
increases in the cost of additional capital needed to close
business combinations or operate targets post-business combination.
This could increase the cost of, delay or otherwise complicate or
frustrate our ability to find a suitable target for and/or complete
our initial business combination.
If the funds not being held in the Trust Account are insufficient
to allow us to operate for at least the 24 months following the
closing of the IPO, we may be unable to complete our initial
business combination.
The funds available to us outside of the Trust Account may not be
sufficient to allow us to operate for at least the 24 months
following the closing of the IPO, assuming that our initial
business combination is not completed during that time. We expect
to incur significant costs in pursuit of our acquisition plans.
Management’s plans to address this need for capital through the IPO
and potential loans from certain of our affiliates are discussed in
Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations—Liquidity and Capital
Resources.” However, our affiliates are not obligated to make loans
to us in the future, and we may not be able to raise additional
financing from unaffiliated parties necessary to fund our expenses.
Any such event in the future may negatively impact the analysis
regarding our ability to continue as a going concern at such
time.
We believe that, as of the closing of IPO, the funds available to
us outside of the Trust Account are sufficient to allow us to
operate for at least the 24 months following the closing of the
IPO; however, we cannot assure you that our estimate is accurate.
Of the funds available to us, we could use a portion of the funds
available to us to pay fees to consultants to assist us with our
search for a target business. We could also use a portion of the
funds as a down payment or to fund a “no-shop” provision (a
provision in letters of intent or merger agreements designed to
keep target businesses from “shopping” around for transactions with
other companies or investors on terms more favorable to such target
businesses) with respect to a particular proposed business
combination, although we do not have any current intention to do
so. If we entered into a letter of intent or merger agreement where
we paid for the right to receive exclusivity from a target business
and were subsequently required to forfeit such funds (whether as a
result of our breach or otherwise), we might not have sufficient
funds to continue searching for, or conduct due diligence with
respect to, a target business. If we are unable to complete our
initial business combination, our public stockholders may receive
only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our Trust Account and our
warrants will expire worthless. Please see “— 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” and other risk
factors herein.
If the net proceeds of the IPO and the sale of the Private
Placement Warrants not being held in the Trust Account are
insufficient, it could limit the amount available to fund our
search for a target business or businesses and complete our initial
business combination and we will depend on loans from our Sponsor
or management team to fund our search, to pay our taxes and to
complete our initial business combination.
Of the net proceeds of the IPO and the sale of the Private
Placement Warrants, we estimate only $1,000,000 will be available
to us initially outside the Trust Account to fund our working
capital requirements. In the event that our offering expenses
exceed our estimate of $1,000,000, we may fund such excess with
funds not to be held in the Trust Account. In such case, the amount
of funds we intend to be held outside the Trust Account would
decrease by a corresponding amount. Conversely, in the event that
the offering expenses are less than our estimate of $1,000,000, the
amount of funds we intend to be held outside the Trust Account
would increase by a corresponding amount. If we are required to
seek additional capital, we would need to borrow funds from our
Sponsor, management team or other third parties to operate or may
be forced to liquidate. Neither our Sponsor, members of our
management team nor any of their affiliates is under any obligation
to loan funds to us in such circumstances. Any such loans may be
repaid only from funds held outside the Trust Account or from funds
released to us upon completion of our initial business combination.
If we have not completed our initial business combination within
the prescribed timeframe because we do not have sufficient funds
available to us, we will be forced to cease operations and
liquidate the Trust Account. In such case, our public stockholders
may receive only $10.00 per share, or less in certain
circumstances, and our warrants will expire worthless. Please see
“— 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”
and other risk factors herein.
You will not be entitled to protections normally afforded to
investors of many other blank check companies.
Since the net proceeds of the IPO 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
selected, we may be deemed to be a “blank check” company under the
U.S. securities laws. However, because we had net tangible assets
in excess of $5,000,000 upon the successful completion of the IPO
and the sale of the Private Placement Warrants and filed a Current
Report on Form 8-K, including an audited balance sheet
demonstrating this fact, we are exempt from rules promulgated by
the SEC to protect investors in blank check companies, such as Rule
419. Accordingly, investors 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 initial business combination than do
companies subject to Rule 419. Moreover, if the IPO were
subject to Rule 419, that rule would prohibit the release of any
interest earned on funds held in the Trust Account to us unless and
until the funds in the Trust Account were released to us in
connection with our completion of our initial business
combination.
Changes in the market for directors and officers liability
insurance could make it more difficult and more expensive for us to
negotiate and complete an initial business combination.
In recent months, the market for directors and officers liability
insurance for special purpose acquisition companies has changed in
ways adverse to us and our management team. Fewer insurance
companies are offering quotes for directors and officers liability
coverage, the premiums charged for such policies have generally
increased and the terms of such policies have generally become less
favorable. These trends may continue into the future.
The increased cost and decreased availability of directors and
officers liability insurance could make it more difficult and more
expensive for us to negotiate and complete an initial business
combination. In order to obtain directors and officers liability
insurance or modify its coverage as a result of becoming a public
company, the post-business combination entity might need to incur
greater expense and/or accept less favorable terms. Furthermore,
any failure to obtain adequate directors and officers liability
insurance could have an adverse impact on the post-business
combination’s ability to attract and retain qualified officers and
directors.
In addition, after completion of any initial business combination,
our directors and officers could be subject to potential liability
from claims arising from conduct alleged to have occurred prior to
such initial business combination. As a result, in order to protect
our directors and officers, the post-business combination entity
may need to purchase additional insurance with respect to any such
claims (“runoff insurance”). The need for runoff insurance would be
an added expense for the post-business combination entity and could
interfere with or frustrate our ability to consummate an initial
business combination on terms favorable to our investors.
If third parties bring claims against us, the proceeds held in the
Trust Account could be reduced and the per share redemption amount
received by stockholders may be less than $10.00 per share.
Our placing of funds in the Trust Account may not protect those
funds from third-party claims against us. Although we will seek to
have all vendors, service providers (other than our independent
registered public accounting firm), prospective target businesses
and other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in
or to any monies held in the Trust Account for the benefit of our
public stockholders, such parties may not execute such agreements,
or even if they execute such agreements they may not be prevented
from bringing claims against the Trust Account, including, but not
limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims
challenging the enforceability of the waiver, in each case in order
to gain 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. Making
such a request of potential target businesses may make our
acquisition proposal less attractive to them and, to the extent
prospective target businesses refuse to execute such a waiver, it
may limit the field of potential target businesses that we might
pursue. The underwriters of the IPO did not execute agreements with
us waiving such claims to the monies held in the Trust
Account.
Examples of possible instances where we may engage a third party
that refuses to execute a waiver include the engagement of a third
party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where
we are unable to find a service provider willing to execute a
waiver. In addition, there is no guarantee that such entities will
agree to waive any claims they may have in the future as a result
of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the Trust Account for
any reason. Upon redemption of our Public Shares, if we have not
completed our initial business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection
with our initial business combination, we will be required to
provide for payment of claims of creditors that were not waived
that may be brought against us within the 10 years following
redemption. Accordingly, the per share redemption amount received
by public stockholders could be less than the $10.00 per share
initially held in the Trust Account, due to claims of such
creditors.
Our Sponsor has agreed that it will be liable to us if and to the
extent any claims by a third party (other than our independent
registered public accounting firm) for services rendered or
products sold to us, or a prospective target business with which we
have discussed entering into a transaction agreement, reduce the
amount of funds in the Trust Account to below (1) $10.00 per public
share or (2) 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 our taxes, 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 the IPO 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,
which is a newly formed entity, has sufficient funds to satisfy its
indemnity obligations and believe that our Sponsor’s only assets
are securities of our company and, therefore, our Sponsor may not
be able to satisfy those obligations. We have not asked our Sponsor
to reserve for such obligations. As a result, if any such claims
were successfully made against the Trust Account, the funds
available for our initial business combination and redemptions
could be reduced to less than $10.00 per public share. In such
event, we may not be able to complete our initial business
combination, and you would receive such lesser amount per public
share in connection with any redemption of your Public Shares. None
of our officers or directors will indemnify us for claims by third
parties including, without limitation, claims by vendors and
prospective target businesses.
Our directors may decide not to enforce the indemnification
obligations of our Sponsor, resulting in a reduction in the amount
of funds in the Trust Account available for distribution to our
public stockholders.
In the event that the proceeds in the Trust Account are reduced
below the lesser of: (1) $10.00 per public share; or (2) 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 our taxes, and our Sponsor asserts
that it is unable to satisfy its indemnification obligations or
that it has no indemnification obligations related to a particular
claim, our independent directors would determine whether to take
legal action against our Sponsor to enforce its indemnification
obligations. While we currently expect that our independent
directors would take legal action on our behalf against our Sponsor
to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business
judgment and subject to their fiduciary duties may choose not to do
so in certain instances. If our independent directors choose not to
enforce these indemnification obligations, the amount of funds in
the Trust Account available for distribution to our public
stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds in the Trust Account to our
public stockholders, we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not
dismissed, a bankruptcy court may seek to recover such proceeds,
and the members of our board of directors may be viewed as having
breached their fiduciary duties to our creditors, thereby exposing
the members of our board of directors and us to claims of punitive
damages.
If, after we distribute the proceeds in the Trust Account to our
public stockholders, we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not
dismissed, any distributions received by stockholders could be
viewed under applicable debtor/creditor and/or bankruptcy laws as
either a “preferential transfer” or a “fraudulent conveyance.” As a
result, a bankruptcy court could seek to recover some or all
amounts received by our stockholders. In addition, our board of
directors may be viewed as having breached its fiduciary duty to
our creditors and/or having acted in bad faith by paying public
stockholders from the Trust Account prior to addressing the claims
of creditors, thereby exposing itself and us to claims of punitive
damages.
If, before distributing the proceeds in the Trust Account to our
public stockholders, we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not
dismissed, the claims of creditors in such proceeding may have
priority over the claims of our stockholders and the per share
amount that would otherwise be received by our stockholders in
connection with our liquidation may be reduced.
If, before distributing the proceeds in the Trust Account to our
public stockholders, we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not
dismissed, the proceeds held in the Trust Account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy
estate and subject to the claims of third parties with priority
over the claims of our stockholders. To the extent any bankruptcy
claims deplete the Trust Account, the per share amount that would
otherwise be received by our public stockholders in connection with
our liquidation would be reduced.
If we are deemed to be an investment company under the Investment
Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make
it difficult for us to complete our initial business
combination.
If we are deemed to be an investment company under the Investment
Company Act, our activities may be restricted, including:
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restrictions on the nature of our
investments; and
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restrictions on the issuance of
securities;
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each of which may make it difficult for us to complete our initial
business combination.
In addition, we may have imposed upon us burdensome requirements,
including:
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registration as an investment
company with the SEC;
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adoption of a specific form of
corporate structure; and
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reporting, record keeping, voting,
proxy and disclosure requirements and compliance with other rules
and regulations that we are currently not subject to.
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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 U.S.
government treasury bills with a maturity of 185 days or less or in
money market funds investing solely in U.S. 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 our initial business
combination. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the
liquidation of our Trust Account and our warrants will expire
worthless.
Changes in laws or regulations, or a failure to comply with any
laws and regulations, may adversely affect our business, including
our ability to negotiate and complete our initial business
combination, and results of operations.
We are subject to laws and regulations enacted by national,
regional and local governments. In particular, we 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, including our ability to negotiate and complete our
initial business combination, 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 DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions
received by them in a dissolution. The pro rata portion of our
Trust Account distributed to our public stockholders upon the
redemption of our Public Shares in the event we do not complete our
initial business combination within the required time period may be
considered a liquidating distribution under Delaware law. If a
corporation complies with certain procedures set forth in Section
280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against it, including a 60-day notice
period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may
reject any claims brought, and an additional 150-day waiting period
before any liquidating distributions are made to stockholders, any
liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred
after the third anniversary of the dissolution. However, it is our
intention to redeem our Public Shares as soon as reasonably
possible following the 24th month from the closing of the IPO (or
the end of any Extension Period) in the event we do not complete
our initial business combination and, therefore, we do not intend
to comply with those procedures.
Because we do not intend to comply with Section 280, Section 281(b)
of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and
pending claims or claims that may be potentially brought against us
within the 10 years following our dissolution. However, because we
are a blank check company, rather than an operating company, and
our operations will be limited to searching for prospective target
businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, consultants,
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 the required time period is not
considered a liquidating distribution under Delaware law and such
redemption distribution is deemed to be unlawful, then pursuant to
Section 174 of the DGCL, the statute of limitations for claims of
creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a
liquidating distribution.
We may not hold an annual meeting of stockholders until after the
consummation of our initial business combination.
We may not hold an annual meeting of stockholders until after we
consummate our initial business combination (unless required by
Nasdaq) 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 our initial
business combination, they may attempt to force us to hold one by
submitting an application to the Delaware Court of Chancery in
accordance with Section 211(c) of the DGCL.
The grant of registration rights to our initial stockholders, the
Institutional Anchor Investors and their respective permitted
transferees may make it more difficult to complete our initial
business combination, and the future exercise of such rights may
adversely affect the market price of our Class A common
stock.
Pursuant to an agreement entered into on the closing of the IPO, at
or after the time of our initial business combination, our initial
stockholders, the Institutional Anchor Investors and their
respective permitted transferees can demand that we register the
resale of their Founder Shares after those shares convert to shares
of our Class A common stock. In addition, our Sponsor, any
applicable Institutional Anchor Investor, and their respective
permitted transferees can demand that we register the resale of 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 the resale of 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 complete.
This is because the stockholders of the target business may
increase the equity stake they seek in the combined entity or ask
for more cash consideration to offset the negative impact on the
market price of our Class A common stock that is expected when the
common stock owned by our initial stockholders, the Institutional
Anchor Investors or their permitted transferees, and the Private
Placement Warrants owned by our Sponsor, any applicable
Institutional Anchor Investor or their permitted transferees or
warrants issued in connection with working capital loans are
registered for resale.
Because we are neither limited to evaluating target businesses in a
particular industry nor have we selected any specific target
businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any
particular target business’s operations.
We may seek to complete a business combination with an operating
company in any industry or sector, but we will not, under our
Certificate of Incorporation, be permitted to effectuate our
initial business combination solely with another blank check
company or similar company with nominal operations. Because we have
not yet selected or approached any specific target business with
respect to a business combination, there is no basis to evaluate
the possible merits or risks of any particular target business’s
operations, results of operations, cash flows, liquidity, financial
condition or prospects. To the extent we complete our initial
business combination, we may be affected by numerous risks inherent
in the business operations with which we combine. For example, if
we combine with a financially unstable business or an entity
lacking an established record of sales or earnings, we may be
affected by the risks inherent in the business and operations of a
financially unstable or a development stage entity. Although our
officers and directors will endeavor to evaluate the risks inherent
in a particular target business, we cannot assure you that we will
properly ascertain or assess all of the significant risk factors or
that we will have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and
leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business. We also cannot
assure you that an investment in our Units will not ultimately
prove to be less favorable to investors than a direct investment,
if such opportunity were available, in a target business.
Accordingly, any stockholders or warrant holders who choose to
remain a stockholder or warrant holder following our initial
business combination could suffer a reduction in the value of their
securities. Such stockholders or warrant holders are unlikely to
have a remedy for such reduction in value.
We may seek acquisition opportunities in industries outside of the
target industries (which industries may or may not be outside of
our management’s area of expertise).
Although we intend to focus on identifying business combination
candidates in the target industries, we will consider a business
combination outside of the target industries (which industries may
be outside our management’s area 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 or we are unable to identify a suitable candidate in the
target industries. Although our management will endeavor to
evaluate the risks inherent in any particular business combination
candidate, we may not adequately ascertain or assess all of the
risks. An investment in our Units may ultimately prove to be less
favorable to investors in the IPO than a direct investment, if an
opportunity were available, in a business combination
candidate.
In the event we elect to pursue an acquisition outside of the
target industries, our management’s expertise may not be directly
applicable to its evaluation or operation, and the information
contained in this report regarding the target industries would not
be relevant to an understanding of the business that we elect to
acquire.
Although we have identified general criteria and guidelines that we
believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target
that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business
combination may not have attributes entirely consistent with our
general criteria and guidelines.
Although we have identified general criteria and guidelines for
evaluating prospective target businesses, it is possible that a
target business with which we enter into our initial business
combination will not have all of these positive attributes. If we
complete our initial business combination with a target that does
not meet some or all of these criteria and guidelines, such
combination may not be as successful as a combination with a
business that does meet all of our general criteria and guidelines.
In addition, if we announce a prospective business combination with
a target that does not meet our general criteria and guidelines, a
greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing
condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder
approval of the transaction is required by applicable law or stock
exchange rules, or we decide to obtain stockholder approval for
business or other reasons, it may be more difficult for us to
attain stockholder approval of our initial business combination if
the target business does not meet our general criteria and
guidelines. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the
liquidation of our Trust Account and our warrants will expire
worthless.
We may seek acquisition opportunities with an early stage company,
a financially unstable business or an entity lacking an established
record of revenue or earnings, which could subject us to volatile
revenues or earnings, intense competition and difficulties in
obtaining and retaining key personnel.
To the extent we complete our initial business combination with an
early stage company, a financially unstable business or an entity
lacking an established record of sales or earnings, we may be
affected by numerous risks inherent in the operations of the
business with which we combine. These risks include investing in a
business without a proven business model and with limited
historical financial data, volatile revenues or earnings, intense
competition and difficulties in obtaining and retaining key
personnel. Although our officers and directors will endeavor to
evaluate the risks inherent in a particular target business, we may
not be able to properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due
diligence. Furthermore, some of these risks may be outside of our
control and leave us with no ability to control or reduce the
chances that those risks will adversely impact a target
business.
We are not required to obtain an opinion from an independent
investment banking firm 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 initial business combination with an
affiliated entity, 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 is
fair to our company from a financial point of view. If no opinion
is obtained, our stockholders will be relying on the judgment of
our board of directors, who will determine fair market value based
on standards generally accepted by the financial community. Such
standards used will be disclosed in our 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 B common stock at a ratio greater than
one-to-one at the time of our initial business combination as a
result of the anti-dilution provisions described herein. Any such
issuances would dilute the interest of our stockholders and likely
present other risks.
Our Certificate of Incorporation authorizes the issuance of up to
100,000,000 shares of Class A common stock, par value $0.0001 per
share, and 50,000,000 shares of Class B common stock, par value
$0.0001 per share, and 1,000,000 shares of undesignated preferred
stock, par value $0.0001 per share. Immediately after the IPO,
there were 76,666,667 and 45,687,500 authorized but unissued shares
of Class A and Class B common stock available, respectively, for
issuance, which amount takes into account shares reserved for
issuance upon exercise of outstanding warrants but not the shares
of Class A common stock issuable upon the conversion of the Class B
common stock. Shares of Class B common stock are automatically
convertible into shares of our Class A common stock at the time of
our initial business combination, initially at a one-for-one ratio
but subject to adjustment as set forth herein.
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 (including pursuant to a
specified future issuance) or under an employee incentive plan
after completion of our initial business combination. We may also
issue shares of Class A common stock upon conversion of the Class B
common stock at a ratio greater than one-to-one at the time of our
initial business combination as a result of the anti-dilution
provisions described herein. However, our Certificate of
Incorporation provides, among other things, that prior to our
initial business combination, we may not issue additional shares of
capital stock that would entitle the holders thereof to (1) receive
funds from the Trust Account or (2) vote as a class with our Public
Shares (a) on any initial business combination or (b) to approve an
amendment to our Certificate of Incorporation to (x) extend the
time we have to consummate a business combination beyond 24 months
from the closing of the IPO or (y) amend the foregoing provisions.
The issuance of additional shares of common or preferred
stock:
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may significantly dilute the equity
interest of investors in the IPO, which dilution would increase if
the anti-dilution provisions in the Founder Shares resulted in the
issuance of shares of Class A common stock on a greater than
one-to-one basis upon conversion of the Founder Shares;
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may subordinate the rights of
holders of Common Stock if preferred stock is issued with rights
senior to those afforded our common stock;
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could cause a change of 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;
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may have the effect of delaying or
preventing a change of control of us by diluting the stock
ownership or voting rights of a person seeking to obtain control of
us;
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may adversely affect prevailing
market prices for our Units, Class A common stock and/or warrants;
and
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may not result in adjustment to the
exercise price of our warrants.
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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, or less than such amount in certain circumstances, on the
liquidation of our Trust Account and our warrants will expire
worthless.
We anticipate that the investigation of each specific target
business and the negotiation, drafting and execution of relevant
agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for
accountants, attorneys and others. If we decide not to complete a
specific initial business combination, the costs incurred up to
that point for the proposed transaction likely would not be
recoverable. Furthermore, if we reach an agreement relating to a
specific target business, we may fail to complete our initial
business combination for any number of reasons including those
beyond our control. Any such event will result in a loss to us of
the related costs incurred which could materially adversely affect
subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the
liquidation of our Trust Account and our warrants will expire
worthless.
We may engage one or more of our underwriters or one of their
respective affiliates to provide additional services to us after
the IPO, which may include acting as financial advisor in
connection with an initial business combination or as placement
agent in connection with a related financing transaction. Our
underwriters are entitled to receive deferred commissions that will
be released from the trust only on a completion of an initial
business combination. These financial incentives may cause them to
have potential conflicts of interest in rendering any such
additional services to us after the IPO, including, for example, in
connection with the sourcing and consummation of an initial
business combination.
We may engage one or more of our underwriters or one of their
respective affiliates to provide additional services to us in the
future, including, for example, identifying potential targets,
providing financial advisory services, acting as a placement agent
in a private offering or arranging debt financing. We may pay such
underwriter or its affiliate fair and reasonable fees or other
compensation that would be determined at that time in an arm’s
length negotiation. No agreement was entered into with any of the
underwriters or their respective affiliates and no fees or other
compensation for such services were paid to any of the underwriters
or their respective affiliates prior to the date that was 60 days
from the date of the Final Prospectus, unless such payment would
not be deemed underwriters’ compensation in connection with the
IPO. The underwriters are also entitled to receive deferred
commissions that are conditioned on the completion of an initial
business combination. The underwriters’ or their respective
affiliates’ financial interests tied to the consummation of a
business combination transaction may give rise to potential
conflicts of interest in providing any such additional services to
us, including potential conflicts of interest in connection with
the sourcing and consummation of an initial business
combination.
We may engage in a business combination with one or more target
businesses that have relationships with entities that may be
affiliated with our Sponsor, officers or directors which may raise
potential conflicts of interest.
In light of the involvement of our Sponsor, officers and directors
with other entities, we may decide to acquire one or more
businesses affiliated with our Sponsor, officers and directors.
Certain of our officers and directors also expect to serve as
officers and board members for several other entities, including,
without limitation, those described under “Management — Conflicts
of Interest.” Our Sponsor, officers and directors are not currently
aware of any specific opportunities for us to complete our initial
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
independent and 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 Sponsor, officers or
directors, potential conflicts of interest still may exist and, as
a result, the terms of the business combination may not be as
advantageous to our company and our public stockholders as they
would be absent any conflicts of interest.
Since our initial stockholders will lose their entire investment in
us if our initial business combination is not completed (other than
with respect to Public Shares they may have acquired during or
after the IPO), a conflict of interest may arise in determining
whether a particular target business is appropriate for our initial
business combination.
On April 9, 2021, our founders purchased an aggregate of 8,625,000
Founder Shares for an aggregate purchase price of $25,000, or
$0.003 per share. On April 19, 2021, the Founder Shares were
assigned to our Sponsor for the same purchase price that was
initially paid by one of our founders. In July 2021, our Sponsor
returned to us, for no consideration, an aggregate of 4,312,500
Founder Shares, which were canceled and an additional 562,500
Founder Shares were forfeited by our Sponsor as the underwriter’s
over-allotment option was not exercised, resulting in an aggregate
of 3,750,000 Founder Shares outstanding and held by our initial
stockholders and their permitted transferees).
The Founder Shares will be worthless if we do not complete an
initial business combination. On July 6, 2021, our Sponsor
transferred an aggregate of 25,000 Founder Shares to each of our
independent director nominees (75,000 shares in total) at their
original purchase price. In addition, our Sponsor purchased an
aggregate of 3,333,333 Private Placement Warrants, each exercisable
for one share of our Class A common stock, for a purchase price of
$5,000,000 in the aggregate, or $1.50 per warrant, that will also
be worthless if we do not complete our initial business
combination. Each Private Placement Warrant may be exercised for
one share of Class A common stock at a price of $11.50 per share,
subject to adjustment as provided herein. In connection with the
closing of the IPO, our Sponsor sold an amount up to 75,000 Founder
Shares to each Institutional Anchor Investor at their original
purchase price, or 650,000 Founder Shares in aggregate. Pursuant to
the terms of the investment agreements with the Institutional
Anchor Investors, we have agreed that these investors will not be
subject to reductions, vesting triggers or similar provisions with
respect to their Founder Shares, including in connection with the
negotiation of a business combination. This may make it more
difficult for us to consummate a business combination.
Additionally, substantially concurrently with the closing of the
Private Placement, the Sponsor sold an aggregate of 66,666 Private
Placement Warrants to the Institutional Anchor Investors for
$100,000.
The Founder Shares are identical to the shares of Class A common
stock included in the Units sold in the IPO, except that: (1) the
Founder Shares are subject to certain transfer restrictions, as
described in more detail below; (2) our Sponsor, officers and
directors have entered into a letter agreement with us, and the
Institutional Anchor Investors have entered into investment
agreements with us, pursuant to which they have agreed to: (a)
waive their redemption rights with respect to their Founder Shares
and any Public Shares held by them in connection with the
completion of our initial business combination; (b) waive their
redemption rights with respect to their Founder Shares and any
Public Shares held by them in connection with a stockholder vote to
approve an amendment to our Certificate of Incorporation (i) to
modify the substance or timing of our obligation to allow
redemptions in connection with our initial business combination or
to redeem 100% of our Public Shares if we have not consummated our
initial business combination within 24 months from the closing of
the IPO or (ii) with respect to any other provision relating to
stockholders’ rights or pre-initial business combination activity;
and (c) waive their rights to liquidating distributions from the
Trust Account with respect to any Founder Shares they hold if we
fail to complete our initial business combination within 24 months
from the closing of the IPO (although they will be entitled to
liquidating distributions from the Trust Account with respect to
any Public Shares they hold if we fail to complete our initial
business combination within the prescribed time frame); (3) the
Founder Shares are automatically convertible into shares of our
Class A common stock at the time of our initial business
combination on a one-for-one basis, subject to adjustment pursuant
to certain anti-dilution rights, as described herein; and (4) the
Founder Shares are entitled to registration rights. In addition,
our directors and officers have also entered into the letter
agreement, which imposes the same obligations on them with respect
to any Public Shares acquired by them.
The personal and financial interests of our Sponsor, officers and
directors may influence their motivation in identifying and
selecting a target business combination, completing an initial
business combination and influencing the operation of the business
following the initial business combination. This risk may become
more acute as the 24-month deadline following the closing of the
IPO nears, which is the deadline for the completion of our 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 the date of this report to
issue any notes or other debt securities, or to otherwise incur
outstanding debt following the IPO, we may choose to incur
substantial debt to complete our initial business combination and
affiliates of AxonPrime Infrastructure Sponsor LLC could
potentially provide such financing. We have agreed that we will not
incur any indebtedness unless we have obtained from the lender a
waiver of any right, title, interest or claim of any kind in or to
the monies held in the Trust Account. As such, no issuance of debt
will affect the per share amount available for redemption from the
Trust Account. Nevertheless, the incurrence of debt could have a
variety of negative effects, including:
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default and foreclosure on our
assets if our operating revenues after an initial business
combination are insufficient to repay our debt obligations;
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acceleration of our obligations to
repay the indebtedness even if we make all principal and interest
payments when due if we breach certain covenants that require the
maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
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our immediate payment of all
principal and accrued interest, if any, if the debt is payable on
demand;
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our inability to obtain necessary
additional financing if the debt contains covenants restricting our
ability to obtain such financing while the debt is
outstanding;
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our inability to pay dividends on
our common stock;
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using a substantial portion of our
cash flow to pay principal and interest on our debt, which will
reduce the funds available for dividends on our common stock if
declared, expenses, capital expenditures, acquisitions and other
general corporate purposes;
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limitations on our flexibility in
planning for and reacting to changes in our business and in the
industry in which we operate;
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increased vulnerability to adverse
changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and
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limitations on our ability to borrow
additional amounts for expenses, capital expenditures,
acquisitions, debt service requirements, execution of our strategy
and other purposes and other disadvantages compared to our
competitors who have less debt.
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We may only be able to complete one business combination with the
proceeds of the IPO 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 materially negatively impact our operations
and profitability.
The net proceeds from the IPO and the sale of the Private Placement
Warrants provided us with $150,000,000 that we may use to complete
our initial business combination (or net proceeds of $141,216,375,
after taking into account the $5,250,000 of deferred underwriting
commissions being held in the Trust Account and the expenses of the
IPO).
We may effectuate our initial business combination with a single
target business or multiple target businesses simultaneously or
within a short period of time. However, we may not be able to
effectuate our initial business combination with more than one
target business because of various factors, including the existence
of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present
operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By
completing our initial business combination with only a single
entity our lack of diversification may subject us to numerous
economic, competitive and regulatory risks. Further, we would not
be able to diversify our operations or benefit from the possible
spreading of risks or offsetting of losses, unlike other entities
which may have the resources to complete several business
combinations in different industries or different areas of a single
industry. Accordingly, the prospects for our success may be:
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solely dependent upon the
performance of a single business, property or asset; or
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dependent upon the development or
market acceptance of a single or limited number of products,
processes or services.
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This lack of diversification may subject us to numerous economic,
competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we
may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business combinations
with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to
increased costs and risks that could negatively impact our
operations and profitability.
If we determine to simultaneously acquire several businesses that
are owned by different sellers, we will need for each of such
sellers to agree that our purchase of its business is contingent on
the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to
complete our initial business combination. With multiple business
combinations, we could also face additional risks, including
additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are
multiple sellers) and the additional risks associated with the
subsequent assimilation of the operations and services or products
of the acquired companies in a single operating business. If we are
unable to adequately address these risks, it could negatively
impact our profitability and results of operations.
We may attempt to complete our initial business combination with a
private company about which little information is available, which
may result in a business combination with a company that is not as
profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek to effectuate our
initial business combination with a privately held company. Very
little public information generally exists about private companies,
and we could be required to make our decision on whether to pursue
a potential initial business combination on the basis of limited
information, which may result in a business combination with a
company that is not as profitable as we suspected, if at all.
We do not have a specified maximum redemption threshold. The
absence of such a redemption threshold may make it possible for us
to complete our initial business combination with which a
substantial majority of our stockholders do not agree.
Our Certificate of Incorporation does not provide a specified
maximum redemption threshold, except that we will only redeem our
Public Shares so long as, after payment of the deferred
underwriting commissions and after such redemptions, our net
tangible assets will be at least $5,000,001 (a) in the case of our
initial business combination, either prior to or upon consummation
of such initial business combination, after payment of the deferred
underwriting commission or (b) in the case of an amendment to our
Certificate of Incorporation (i) to modify the substance or timing
of our obligation to allow redemptions in connection with our
initial business combination or to redeem 100% of our Public Shares
if we have not consummated our initial business combination within
24 months from the closing of the IPO or (ii) with respect to any
other provision relating to stockholders’ rights or pre-initial
business combination activity, upon such amendment (in each case
such that we do not then become subject to the SEC’s “penny stock”
rules), or any greater net tangible asset or cash requirement that
may be contained in the agreement relating to our initial business
combination. As a result, we may be able to complete our initial
business combination even though a substantial majority of our
public stockholders do not agree with the transaction and have
redeemed their shares or, if we seek stockholder approval of our
initial business combination and do not conduct redemptions in
connection with our initial business combination pursuant to the
tender offer rules, have entered into privately negotiated
agreements to sell their shares to our Sponsor, officers,
directors, advisors or any of their affiliates. In the event the
aggregate cash consideration we would be required to pay for all
shares of Common Stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the
terms of the proposed business combination exceed the aggregate
amount of cash available to us, we will not complete the business
combination or redeem any shares, all shares of Common Stock
submitted for redemption will be returned to the holders thereof,
and we instead may search for an alternate business
combination.
In order to effectuate an initial business combination, blank check
companies have, in the recent past, amended various provisions of
their charters and modified governing instruments, including their
warrant agreements. We cannot assure you that we will not seek to
amend our Certificate of Incorporation or governing instruments in
a manner that will make it easier for us to complete our initial
business combination that some of our stockholders may not
support.
In order to effectuate an initial business combination, blank check
companies have, in the recent past, amended various provisions of
their charters and modified governing instruments, including their
warrant agreements. For example, blank check companies have amended
the definition of business combination, increased redemption
thresholds extended the time to consummate an initial business
combination and, with respect to their warrants, amended their
warrant agreements to require the warrants to be exchanged for cash
and/or other securities. We cannot assure you that we will not seek
to amend our charter or governing instruments, including to extend
the time to consummate an initial business combination in order to
effectuate our initial business combination.
Certain provisions of our Certificate of Incorporation that relate
to our pre-business combination activity (and corresponding
provisions of the agreement governing the release of funds from our
Trust Account) may be amended with the approval of holders of at
least 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 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 holders of a certain
percentage of the company’s stockholders. In those companies,
amendment of these provisions typically requires approval by
holders holding between 90% and 100% of the company’s Public
Shares. Our Certificate of Incorporation provides that any of its
provisions related to pre-business combination activity (including
the requirement to deposit proceeds of the IPO and the Private
Placement Warrants into the Trust Account and not release such
amounts except in specified circumstances) may be amended if
approved by holders of at least 65% of our common stock who attend
and vote in a stockholder meeting, and corresponding provisions of
the trust agreement governing the release of funds from our Trust
Account may be amended if approved by holders of at least 65% of
our outstanding common stock. In all other instances, our
Certificate of Incorporation provides that it may be amended by
holders of a majority of our outstanding common stock, subject to
applicable provisions of the DGCL or applicable stock exchange
rules. Unless specified in our Certificate of Incorporation or
bylaws, or as required by applicable law or stock exchange rules,
the affirmative vote of a majority of the outstanding shares of our
common stock that are voted is required to approve any such matter
voted on by our stockholders, and, prior to our initial business
combination, the affirmative vote of holders of a majority of the
outstanding shares of our Class B common stock is required to
approve the election or removal of directors. Our initial
stockholders and their permitted transferees, who collectively
beneficially own 28% of our common stock (including Units
purchased in the IPO), may participate in any vote to amend our
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 Certificate of
Incorporation which will govern our pre-business combination
behavior more easily than some other blank check companies, and
this may increase our ability to complete our initial business
combination with which you do not agree.
Our Sponsor, officers and directors have agreed, pursuant to a
written agreement, that they will not propose any amendment to our
Certificate of Incorporation (A) to modify the substance or timing
of our obligation to allow redemptions in connection with our
initial business combination or to redeem 100% of our Public Shares
if we do not complete our initial business combination within 24
months from the closing of the IPO or (B) with respect to any other
provision relating to stockholders’ rights or pre-initial business
combination activity, unless we provide our public stockholders
with the opportunity to redeem their shares of Class A common stock
upon approval of any such amendment at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust
Account, divided by the number of then outstanding Public Shares.
These agreements are contained in a letter agreement that we have
entered into with our Sponsor, officers and directors. Our public
stockholders are not parties to, or third-party beneficiaries of,
these agreements and, as a result, will not have the ability to
pursue remedies against our Sponsor, officers or directors for any
breach of these agreements. As a result, in the event of a breach,
our stockholders would need to pursue a stockholder derivative
action, subject to applicable law.
Certain agreements related to our Initial Public Offering may be
amended without stockholder approval.
Certain agreements, including the letter agreement among us and our
Sponsor, officers and directors, the investment agreements between
us and the Institutional Anchor Investors and the registration
rights agreement among us and our initial stockholders, may be
amended without stockholder approval. These agreements contain
various provisions, including transfer restrictions on our Founder
Shares, that our public stockholders might deem to be material.
While we do not expect our board of directors to approve any
amendment to any of these agreements prior to our initial business
combination, it may be possible that our board of directors, in
exercising its business judgment and subject to its fiduciary
duties, chooses to approve one or more amendments to any such
agreement in connection with the consummation of our initial
business combination. Any such amendments would not require
approval from our stockholders, may result in the completion of our
initial business combination that may not otherwise have been
possible, and may have an adverse effect on the value of an
investment in our securities.
We may be unable to obtain additional financing to complete our
initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or
abandon a particular business combination.
Although we believe that the net proceeds of the IPO and the sale
of the Private Placement Warrants will represent sufficient equity
capital to allow us to complete our initial business combination,
because we have not yet selected any prospective target business we
cannot ascertain the capital requirements for any particular
transaction. If the net proceeds of the IPO 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 redeem for cash a significant number of shares from
stockholders who elect redemption in connection with our initial
business combination or the terms of negotiated transactions to
purchase shares in connection with our initial business
combination, we may be required to seek additional financing or to
abandon the proposed business combination. We cannot assure you
that such financing will be available on acceptable terms, if at
all. To the extent that additional financing proves to be
unavailable when needed to complete our initial business
combination, we would be compelled to either restructure the
transaction or abandon that particular business combination and
seek an alternative target business candidate. In addition, even if
we do not need additional financing to complete our initial
business combination, we may require such financing to fund the
operations or growth of the target business. The failure to secure
additional financing could have a material adverse effect on the
continued development or growth of the target business. None of our
officers, directors or stockholders or any of their respective
affiliates, including AxonPrime Infrastructure Sponsor LLC, is
required to provide any financing to us in connection with or after
our initial business combination. If we are unable to complete our
initial business combination, our public stockholders may receive
only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our Trust Account, and our
warrants will expire worthless.
Our initial stockholders will control the election of our board of
directors until consummation of our initial business combination
and will hold a substantial interest in us. As a result, they will
elect all of our directors prior to our initial business
combination and may exert a substantial influence on actions
requiring a stockholder vote, potentially in a manner that you do
not support.
As of the date that we consummated our IPO, our initial
stockholders and their permitted transferees collectively owned 28%
of our outstanding common stock (including Units purchased in the
IPO). In addition, prior to our initial business combination,
holders of our Class B common stock will have the right to appoint
all of our directors and may remove members of our board of
directors for any reason. Holders of our Public Shares will have no
right to vote on the election of directors during such time. These
provisions of our Certificate of Incorporation may only be amended
by holders of at least 90% of the outstanding shares of our common
stock voting at a stockholder meeting. As a result, you will not
have any influence over the election of directors prior to our
initial business combination.
Neither our initial stockholders nor, to our knowledge, any of our
officers or directors, have any current intention to purchase
additional securities, other than as disclosed in this report.
Factors that would be considered in making such additional
purchases would include consideration of the current trading price
of our Class A common stock. In addition, as a result of their
substantial ownership in our company, our initial stockholders may
exert a substantial influence on other actions requiring a
stockholder vote, potentially in a manner that you do not support,
including amendments to our Certificate of Incorporation and
approval of major corporate transactions.
If our initial stockholders purchase any additional shares of
Common Stock in the aftermarket or in privately negotiated
transactions, this would increase their influence over these
actions. Accordingly, our initial stockholders will exert
significant influence over actions requiring a stockholder
vote.
A provision of our warrant agreement may make it more difficult for
us to consummate an initial business combination.
Unlike most blank check companies, if we issue additional shares of
Class A common stock or equity-linked securities for capital
raising purposes in connection with the closing of our initial
business combination at an issue price or effective issue price of
less than $9.20 per share of Class A common stock (with such issue
price or effective issue price to be determined in good faith by
our board of directors and, in the case of any such issuance to our
Sponsor or its affiliates, without taking into account any Founder
Shares held by our Sponsor or such affiliates, as applicable, prior
to such issuance) (“newly issued price”), the exercise price of the
warrants will be adjusted (to the nearest cent) to be equal to 115%
of the newly issued price, and the $18.00 per share redemption
trigger price will be adjusted (to the nearest cent) to be equal to
180% of the newly issued price. This may make it more difficult for
us to consummate an initial business combination with a target
business.
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 as issued by the
International Accounting Standards Board, or IFRS, depending on the
circumstances and the historical financial statements may be
required to be audited in accordance with the 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 financial statements in time for us to
disclose such financial statements in accordance with federal proxy
rules and complete our initial business combination within the
prescribed time frame.
Compliance obligations under the Sarbanes-Oxley Act may make it
more difficult for us to effectuate our initial business
combination, require substantial financial and management
resources, and increase the time and costs of completing an initial
business combination.
Section 404 of the Sarbanes-Oxley Act requires that we evaluate and
report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2022. Only in
the event we are deemed to be a large accelerated filer or an
accelerated filer, and no longer qualify as an emerging growth
company, will we be required to comply with the independent
registered public accounting firm attestation requirement on our
internal control over financial reporting. The fact that we are a
blank check company makes compliance with the requirements of the
Sarbanes-Oxley Act particularly burdensome on us as compared to
other public companies because a target business with which we seek
to complete our initial business combination may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal
control of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary to
complete any such initial business combination.
Data privacy and security breaches, including, but not limited to,
those resulting from cyber incidents or attacks, acts of vandalism
or theft, computer viruses and/or misplaced or lost data, could
result in information theft, data corruption, operational
disruption, reputational harm, criminal liability and/or financial
loss.
In searching for targets for our initial business combination, we
may depend on digital technologies, including information systems,
infrastructure and cloud applications and services, including those
of third parties with which we may deal. Sophisticated and
deliberate attacks on, or privacy and security breaches in, our
systems or infrastructure, or the systems or infrastructure of
third parties or the cloud, could lead to corruption or
misappropriation of our assets, proprietary information, and
sensitive or confidential data, including certain health
information protected under the Health Insurance Portability and
Accountability Act of 1996, or HIPAA, and other laws. As an early
stage company without significant investments in data privacy or
security protection, we may not be sufficiently protected against
such occurrences and therefore could be liable for privacy and
security breaches, including potentially those caused by any of our
subcontractors. We may not have sufficient resources to adequately
protect against, or to investigate and remediate any vulnerability
to, cyber incidents or other incidents that result in a privacy or
security breach. It is possible that any of these occurrences, or a
combination of them, could have adverse consequences on our
business and lead to reputational harm, criminal liability and/or
financial loss.
We may reincorporate in another jurisdiction in connection with our
initial business combination and such reincorporation may result in
taxes imposed on shareholders or warrant holders.
We may, in connection with our initial business combination and
subject to requisite shareholder approval under the DGCL,
reincorporate in the jurisdiction in which the target company or
business is located or in another jurisdiction. The transaction may
require a shareholder or warrant holder to recognize taxable income
in the jurisdiction in which the shareholder or warrant holder is a
tax resident or in which its members are resident if it is a tax
transparent entity (or may otherwise result in adverse tax
consequences). We do not intend to make any cash distributions to
shareholders or warrant holders to pay such taxes. Shareholders or
warrant holders may be subject to withholding taxes or other taxes
with respect to their ownership of us after the
reincorporation.
Involvement of members of our management team and companies with
which they are affiliated in civil disputes and litigation,
governmental investigations, or negative publicity unrelated to our
business affairs could materially impact our ability to consummate
an initial business combination.
Our directors and officers and companies with which they are
affiliated have been, and in the future will continue to be,
involved in a wide variety of business affairs, including
transactions, such as sales and purchases of businesses, and
ongoing operations, as well as public service and other
associations. As a result of such involvement, members of our
management and companies with which they are affiliated in have
been, and may in the future be, involved in civil disputes,
litigation, governmental investigations, and negative publicity
relating to their business affairs, public service, or other
associations. Any such claims, investigations, lawsuits, or
negative publicity may be detrimental to our reputation and could
negatively affect our ability to identify and complete an initial
business combination in a material manner and may have adverse
effect on the price of our securities.
Risks Relating to the Post-Business Combination Company
Because we intend to seek a business combination with a target
business or businesses in infrastructure, we expect our future
operations to be subject to risks associated with this
industry.
We intend to focus our search for a business combination target in
infrastructure. Accordingly, we may pursue a target business in any
sector within the infrastructure space. Because we have not yet
selected any specific target business or sector, we cannot provide
specific risks of any business combination. However, risks inherent
in investments in infrastructure, infrastructure services and
related sectors include, but are not limited to, the
following:
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significant federal, state and local
regulation, taxation and regulatory approval processes as well as
changes in applicable laws and regulations, including the ability
to procure necessary governmental licenses, concessions, leases or
contracts and rules and regulations relating to environmental
protection climate change, including potential penalties resulting
from the violation of such environmental regulations;
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worldwide and regional economic and
financial conditions impacting global and regional supply and
demand;
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competitive pressures as a result of
consumer demand, technological advances, and other factors;
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the speculative nature of and high
degree of risk involved in investments in the energy value
chain;
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availability of key inputs, such as
strategic consumables, raw materials and necessary equipment;
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fluctuations in real estate
availability and value;
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the inherent risks associated with
real estate ownership, including the potential for litigation,
depreciation, title disputes and real estate regulations;
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available transportation, storage
and other transportation capacity;
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changes in global supply and demand
and prices for commodities;
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overall domestic and global economic
conditions;
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availability of, and potential
disputes with, contractors and subcontractors;
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risks of eminent domain and
governmental takings;
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construction and other capital
expenditures;
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natural disasters, terrorist acts
and similar dislocations; and
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value of U.S. dollar relative to the
currencies of other countries.
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Any of the foregoing could have an adverse impact on our operations
following a business combination. However, our efforts in
identifying prospective target businesses will not be limited to
businesses in the infrastructure-related industry sectors.
Accordingly, if we acquire a target business in another industry,
these risks we will be subject to risks attendant with the specific
industry in which we operate or target business which we acquire,
which may or may not be different than those risks listed
above.
Subsequent to our completion of our initial business combination,
we may be required to subsequently take write-downs or write-offs,
restructuring and impairment or other charges that could have a
significant negative effect on our financial condition, results of
operations and the price of our securities, which could cause you
to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business
with which we combine, we cannot assure you that this diligence
will identify all material issues that may be present with a
particular target business, that it would be possible to uncover
all material issues through a customary amount of due diligence, or
that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may
be forced to later write-down or write-off assets, restructure our
operations, or incur impairment or other charges that could result
in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously
known risks may materialize in a manner not consistent with our
preliminary risk analysis. Even though these charges may be
non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to
negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth
or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue
of our obtaining post-combination debt financing. Accordingly, any
stockholders or warrant holders who choose to remain a stockholder
or warrant holder following our initial business combination could
suffer a reduction in the value of their securities. Such
stockholders or warrant holders are unlikely to have a remedy for
such reduction in value.
Our management may not be able to maintain control of a target
business after our initial business combination. We cannot provide
assurance that, upon loss of control of a target business, new
management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We may structure our initial business combination so that the
post-transaction company in which our public stockholders own
shares will own or acquire less than 100% of the outstanding equity
interests or assets of a target business, but we will only complete
such business combination if the post-transaction company owns or
acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target
business sufficient for us not to be required to register as an
investment company under the Investment Company Act. We will not
consider any transaction that does not meet such criteria. Even if
the post-transaction company owns or acquires 50% or more of the
outstanding voting securities of the target, our stockholders prior
to our initial business combination may collectively own a minority
interest in the post business combination company, depending on
valuations ascribed to the target and us in our initial business
combination. For example, we could pursue a transaction in which we
issue a substantial number of new shares of Common Stock in
exchange for all of the outstanding capital stock of a target, or
issue a substantial number of new shares to third parties in
connection with financing our initial business combination. In such
cases, 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 may have a limited ability to assess the management of a
prospective target business and, as a result, may affect our
initial business combination with a target business whose
management may not have the skills, qualifications or abilities to
manage a public company.
When evaluating the desirability of effecting our initial business
combination with a prospective target business, our ability to
assess the target business’s management may be limited due to a
lack of time, resources or information.
Our assessment of the capabilities of the target’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 or warrant holders who
choose to remain a stockholder or warrant holder following our
initial business combination could suffer a reduction in the value
of their securities. Such stockholders or warrant holders are
unlikely to have a remedy for such reduction in value.
The officers and directors of an acquisition candidate may resign
upon completion of our initial business combination. The departure
of a target business’s key personnel could negatively impact the
operations and profitability of our post-combination business. The
role of an acquisition candidate’s key personnel upon the
completion of our initial business combination cannot be
ascertained at this time. Although we contemplate that certain
members of an acquisition candidate’s management team will remain
associated with the acquisition candidate following our initial
business combination, it is possible that members of the management
of an acquisition candidate will not wish to remain in place.
If our management following our initial business combination is
unfamiliar with U.S. securities laws, they may have to expend time
and resources becoming familiar with such laws, which could lead to
various regulatory issues.
Following our initial business combination, any or all of our
management could resign from their positions as officers of the
post-business combination company, and the management of the target
business at the time of the business combination could remain in
place. Management of the target business may not be familiar with
U.S. securities laws. If new management is unfamiliar with U.S.
securities laws, they may have to expend time and resources
becoming familiar with such laws. This could be expensive and
time-consuming and could lead to various regulatory issues which
may adversely affect our operations.
Risks Relating to Our Management Team
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 initial business combination
is dependent upon the efforts of our key personnel. The role of our
key personnel in the target business, however, cannot presently be
ascertained. Although some of our key personnel may remain with the
target business in senior management or advisory positions
following our initial business combination, it is likely that some
or all of the management of the target business will remain in
place. While we intend to closely scrutinize any individuals we
engage after our initial business combination, we cannot assure you
that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of
operating a company regulated by the SEC, which could cause us to
have to expend time and resources helping them become familiar with
such requirements.
We are dependent upon our directors and officers and their
departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively small group of
individuals and in particular, we believe that our success depends
on the continued service of our directors and officers, at least
until we have completed our initial business combination. In
addition, our directors and officers are not required to commit any
specified amount of time to our affairs and, accordingly, will have
conflicts of interest in allocating their time among various
business activities, including identifying potential business
combinations and monitoring the related due diligence. Moreover,
certain of our directors and officers have time and attention
requirements for investment funds of which affiliates of our
Sponsor are the investment managers. We do not have an employment
agreement with, or key-man insurance on the life of, any of our
directors or officers. The unexpected loss of the services of one
or more of our directors or officers could have a detrimental
effect on us.
Our 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 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 initial business combination. Each
of our officers and our Chairman is engaged in other business
endeavors for which he may be entitled to substantial compensation
and our officers and our Chairman are not obligated to contribute
any specific number of hours per week to our affairs. Our
independent directors may also serve as officers or board members
for other entities. If our officers’ and directors’ other business
affairs require them to devote substantial amounts of time to such
affairs in excess of their current commitment levels, it could
limit their ability to devote time to our affairs which may have a
negative impact on our ability to complete our initial business
combination.
Certain of our officers and directors expect to have, and any of
them may in the future become, affiliated with several other
entities engaged in business activities similar to those intended
to be conducted by us and, accordingly, may have conflicts of
interest in determining to which entity a particular business
opportunity should be presented.
Until we consummate our initial business combination, we intend to
engage in the business of identifying and combining with one or
more businesses. Certain of our officers and directors expect to
have, and all of them may in the future become, affiliated with
several other entities that are engaged in a similar
business.
Certain of our officers and directors expect to have, and any of
them in the future may further have, fiduciary or contractual
obligations to several other entities pursuant to which such
officer or director is or will be required to present a business
combination opportunity to such entity. 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 these obligations to present such business combination
opportunity to such entity, and only present it to us if such
entity rejects the opportunity. 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 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 officers, directors and their respective affiliates may have
competitive pecuniary interests that conflict with our
interests.
We have not adopted a policy that expressly prohibits our
directors, officers 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 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.
Our Sponsor and its affiliates may have incentives to take
increased investment risk and to complete a transaction on terms
that are less favorable to you in order to complete a transaction
within the specified time period to avoid losing their
investment.
You should be aware that our Sponsor’s and its permitted
transferees’ collective ownership of more than 20% of our issued
and outstanding shares and the Private Placement Warrants that are
exercisable for additional shares of our common stock, which it has
collectively acquired for $5,000,000, as well as any working
capital loans by our Sponsor that may be converted into warrants,
could create actual and significant conflicts of interest.
You should also be aware that this expected ownership interest will
have an immediate and substantial dilutive impact on the value of
our Class A common stock. It is not possible to quantify the extent
of such dilution at this time, which will be impacted by a number
of unknown factors, including without limitation the number of
redemptions in connection with our initial business combination,
which will magnify the dilutive impact of our Sponsor’s ownership
interests, as well as certain rights that we may, in our
discretion, grant to parties in connection with any financing
necessary to complete our initial business combination, including
in the form of a private investment in public equity
(“PIPE”).
We must generate sufficient value from our initial business
combination in order to overcome the dilutive impact of these
factors, including our Sponsor’s expected ownership interests, and
there is no guarantee that we will be able to do so. Moreover, even
if our initial business combination generates sufficient value to
overcome this dilution, you will still bear the impact of this
dilution as a cost. Additionally, our Sponsor may still realize
substantial profits by virtue of its expected ownership interests
in our Founder Shares and Private Placement Warrants—even if our
initial business combination does not generate sufficient value to
overcome the dilution you will experience and even if our
post-combination business performs poorly—while you will experience
a loss. Please see “——Risks Relating to Our Securities — 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, and may substantially dilute your investment in
us” and “— Risks Relating to Our Securities—Our Sponsor paid an
aggregate of $25,000, or approximately $0.003 per Founder Share,
and, accordingly, you will experience immediate and substantial
dilution from the purchase of our Class A common stock.”
Our Sponsor’s expected ownership interests in our Founder Shares
and Private Placement Warrants (including any working capital loans
by our Sponsor that may be converted into warrants), as well as the
other forms of compensation our Sponsor and its affiliates are
expected to receive from us, together, create significant actual
and potential conflicts of interest. In particular, our Sponsor and
its affiliates will benefit more than you from our completion of an
initial business combination, and may benefit from an initial
business combination even if you experience a loss. Accordingly,
our Sponsor and its affiliates have an incentive to take increased
investment risk and to complete a transaction on terms that are
less favorable to you—including by completing a transaction that
may not generate sufficient value to overcome the dilutive impact
of their expected ownership interests on your investment—in order
to complete a transaction within the specified time period to avoid
losing their investment.
Risks Relating to Our Securities
You will not have any rights or interests in funds from the Trust
Account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your Public
Shares or warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the
Trust Account only upon the earliest to occur of: (1) the
completion of our initial business combination, and then only in
connection with those shares of Class A common stock that such
stockholder properly elected to redeem, subject to the limitations
described herein; (2) the redemption of any Public Shares properly
submitted in connection with a stockholder vote to amend our
Certificate of Incorporation (A) to modify the substance or timing
of our obligation to allow redemptions in connection with our
initial business combination or to redeem 100% of our Public Shares
if we do not complete our initial business combination within 24
months from the closing of the IPO or (B) with respect to any other
provision relating to stockholders’ rights or pre-initial business
combination activity; and (3) the redemption of all of our Public
Shares if we have not completed our initial business combination
within 24 months from the closing of the IPO, subject to applicable
law and as further described herein. In addition, if we are unable
to complete an initial business combination within 24 months from
the closing of the IPO for any reason, compliance with Delaware law
may require that we submit a plan of dissolution to our
then-existing stockholders for approval prior to the distribution
of the proceeds held in our Trust Account. In that case, public
stockholders may be forced to wait beyond 24 months from the
closing of the IPO before they receive funds from our Trust
Account. In no other circumstances will a public stockholder have
any right or interest of any kind to or in the Trust Account.
Holders of warrants will not have any right to the proceeds held in
the Trust Account with respect to the warrants. Accordingly, to
liquidate your investment, you may be forced to sell your Public
Shares or warrants, potentially at a loss.
Nasdaq may delist our securities from trading on its exchange,
which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our Units, Class A common stock and warrants have been approved for
listing on Nasdaq. Although after giving effect to the IPO we met
the minimum initial listing standards set forth in Nasdaq listing
standards, we cannot assure you that our securities will be, or
will continue to be, listed on Nasdaq in the future or prior to our
initial business combination. In order to continue listing our
securities on Nasdaq prior to our initial business combination, we
must maintain certain financial, distribution and stock price
levels. In general, we must maintain a minimum amount in
stockholders’ equity (generally $2,500,000) and a minimum number of
holders of our securities (generally 300 round-lot holders).
Additionally, in connection with our initial business combination,
we will be required to demonstrate compliance with Nasdaq’s initial
listing requirements, which are more rigorous than Nasdaq’s
continued listing requirements, in order to continue to maintain
the listing of our securities on Nasdaq. For instance, our stock
price would generally be required to be at least $4.00 per share,
our stockholders’ equity would generally be required to be at least
$5.0 million and we would be required to have a minimum of 300
round lot holders (with at least 50% of such round lot holders
holding securities with a market value of at least $2,500) of our
securities. We cannot assure you that we will be able to meet those
initial listing requirements at that time.
If Nasdaq delists any of our securities from trading on its
exchange and we are not able to list such securities on another
national securities exchange, we expect such securities could be
quoted on an over-the-counter market. If this were to occur, we
could face significant material adverse consequences,
including:
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a limited availability of market
quotations for our securities;
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reduced liquidity for our
securities;
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a determination that our Class A
common stock is a “penny stock” which will require brokers trading
in our Class A common stock to adhere to more stringent rules and
possibly result in a reduced level of trading activity in the
secondary trading market for our securities;
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a limited amount of news and analyst
coverage; and
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a decreased ability to issue
additional securities or obtain additional financing in the
future.
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The National Securities Markets Improvement Act of 1996, which is a
federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered
securities.” Because we expect that our Units and eventually our
Class A common stock and warrants will be listed on Nasdaq, our
Units, Class A common stock and warrants will qualify as covered
securities under such statute. Although the states are preempted
from regulating the sale of covered securities, the federal statute
does allow the states to investigate companies if there is a
suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state
having used these powers to prohibit or restrict the sale of
securities issued by blank check companies, other than the State of
Idaho, certain state securities regulators view blank check
companies unfavorably and might use these powers, or threaten to
use these powers, to hinder the sale of securities of blank check
companies in their states. Further, if we were no longer listed on
Nasdaq, our securities would not qualify as covered securities
under such statute and we would be subject to regulation in each
state in which we offer our securities.
Our Sponsor paid an aggregate of $25,000, or approximately $0.003
per Founder Share, and, accordingly, you will experience immediate
and substantial dilution from the purchase of our Class A common
stock.
The difference between the public offering price per share
(allocating all of the Unit purchase price to the common stock and
none to the warrant included in the Unit) and the pro forma net
tangible book value per share of our Class A common stock after the
IPO constitutes the dilution to the investors in the IPO. Our
Sponsor acquired the Founder Shares at a nominal price,
significantly contributing to this dilution. At the time of the
closing of the IPO, the public stockholders incurred an immediate
and substantial dilution of approximately 91.5%, the difference
between the pro forma net tangible book value per share of
approximately $0.85 and the initial offering price of $10.00 per
Unit. This dilution would increase to the extent that the
anti-dilution provisions of the Class B common stock result in the
issuance of shares of Class A common stock on a greater than
one-to-one basis upon conversion of the Class B common stock at the
time of our initial business combination and would become
exacerbated to the extent that public stockholders seek redemptions
from the trust. In addition, because of the anti-dilution
protection in the Founder Shares, any equity or equity-linked
securities issued in connection with our initial business
combination would be disproportionately dilutive to our Class A
common stock.
The market for our securities is still in development, which may
adversely affect the liquidity and price of our securities.
There is currently a limited market for our securities.
Stockholders therefore have little to no access to information
about prior market history on which to base their investment
decision. The price of our securities may vary significantly due to
one or more potential business combinations and general market or
economic conditions, including as a result of the COVID-19 outbreak
and other events (such as terrorist attacks, natural disasters or a
significant outbreak of other infectious diseases). Furthermore, an
active trading market for our securities may never develop or, if
developed, may not be sustained. You may be unable to sell your
securities unless a market can be established and sustained.
We are not registering the issuance of shares of Class A common
stock issuable upon exercise of the warrants under the Securities
Act or any state securities laws at this time, and such
registration may not be in place when an investor desires to
exercise warrants, thus precluding such investor from being able to
exercise its warrants except on a “cashless basis” and potentially
causing such warrants to expire worthless.
We are not registering the issuance of shares of Class A common
stock issuable upon exercise of the warrants under the Securities
Act or any state securities laws at this time. However, under the
terms of the warrant agreement, we have agreed, as soon as
practicable, but in no event later than 20 business days after the
closing of our initial business combination, to use our
commercially reasonable efforts to file, and within 60 business
days following our initial business combination have declared
effective, a registration statement under the Securities Act
covering the issuance of such shares and maintain a current
prospectus relating to the Class A common stock issuable upon
exercise of the warrants, 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, complete or correct or the SEC issues a
stop order. If the issuance of 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 commercially reasonable
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 and no exemption is
available. If the issuance of the shares upon exercise of the
warrants is not so registered or qualified or exempt from
registration or qualification, the holder of such warrant shall not
be entitled to exercise such warrant and such warrant may have no
value and expire worthless. In such event, holders who acquired
their warrants as part of a purchase of Units will have paid the
full Unit purchase price solely for the shares of Class A common
stock included in the Units. There may be a circumstance where an
exemption from registration exists for holders of our Private
Placement Warrants to exercise their warrants while a corresponding
exemption does not exist for holders of the public warrants
included as part of Units sold in the IPO. In such an instance, our
Sponsor and its permitted transferees (which may include our
directors and officers) would be able to exercise their warrants
and sell the common stock underlying their warrants while holders
of our public warrants would not be able to exercise their warrants
and sell the underlying common stock. If and when the warrants
become redeemable by us, we may exercise our redemption right even
if we are unable to register or qualify the underlying shares of
Class A common stock for sale under all applicable state securities
laws. As a result, we may redeem the warrants as set forth above
even if the holders are otherwise unable to exercise the
warrants.
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 50% of the then outstanding public warrants. As
a result, the exercise price of your warrants could be increased,
the warrants could be converted into cash or stock, the exercise
period could be shortened and the number of shares of our Class A
common stock purchasable upon exercise of a warrant could be
decreased, all without your approval.
Our warrants will be issued in registered form under a warrant
agreement between Computershare Trust Company, N.A., 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 50% 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 50% 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 50% of the then outstanding public warrants is
unlimited, examples of such amendments could be amendments to,
among other things, increase the exercise price of the warrants,
convert the warrants into cash or stock, shorten the exercise
period or decrease the number of shares of our common stock
purchasable upon exercise of a warrant.
Our warrant agreement designates the courts of the State of New
York or the United States District Court for the Southern District
of New York as the sole and exclusive forum for certain types of
actions and proceedings that may be initiated by holders of our
warrants, which could limit the ability of warrant holders to
obtain a favorable judicial forum for disputes with our
Company.
Our warrant agreement provides that, subject to applicable law, (i)
any action, proceeding or claim against us arising out of or
relating in any way to the warrant agreement, including under the
Securities Act, will be brought and enforced in the courts of the
State of New York or the United States District Court for the
Southern District of New York, and (ii) that we irrevocably submit
to such jurisdiction, which jurisdiction shall be the exclusive
forum for any such action, proceeding or claim. We have waived any
objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum.
Notwithstanding the foregoing, these provisions of the warrant
agreement will not apply to suits brought to enforce any liability
or duty created by the Exchange Act or any other claim for which
the federal district courts of the United States of America are the
sole and exclusive forum. Any person or entity purchasing or
otherwise acquiring any interest in any of our warrants shall be
deemed to have notice of and to have consented to the forum
provisions in our warrant agreement. If any action, the subject
matter of which is within the scope the forum provisions of the
warrant agreement, is filed in a court other than a court of the
State of New York or the United States District Court for the
Southern District of New York (a “foreign action”) in the name of
any holder of our warrants, such holder shall be deemed to have
consented to: (x) the personal jurisdiction of the state and
federal courts located in the State of New York in connection with
any action brought in any such court to enforce the forum
provisions (an “enforcement action”), and (y) having service of
process made upon such warrant holder in any such enforcement
action by service upon such warrant holder’s counsel in the foreign
action as agent for such warrant holder.
This choice-of-forum provision may limit a warrant holder’s ability
to bring a claim in a judicial forum that it finds favorable for
disputes with our company, which may discourage such lawsuits.
Alternatively, if a court were to find this provision of our
warrant agreement inapplicable or unenforceable with respect to one
or more of the specified types of actions or proceedings, we may
incur additional costs associated with resolving such matters in
other jurisdictions, which could materially and adversely affect
our business, financial condition and results of operations and may
result in a diversion of the time and resources of our management
and board of directors.
Our warrants are accounted for as a warrant liability and were
recorded at fair value upon issuance, with changes in fair value
each period reported in earnings, which may have an adverse effect
on the market price of our Class A common stock or may make it more
difficult for us to consummate an initial business
combination.
We issued warrants to purchase 5,000,000 shares of our Class A
common stock as part of the Units offered by the Final Prospectus
and, simultaneously with the closing of the IPO, we issued in a
Private Placement an aggregate of 3,333,333 Private Placement
Warrants to purchase an aggregate of 3,333,333 shares of Class A
common stock. We expect to account for these as a warrant
liability. They were recorded at fair value upon issuance, with any
changes in fair value each period being reported in earnings as
determined by us based on a valuation report obtained from our
third-party valuation firm. The impact of changes in fair value on
earnings may have an adverse effect on the market price of our
Class A common stock. In addition, potential targets may seek a
special purpose acquisition company that does not have warrants
that are accounted for as a warrant liability, which may make it
more difficult for us to consummate an initial business combination
with a target business.
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 (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like and for certain
issuances of Class A common stock and equity-linked securities as
described above) for any 20 trading days within a 30 trading-day
period ending on the third trading day prior to the date we send
the notice of redemption to the warrant holders. If and when the
warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying
securities for sale under all applicable state securities laws. As
a result, we may redeem the warrants as set forth above even if the
holders are otherwise unable to exercise the warrants. Redemption
of the outstanding warrants could force you to: (1) exercise your
warrants and pay the exercise price therefor at a time when it may
be disadvantageous for you to do so; (2) sell your warrants at the
then-current market price when you might otherwise wish to hold
your warrants; or (3) 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 (except as described in the Final Prospectus under
“Description of Securities — Warrants — Public Stockholders’
Warrants — Redemption of Warrants”) so long as they are held by our
Sponsor, any Institutional Anchor Investors or their permitted
transferees.
In addition, we may redeem your warrants after they become
exercisable for $0.10 per warrant upon a minimum of 30 days’ prior
written notice of redemption provided that holders will be able to
exercise their warrants prior to redemption for a number of Class A
common stock determined based on the redemption date and the fair
market value of our Class A common stock. Any such redemption may
have similar consequences to a cash redemption described above. In
addition, such redemption may occur at a time when the warrants are
“out-of-the-money,” in which case you would lose any potential
embedded value from a subsequent increase in the value of the Class
A common stock had your warrants remained outstanding.
Our warrants and Founder Shares may have an adverse effect on the
market price of our Class A common stock and make it more difficult
to effectuate our initial business combination.
We issued warrants to purchase 5,000,000 shares of our Class A
common stock, at a price of $11.50 per whole share (subject to
adjustment as provided in the Final Prospectus), as part of the
Units offered by the Final Prospectus and, simultaneously with the
closing of the IPO, we issued in a Private Placement an aggregate
of 3,333,333 Private Placement Warrants, each exercisable to
purchase one share of Class A common stock at a price of $11.50 per
share, subject to adjustment as provided herein. Our initial
stockholders and permitted transferees currently hold 3,750,000
Founder Shares. The Founder Shares are convertible into shares of
Class A common stock on a one-for-one basis, subject to adjustment
as set forth herein. In addition, if our Sponsor, an affiliate of
our Sponsor or certain of our officers and directors make any
working capital loans, up to $1,500,000 of such loans may be
converted into warrants, at the price of $1.50 per warrant at the
option of the lender. Such warrants would be identical to the
Private Placement Warrants. To the extent we issue shares of Class
A common stock to effectuate our initial business combination, the
potential for the issuance of a substantial number of additional
shares of Class A common stock upon exercise of these warrants or
conversion rights could make us a less attractive acquisition
vehicle to a target business. Any such issuance will increase the
number of outstanding shares of our Class A common stock and reduce
the value of the Class A common stock issued to complete the
business combination. Therefore, our warrants and Founder Shares
may make it more difficult to effectuate a business combination or
increase the cost of acquiring the target business.
The Private Placement Warrants are identical to the warrants sold
as part of the Units in the IPO except that, so long as they are
held by our Sponsor, any Institutional Anchor Investor or their
permitted transferees: (1) they will not be redeemable by us
(except as described in the Final Prospectus under “Description of
Securities — Warrants — Public Stockholders’ Warrants — Redemption
of Warrants”); (2) they (including the Class A common stock
issuable upon exercise of these warrants) may not, subject to
certain limited exceptions, be transferred, assigned or sold by our
Sponsor or the relevant Institutional Anchor Investor until 30 days
after the completion of our initial business combination; (3) they
may be exercised by the holders on a cashless basis; and (4) they
(including the shares of Common Stock issuable upon exercise of
these warrants) are entitled to registration rights. The Private
Placement Warrants will not vote on any amendments to the warrant
agreement discussed elsewhere in this report.
Because each Unit offered in the IPO contained one-third of one
redeemable warrant and only a whole warrant may be exercised, the
Units may be worth less than units of other blank check
companies.
Each Unit offered in the IPO contained one-third of one redeemable
warrant. Pursuant to the warrant agreement, no fractional warrants
will be issued upon separation of the Units, and only whole
warrants will trade. This is different from other offerings similar
to ours whose units include one share of Class A common stock and
one whole warrant to purchase one whole share. We have established
the components of the Units in this way in order to reduce the
dilutive effect of the warrants upon completion of a business
combination since the warrants will be exercisable in the aggregate
for one-third of the number of shares compared to units that each
contain a whole warrant to purchase one whole share, thus making
us, we believe, a more attractive business combination partner for
target businesses. Nevertheless, this unit structure may cause our
Units to be worth less than if they included a warrant to purchase
one whole share.
Provisions in our 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 Certificate of Incorporation contains provisions that may
discourage unsolicited takeover proposals that stockholders may
consider to be in their best interests. These provisions include
the ability of the board of directors to designate the terms of and
issue new series of preferred shares, and the fact that prior to
the completion of our initial business combination only holders of
our shares of Class B common stock, which may make more difficult
the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market
prices for our securities.
We are also subject to anti-takeover provisions under Delaware law,
which could delay or prevent a change of control. Together these
provisions may make more difficult the removal of management and
may discourage transactions that otherwise could involve payment of
a premium over prevailing market prices for our securities.
Our Certificate of Incorporation designates the Court of Chancery
of the State of Delaware as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by
our stockholders, which could limit our stockholders’ ability to
obtain a favorable judicial forum for disputes with our company or
our company’s directors, officers or other employees.
Our Certificate of Incorporation provides that, unless we consent
in writing to the selection of an alternative forum, the Court of
Chancery of the State of Delaware shall, to the fullest extent
permitted by law, be the sole and exclusive forum for any (1)
derivative action or proceeding brought on behalf of our company,
(2) action asserting a claim of breach of a fiduciary duty owed by
any director, officer, employee or agent of our company to our
company or our stockholders, or any claim for aiding and abetting
any such alleged breach, (3) action asserting a claim against our
company or any director or officer of our company arising pursuant
to any provision of the DGCL or our Certificate of Incorporation or
our bylaws, or (4) action asserting a claim against us or any
director or officer of our company governed by the internal affairs
doctrine except for, as to each of (1) through (4) above, any claim
(a) as to which the Court of Chancery determines that there is an
indispensable party not subject to the jurisdiction of the Court of
Chancery (and the indispensable party does not consent to the
personal jurisdiction of the Court of Chancery within ten days
following such determination), (b) which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery,
or (c) for which the Court of Chancery and the U.S. federal
district court for the District of Delaware does not have subject
matter jurisdiction, as to which the Court of Chancery and the
federal district court for the District of Delaware shall
concurrently be the sole and exclusive forums. Notwithstanding the
foregoing, our Certificate of Incorporation provides that the
exclusive forum provision will not apply to suits brought to
enforce any liability or duty created by the Exchange Act or any
other claim for which the federal district courts of the United
States of America shall be the sole and exclusive forum. Section 27
of the Exchange Act creates exclusive federal jurisdiction over all
suits brought to enforce any duty or liability created by the
Exchange Act or the rules and regulations thereunder. Additionally,
unless we consent in writing to the selection of an alternative
forum, the federal courts shall be the exclusive forum for the
resolution of any complaint asserting a cause of action arising
under the Securities Act against us or any of our directors,
officers, other employees or agents. Section 22 of the Securities
Act, however, created concurrent jurisdiction for federal and state
courts over all suits brought to enforce any duty or liability
created by the Securities Act or the rules and regulation
thereunder. Accordingly, there is uncertainty as to whether a court
would enforce such provisions, and the enforceability of similar
choice of forum provisions in other companies’ charter documents
has been challenged in legal proceedings. While the Delaware courts
have determined that such exclusive forum provisions are facially
valid, a stockholder may nevertheless seek to bring a claim in a
venue other than those designated in the exclusive forum
provisions, and there can be no assurance that such provisions will
be enforced by a court in those other jurisdictions. Any person or
entity purchasing or otherwise acquiring any interest in our
securities shall be deemed to have notice of and to have consented
to the forum provisions in our Certificate of Incorporation,
however, we note that investors cannot waive compliance with the
federal securities laws and the rules and regulations thereunder.
Although we believe this provision benefits us by providing
increased consistency in the application of Delaware law in the
types of lawsuits to which it applies, the provision may limit our
stockholders’ ability to obtain a favorable judicial forum for
disputes with us and may have the effect of discouraging lawsuits
against our directors and officers.
If any action the subject matter of which is within the scope the
forum provisions is filed in a court other than a court located
within the State of Delaware (a “foreign action”) in the name of
any stockholder, such stockholder shall be deemed to have consented
to: (x) the personal jurisdiction of the state and federal courts
located within the State of Delaware in connection with any action
brought in any such court to enforce the forum provisions (an
“enforcement action”), and (y) having service of process made upon
such stockholder in any such enforcement action by service upon
such stockholder’s counsel in the foreign action as agent for such
stockholder.
This choice-of-forum provision may make it more costly for a
stockholder to bring a claim, and it may also limit a stockholder’s
ability to bring a claim in a judicial forum that it finds
favorable for disputes with our company or its directors, officers
or other employees, which may discourage such lawsuits.
Alternatively, if a court were to find this provision of our
Certificate of Incorporation inapplicable or unenforceable with
respect to one or more of the specified types of actions or
proceedings, we may incur additional costs associated with
resolving such matters in other jurisdictions, which could
materially and adversely affect our business, financial condition
and results of operations and result in a diversion of the time and
resources of our management and board of directors.
We may issue our shares to investors in connection with our initial
business combination at a price which is less than the prevailing
market price of our shares at that time.
In connection with our initial business combination, we may issue
shares to investors in private placement transactions (so-called
PIPE transactions) at a price of $10.00 per share or which
approximates the per-share amounts in our Trust Account at such
time, which is generally approximately $10.00. The purpose of such
issuances will be to enable us to provide sufficient liquidity to
the post-business combination entity. The price of the shares we
issue may therefore be less, and potentially significantly less,
than the market price for our shares at such time.
An investment in our shares may result in uncertain or adverse U.S.
federal income tax consequences.
An investment in our shares may result in uncertain U.S. federal
income tax consequences. For instance, because there are no
authorities that directly address instruments similar to the Units
we issued in the IPO, the allocation an investor makes with respect
to the purchase price of a Unit between the Class A common stock
and the one-third of a warrant to purchase one Class A common stock
included in each Unit could be challenged by the IRS or courts.
Furthermore, the U.S. federal income tax consequences of a cashless
exercise of warrants included in the Units we issued in the IPO is
unclear under current law, and the adjustment to the exercise price
and/or redemption price of the warrants could give rise to dividend
income to investors without a corresponding payment of cash.
Finally, it is unclear whether the redemption rights with respect
to our Class A common stock suspend the running of a U.S. Holder’s
(as defined in “United States Federal Income Tax Considerations” in
the Final Prospectus) holding period for purposes of determining
whether any gain or loss realized by such holder on the sale or
exchange of Class A common stock is long-term capital gain or loss
and for determining whether any dividend we pay would be considered
“qualified dividends” for U.S. federal income tax purposes.
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.
General Risk Factors
We are a newly incorporated 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 newly incorporated company with no operating results, and
we did not commence operations until obtaining funding through the
IPO. Because we have a limited operating history, you have a
limited 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 initial
business combination. If we fail to complete our initial business
combination, we will never generate any operating revenues.
Past performance by members of our management team and their
respective affiliates may not be indicative of future performance
of an investment in us.
Information regarding performance by, or businesses associated
with, members of our management team and their respective
affiliates, including Axon Capital and Prime Movers Lab, is
presented for informational purposes only. Any past experience and
performance, including related to acquisitions, of members of our
management team and their respective affiliates, including Axon
Capital and Prime Movers Lab, is not a guarantee either: (1) that
we will be able to successfully identify a suitable candidate for
our initial business combination; or (2) of any results with
respect to any initial business combination we may consummate. You
should not rely on the historical record of our management team’s
or their affiliates’ performance, including that of Axon Capital
and Prime Movers Lab, as indicative of the future performance of an
investment in us or the returns we will, or are likely to, generate
going forward. An investment in us is not an investment in Axon
Capital, Prime Movers Lab or any of their funds.
We are an emerging growth company and a smaller reporting company
within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to
emerging growth companies or smaller reporting companies, this
could make our securities less attractive to investors and may make
it more difficult to compare our performance with other public
companies.
We are an “emerging growth company” within the meaning of the
Securities Act, as modified by the JOBS Act, and we may take
advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging
growth companies including, but not limited to, not being required
to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved.
As a result, our stockholders may not have access to certain
information they may deem important. We could be an emerging growth
company for up to five years, although circumstances could cause us
to lose that status earlier, including if the market value of our
common stock held by non-affiliates exceeds $700 million as of the
end of any second quarter of a fiscal year, in which case we would
no longer be an emerging growth company as of the end of such
fiscal year. We cannot predict whether investors will find our
securities less attractive because we will rely on these
exemptions. If some investors find our securities less attractive
as a result of our reliance on these exemptions, the trading prices
of our securities may be lower than they otherwise would be, there
may be a less active trading market for our securities and the
trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth
companies from being required to comply with new or revised
financial accounting standards until private companies (that is,
those that have not had a Securities Act registration statement
declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that
a company can elect to opt out of the extended transition period
and comply with the requirements that apply to non-emerging growth
companies but any such election to opt out is irrevocable. We have
elected not to opt out of such extended transition period which
means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as
an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard.
This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential
differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in
Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations,
including, among other things, providing only two years of audited
financial statements. We will remain a smaller reporting company
until the last day of the fiscal year in which (1) the market value
of our common stock held by non-affiliates exceeds $250 million as
of the end of that fiscal year’s second fiscal quarter, or (2) our
annual revenues exceeded $100 million during such completed fiscal
year and the market value of our common stock held by
non-affiliates exceeds $700 million as of the end of that fiscal
year’s second fiscal quarter. To the extent we take advantage of
such reduced disclosure obligations, it may also make comparison of
our financial statements with other public companies difficult or
impossible.
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Item 1B. |
Unresolved Staff Comments.
|
None.
We currently utilize office space at 126 E. 56th
Street, 30th
Floor, New York, New York 10022. We consider our current office
space adequate for our current operations.
|
Item 3. |
Legal Proceedings.
|
There is no material litigation, arbitration, governmental
proceeding or any other legal proceeding currently pending or known
to be contemplated against us or any members of our management team
in their capacity as such, and we and the members of our management
team have not been subject to any such proceeding in the 12 months
preceding the date of this report.
|
Item 4. |
Mine Safety Disclosures.
|
Not applicable.
PART II
|
Item 5. |
Market For Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
|
Our Units, Class A common stock and warrants are listed on The
Nasdaq Capital Market under the symbols “APMIU,” “APMI” and
“APMIW,” respectively.
On October 1, 2021, the Company announced that the holders of the
Company’s Units, each consisting of one share of the Company’s
Class A common stock (“Common Stock”) and one-third of one
redeemable warrant, with each whole warrant entitling the holder to
purchase one share of Common Stock at a price of $11.50 per share,
may elect to separately trade the Common Stock and warrants
included in the Units commencing on October 4, 2021. Any Units not
so separated will continue to trade on Nasdaq under the symbol
“APMIU.” Any underlying shares of Common Stock and warrants that
are separated are expected to trade on Nasdaq under the symbols
“APMI” and “APMIW,” respectively. No fractional warrants will be
issued upon separation of the Units and only whole warrants will
trade. Holders of Units will need to have their brokers contact
Computershare Trust Company, N.A., the Company’s transfer agent, in
order to separate the holders’ Units into shares of Common Stock
and warrants.
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Item 7. |
Management’s Discussion and
Analysis of Financial Condition and Results of Operations.
|
The following discussion and analysis should be read in conjunction
with the financial statements and related notes included elsewhere
in this Annual Report on Form 10-K. This discussion contains
forward-looking statements reflecting our current expectations,
estimates and assumptions concerning events and financial trends
that may affect our future operating results or financial position.
Actual results and the timing of events may differ materially from
those contained in these forward-looking statements due to a number
of factors, including those discussed in the sections of this
Annual Report entitled “Risk Factors” and “Forward-Looking
Statements” and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company formed under the laws of the State of
Delaware on April 1, 2021, for the purpose of effectuating a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or other similar business combination with one or
more businesses (“business combination”). We intend to effectuate
our business combination using cash from the proceeds of our IPO,
our capital stock, debt or a combination of cash, stock and debt.
We are an emerging growth company and, as such, we are subject to
all of the risks associated with emerging growth companies.
As indicated in the accompanying audited financial statements, as
of December 31, 2021, we had $449,254 in cash and working capital
of $85,144. Further, we expect to incur significant costs in the
pursuit of our initial business combination. We cannot assure you
that our plans to raise capital or to complete our initial business
combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any
revenues to date. Our only activities since inception have been
organizational activities, those necessary to prepare for our IPO,
and, since the closing of our Initial Public Offering, our search
for business combination candidates. On August 17, 2021, we
consummated our IPO of 15,000,000 Units, as described below under
“—Liquidity and Capital Resources.” Subsequent to our IPO, we have
not generated, and will not generate, any operating revenues until
after completion of our initial business combination. We have
generated non-operating income in the form of interest income on
cash and cash equivalents from the proceeds of the IPO and the
Private Placement (as defined herein). There has been no
significant change in our financial or trading position since the
date of our unaudited condensed financial statements included in
our Quarterly Report on Form 10-Q filed with the SEC on November
18, 2021. We expect to incur increased expenses as a result of
being a public company (for legal, financial reporting, accounting
and auditing compliance) as well as for due diligence expenses. We
expect our expenses to increase substantially since the closing of
our IPO.
Our entire activity from April 1, 2021 (inception) through December
31, 2021, was, except as noted above, related to organizational
activities and those necessary to prepare for the IPO. Although we
consummated the IPO, we will not be generating any operating
revenues until the closing and completion of our initial business
combination.
For the period from April 1,2021 (inception) through December 31,
2021, we had net income of $525,837, which consisted of $1,175,244
of formation costs and other operating expenses, a warrant offering
expense of $289,574, $141,870 of offering costs related to
transferring founder shares to anchor investors, and $151,374 of
franchise tax expense, offset by gain on change in fair value of
warrant liabilities of $2,283,333, and income earned on investments
in Trust Account of $566.
Liquidity and Capital
Resources
Until the consummation of the IPO, our liquidity needs were
satisfied through the receipt of $25,000 from the sale of the Class
B common stock (i.e., the Founder Shares) to our initial
stockholders and up to $300,000 in loans from our Sponsor under an
unsecured promissory note. As of the IPO date of August 17, 2021,
the Company had drawn approximately $69,000 from the promissory
note. As of December 31, 2021, the Company had repaid the amount
borrowed and has not drawn any amount from the promissory
note.
The registration statement for our IPO was declared effective on
August 12, 2021. On August 17, 2021 we consummated our IPO of
15,000,000 Units at $10.00 per share. Each Unit consists of one
share of Class A common stock, par value $0.0001 per share, and
one-third of one redeemable warrant, with each warrant entitling
the holder thereof to purchase one share of Class A common stock at
a price of $11.50 per share, subject to adjustment. Certain
investment funds managed by affiliates of the Sponsor purchased an
aggregate of 1,500,000 Units in the IPO. As part of the IPO, the
Institutional Anchor Investors purchased an aggregate of
$127,900,000 of Units. The IPO generated net proceeds of
$146,466,375 and offering costs of $8,703,625, which includes
$3,000,000 of underwriting fees, $5,250,000 in deferred
underwriting commissions, $453,625 of other offering costs, and an
estimated additional $80,000 in other offering expenses that will
be paid (or net proceeds of $141,216,375 giving effect to deferred
underwriting commissions). No payments for offering expenses, and
no payments from the net offering proceeds, were made by us to our
directors, officers or their associates, persons owning 10% or more
of any class of equity securities of the Company or affiliates of
the Company, except that offering expenses have been funded in part
by the outstanding promissory note with our Sponsor, as disclosed
above.
Simultaneously with the consummation of the IPO, we consummated the
Private Placement of 3,333,333 Private Placement Warrants at a
price of $1.50 per Private Placement Warrant, generating total
proceeds of $5,000,000, to the Sponsor. Substantially concurrently
with the closing of the Private Placement, the Sponsor sold an
aggregate of 66,666 Private Placement Warrants to the Institutional
Anchor Investors. The Private Placement Warrants are identical to
the warrants sold in the IPO, except that the Private Placement
Warrants are non-redeemable and may be exercised on a cashless
basis, in each case so long as they continue to be held by the
initial purchasers or their permitted transferees. The purchasers
of the Private Placement Warrants have agreed not to transfer,
assign or sell any of the securities purchased in the Private
Placement, including the underlying shares of Class A common stock
(except to certain permitted transferees), until 30 days after the
consummation of the Company’s initial business combination.
Upon the closing of the IPO and the Private Placement, a
total amount of $150,000,000 ($10.00 per share) from the net
proceeds of the IPO and certain of the proceeds of the Private
Placement was placed in a Trust Account located in the United
States with Computershare Trust Company, N.A. acting as trustee.
The funds are invested only in United States “government
securities” within the meaning of Section 2(a)(16) of the
Investment Company Act of 1940 having a maturity of 180 days or
less or in money market funds meeting certain conditions under Rule
2a-7 promulgated under the Investment Company Act of 1940 which
invest only in direct U.S. government treasury obligations, as
determined by us, until the earlier of (i) the completion of a
business combination and (ii) the distribution of the Trust
Account.
We intend to use substantially all of the funds held in the Trust
Account, including any amounts representing interest earned on the
Trust Account, excluding deferred underwriting commissions, to
complete our initial business combination. We may withdraw interest
from the Trust Account to pay taxes, if any. To the extent that our
share capital or debt is used, in whole or in part, as
consideration to complete an initial business combination, the
remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the target business or
businesses, make other acquisitions and pursue our growth
strategies.
We intend to use the funds held outside the Trust Account primarily
to identify and evaluate target businesses, perform business due
diligence on prospective target businesses, travel to and from the
offices, plants or similar locations of prospective target
businesses or their representatives or owners, review corporate
documents and material agreements of prospective target businesses,
structure, negotiate and complete an initial Business
Combination.
In order to fund working capital deficiencies or to finance
transaction costs in connection with an intended initial business
combination, our Sponsor or an affiliate of our Sponsor or certain
of our officers and directors may, but are not obligated to, loan
us funds as may be required. If we complete our initial business
combination, we expect to repay such loaned amounts out of the
proceeds of the Trust Account released to us. Otherwise, such loans
may be repaid only out of funds held outside of the Trust Account.
Up to $1,500,000 of such loans may be convertible into warrants at
a price of $1.50 per warrant at the option of the lender. The
warrants would be identical to the Private Placement Warrants
issued to our Sponsor. The terms of such loans, if any, have not
been determined and no written agreements exist with respect to
such loans. 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.
We do not believe we will need to raise additional funds in order
to meet the expenditures required for operating our business prior
to our initial business combination. However, if our estimates of
the costs of identifying a target business, undertaking in-depth
due diligence and negotiating an initial business combination are
less than the actual amount necessary to do so, we may have
insufficient funds available to operate our business prior to our
initial business combination. Moreover, we may need to obtain
additional financing either to complete our initial business
combination or because we become obligated to redeem a significant
number of our Class A common stock upon completion of our initial
business combination, in which case we may issue additional
securities or incur debt in connection with such business
combination.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of December
31, 2021.
Commitments and Contractual
Obligations
Administrative Services Agreement
On August 12, 2021, we entered into an Administrative Services
Agreement pursuant to which we have been paying our Sponsor or an
affiliate of our Sponsor a total of $10,000 per month, and will
continue to pay this amount for up to 24 months in total, for
administrative and support services. Upon completion of our initial
business combination or our liquidation, we will cease paying these
monthly fees.
Registration
Rights
The holders of the Founder Shares, Private Placement Warrants and
any warrants that may be issued upon conversion of the Working
Capital Loans (and in each case holders of their component
securities, as applicable) will be entitled to registration rights
pursuant to a registration rights agreement to be signed prior to
or on the effective date of the Initial Public Offering, requiring
the Company to register such securities for resale (in the case of
the Founder Shares, only after conversion to our Class A ordinary
shares). The holders of the majority of these securities are
entitled to make up to three demands, excluding short form demands,
that the Company register such securities. In addition, the holders
have certain “piggy-back” registration rights with respect to
registration statements filed subsequent to the consummation of a
Business Combination and rights to require the Company to register
for resale such securities pursuant to Rule 415 under the
Securities Act. The Company will bear the expenses incurred in
connection with the filing of any such registration
statements.
Underwriting Agreement
The Company granted the underwriter a 45-day option to purchase up
to 2,250,000 additional Units to cover over-allotments at the
Initial Public Offering price, less the underwriting discounts and
commissions.
The underwriter was paid a cash underwriting discount of 2.00% of
the gross proceeds of the Initial Public Offering, or $3,000,000,
in connection with the Initial Public Offering. In addition, the
underwriter is entitled to a deferred fee of three and half percent
(3.50%) of the gross proceeds of the Initial Public Offering, or
$5,250,000. The deferred fee will become payable to the underwriter
from the amounts held in the Trust Account solely in the event that
the Company completes a Business Combination, subject to the terms
of the underwriting agreement.
The underwriter’s over-allotment option was not exercised and
expired on September 26, 2021.
Critical Accounting Estimates
This management’s discussion and analysis of our financial
condition and results of operations is based on our financial
statements, which have been prepared in accordance with GAAP. The
preparation of our financial statements requires us to make
estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent
assets and liabilities in our financial statements. On an ongoing
basis, we evaluate our estimates and judgments, including those
related to fair value of financial instruments and accrued
expenses. We base our estimates on historical experience, known
trends and events and various other factors that we believe to be
reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different
assumptions or conditions. The Company has identified the following
as its critical accounting estimates:
Warrant Liabilities
The Company accounts for the Warrants as either equity-classified
or liability-classified instruments based on an assessment of the
specific terms of the Warrants and the applicable authoritative
guidance in Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 480, “Distinguishing
Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and
Hedging” (“ASC 815”). The assessment considers whether they are
freestanding financial instruments pursuant to ASC 480, meet the
definition of a liability pursuant to ASC 480, and meet all of the
requirements for equity classification under ASC 815, including
whether the Warrants are indexed to the Company’s own common shares
and whether the holders of the Warrants could potentially require
“net cash settlement” in a circumstance outside of the Company’s
control, among other conditions for equity classification. This
assessment, which requires the use of professional judgment, is
conducted at the time of issuance of the Warrants and as of each
subsequent quarterly period end date while the Warrants are
outstanding.
For issued or modified warrants that meet all of the criteria
for equity classification, such warrants are required to be
recorded as a component of additional paid-in capital at the time
of issuance. For issued or modified warrants that do not meet all
the criteria for equity classification, such warrants are required
to be recorded at their initial fair value on the date of issuance,
and each balance sheet date thereafter. Changes in the estimated
fair value of liability-classified warrants are recognized as a
non-cash gain or loss on the statements of operations. The fair
value of the Private Warrants were estimated using a Monte Carlo
simulation model-based approach. The measurements of fair market
value of the Public Warrants were initially estimated using a Monte
Carlo simulation model-based approach. As of December 31, 2021 the
Public warrants are calculated based on the market price of the
Public Warrants, which trade under the ticker symbol APMIW (See
Note 10).
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to
possible redemption in accordance with the guidance in FASB ASC
Topic 480 “Distinguishing Liabilities from Equity.” The shares of
Class A common stock subject to mandatory redemption (if any) are
classified as liability instruments and are measured at fair value.
Conditionally redeemable shares of Class A common stock (including
Class A common stock that feature redemption rights that are either
within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within the Company’s
control) are classified as temporary equity. At all other times,
Class A common stock is classified as stockholders’ equity. The
Company’s Class A common stock features certain redemption rights
that are considered to be outside of the Company’s control and
subject to the occurrence of uncertain future events. Accordingly,
as of December 31, 2021, 15,000,000 shares of Class A common stock
subject to possible redemption are presented as temporary equity,
outside of the stockholders’ deficit section of the Company’s
balance sheet.
Net Income per Share of Common Stock
We comply with accounting and disclosure requirements of FASB ASC
Topic 260, “Earnings Per Share.” We have two classes of shares,
which are referred to as Class A common stock and Class B common
stock. Net income per share of Class A common stock is calculated
by dividing weighted net income by the weighted average number of
shares of Class A common stock outstanding during the period. Net
income per share of Class B common stock is calculated by dividing
weighted net income by the weighted average number of shares of
Class B common stock outstanding during the period. The calculation
of diluted net income does not consider the effect of the warrants
underlying the Units sold in the IPO (including the consummation of
the Over-allotment) and the private placement warrants to purchase
an aggregate of 15,000,000 Class A ordinary shares in the
calculation of diluted income per share, because their inclusion
would be anti-dilutive under the treasury stock method. As a
result, diluted net income per share is the same as basic net
income per share for the year ended December 31, 2021. Accretion
associated with the redeemable Class A ordinary shares is excluded
from earnings per share as the redemption value approximates fair
value.
Investments Held in Trust Account
The Company’s portfolio of investments held in trust consists
solely of U.S. government securities, within the meaning set forth
in Section 2(a)(16) of the Investment Company Act, with a maturity
of 185 days or less, or investments in money market funds that
invest in U.S. government securities, or a combination thereof. The
Company’s investments held in the Trust Account are classified as
trading securities. Trading securities are presented on the balance
sheet at fair value at the end of each reporting period. Gains and
losses resulting from the change in fair value of these investments
are included in income earned on investments in Trust Account in
the accompanying statement of operations. The estimated fair values
of investments held in the Trust Account are determined using
available market information.
Recently Issued Accounting Standards
In August 2020, the FASB issued Accounting Standards Update (“ASU”)
2020-06, Debt - Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging - Contracts in Entity’s Own
Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current
models that require separation of beneficial conversion and cash
conversion features from convertible instruments and simplifies the
derivative scope exception guidance pertaining to equity
classification of contracts in an entity’s own equity. The new
standard also introduces additional disclosures for convertible
debt and freestanding instruments that are indexed to and settled
in an entity’s own equity. ASU 2020-06 amends the diluted earnings
per share guidance, including the requirement to use the
if-converted method for all convertible instruments. As a smaller
reporting company, ASU 2020-06 is effective January 1, 2024 and
should be applied on a full or modified retrospective basis, with
early adoption permitted beginning on January 1, 2021. The Company
is currently assessing the impact, if any, that ASU 2020-06 would
have on its financial position, results of operations or cash
flows.
Management does not believe that any recently issued, but not yet
effective, accounting pronouncements, if currently adopted, would
have a material effect on the Company’s financial statements.
JOBS Act
The JOBS Act contains provisions that, among other things, relax
certain reporting requirements for qualifying public companies. We
qualify as an “emerging growth company” and under the JOBS Act will
be allowed to comply with new or revised accounting pronouncements
based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised
accounting standards, and as a result, we may not comply with new
or revised accounting standards on the relevant dates on which
adoption of such standards is required for non-emerging growth
companies. As a result, our financial statements may not be
comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates.
Additionally, we are in the process of evaluating the benefits of
relying on the other reduced reporting requirements provided by the
JOBS Act. Subject to certain conditions set forth in the JOBS Act,
if, as an “emerging growth company,” we choose to rely on such
exemptions we may not be required to, among other things, (i)
provide an auditor’s attestation report on our system of internal
controls over financial reporting pursuant to Section 404, (ii)
provide all of the compensation disclosure that may be required of
non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any
requirement that may be adopted by the PCAOB regarding mandatory
audit firm rotation or a supplement to the auditor’s report
providing additional information about the audit and the financial
statements (auditor discussion and analysis), (iv) disclose certain
executive compensation related items such as the correlation
between executive compensation and performance and comparisons of
the CEO’s compensation to median employee compensation and (v)
comply with the requirements of holding a nonbinding advisory vote
on executive compensation and stockholder approval of any golden
parachute payments not previously approved. These exemptions will
apply for a period of five years following the completion of our
IPO or until we are no longer an “emerging growth company,”
whichever is earlier.
|
Item 7A. |
Quantitative and Qualitative
Disclosures About Market Risk.
|
As of December 31, 2021, we were not subject to any market or
interest rate risk. Following the consummation of our Initial
Public Offering, the net proceeds of our Initial Public Offering,
including amounts in the Trust Account, have been invested in U.S.
government treasury bills, notes or bonds with a maturity of 180
days or less or in certain money market funds that invest solely in
U.S. treasuries. Due to the short-term nature of these investments,
we believe there will be no associated material exposure to
interest rate risk.
|
Item 8. |
Financial Statements and
Supplementary Data.
|
Our financial statements and the notes thereto begin on page F-1 of
this Annual Report.
|
Item 9. |
Changes in and Disagreements With
Accountants on Accounting and Financial Disclosure.
|
None.
|
Item 9A. |
Controls and Procedures.
|
Disclosure controls and procedures are controls and other
procedures that are designed to ensure that information required to
be disclosed in our reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported within the time
periods specified in the SEC’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is accumulated
and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, to allow timely decisions
regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our
Chief Executive Officer and Chief Financial Officer carried out an
evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures as of December 31, 2021. Based
upon their evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) were effective.
Changes in Internal Controls Over Financial Reporting
During the most recently completed fiscal quarter, there has been
no change in our internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
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Item 9B. |
Other Information.
|
None.
|
Item 9C. |
Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections.
|
Not applicable.
PART III
|
Item 10. |
Directors, Executive Officers and
Corporate Governance.
|
MANAGEMENT
Founders, Directors and Executive Officers
Our founders, officers and directors are as follows:
|
Name
|
|
Age
|
|
Title
|
|
Dinakar Singh
|
|
53
|
|
Founder, Chief Executive Officer
|
|
Dakin Sloss
|
|
31
|
|
Founder
|
|
Jon Layman
|
|
56
|
|
Chief Financial Officer, Chief Operating Officer,
Director
|
|
Richard Spencer
|
|
68
|
|
Director
|
|
Muneer Satter
|
|
61
|
|
Director
|
|
Koryn Estrada
|
|
36
|
|
Director
|
|
William Ulrich
|
|
38
|
|
Director
|
Dinakar Singh is our Founder and CEO. Mr. Singh is the CEO of Axon
Capital, a global investment firm, which he founded in 2005. Mr.
Singh was previously a senior Partner at Goldman Sachs, where he
was global co-head of the Principal Strategies Department, which
was the firm’s highly profitable global equities proprietary
trading and investment business. He was also a member of the
Operating Committee, Partnership Committee, Risk Committee and Asia
Management Committee. Mr. Singh became a partner in 1998, and at
that time was the second youngest partner in Goldman Sachs history.
Driven by his daughter Arya’s diagnosis with Spinal Muscular
Atrophy (“SMA”), Mr. Singh established the SMA Foundation in 2003
to drive development of a treatment for SMA, which was the leading
genetic cause of death in young children. Through over $100 million
of strategic investments, the Foundation successfully facilitated
or drove three transformative FDA-approved treatments, and helped
establish SMA as a model for the potential to transform deadly rare
diseases. Mr. Singh serves on the boards of the Columbia University
Medical Center and New York Public Library, where he chairs the
Investment Committee for the NYPL endowment. He also previously
served as a member of the Yale Investment Committee, and Trustee of
Rockefeller University and Cold Spring Harbor Laboratory, and
served on the investment committees of both.
Dakin Sloss is our Founder. Mr. Sloss is Founder and General
Partner of Prime Movers Lab. He has led investments in and is a
Board Member at Momentus Inc., Heliogen, Inc., Vaxxinity, Inc.
(formerly known as C19 Corp., and formerly doing business as
Covaxx), Tarana Wireless Inc. and Carbon Capture, Inc. Prior to
founding Prime Movers Lab, Mr. Sloss served as founding CEO of
Tachyus Corp. and OpenGov. Mr. Sloss studied Mathematics, Physics,
and Philosophy at Stanford University. Mr. Sloss was recognized as
one of Yahoo Finance’s THE NEXT: 21 people who will have a
significant impact on the worlds of finance, business, sports or
politics in the year ahead and was featured on CNBC discussing the
rise of SPACs. In 2016, Mr. Sloss was recognized as a featured
Forbes 30 Under 30 energy entrepreneur. In 2017, Mr. Sloss was
named as a San Francisco Business Times 40 Under 40 honoree.
Jon Layman is our Director, COO and CFO. Mr. Layman is a General
Partner at Prime Movers Lab. Mr. Layman has spent the last 20-plus
years in San Francisco and Silicon Valley advising founders,
entrepreneurs and technology and life sciences companies. Mr.
Layman has extensive experience advising on and managing mergers
and acquisitions, technology company investments and capital
markets transactions. Mr. Layman also has extensive experience
advising public companies on corporate governance, securities,
mergers and acquisitions and capital raising transactions. Prior to
joining Prime Movers Lab in February 2021, Mr. Layman was a Partner
in the corporate group at Hogan Lovells US LLP since 2010. Prior to
joining Hogan Lovells, Mr. Layman was a Partner at Wilson Sonsini
Goodrich & Rosati PC. Mr. Layman earned his bachelor’s degree
at the University of Michigan and his JD from New York University.
We believe that Mr. Layman is qualified to serve on our board of
directors due to his extensive legal experience.
Richard Spencer is a 1976 graduate of Rollins College with a
Bachelor of Arts in Economics. Upon graduation, he joined the
United States Marine Corps, and proudly served as an H-46 (Phrog)
pilot until 1981. After leaving active duty, Mr. Spencer worked on
Wall Street for 16 years with responsibilities centered on
investment banking services. He served as President of Crossroads
Investment Management, LLC, and then joined Intercontinental
Exchange, Inc., as Vice Chairman and Chief Financial Officer.
Before being nominated as the Secretary of the Navy in 2017, Mr.
Spencer was the Managing Director of Fall Creek Management, LLC.
Mr. Spencer is also on the boards of Global Atlantic Financial
Group, Morpheus Space GmbH and Aviation Safety Resources Inc. Mr.
Spencer was sworn in as the 76th secretary of the Navy on Aug. 3,
2017, and served in that office until Nov 24, 2019. He served as
acting secretary of defense from July 15, 2019, to July 23, 2019.
He performed the duties of the deputy secretary of defense from
July 23, 2019, to July 31, 2019. We believe that Mr. Spencer is
qualified to serve on our board of directors due to his extensive
business experience.
Muneer Satter has been Founder and Managing Partner of Satter
Medical Technology Partners, L.P. since 2016, and Chairman of
Satter Investment Management, LLC since 2012, and he also manages
the Satter Foundation. Prior to Satter Investment Management, Mr.
Satter was a partner at Goldman Sachs where he spent 24 years in
various roles, most recently as a senior member of the Merchant
Banking Investment Committee overseeing private equity and debt
investments, and the Global Head of the Mezzanine Group in the
Merchant Banking Division, where he raised and managed over $30
billion of assets. He was also Chairman of the Risk Committee
overseeing $80 billion of assets. Mr. Satter is currently a
director of REX – Real Estate Exchange, Inc. Mr. Satter has been a
director of Annexon, Inc. since December 2014, and was a director
of Aerpio Pharmaceuticals, Inc. from October 2013 to June 2020, a
director and Chairman of Akebia Therapeutics, Inc. from May 2013 to
December 2018 and a director of Vital Therapies, Inc. from October
2012 to October 2018. Mr. Satter serves as Vice Chairman of the
Goldman Sachs Foundation and GS Gives, where he is also Chairman of
the Investment Committee overseeing $1.2 billion of assets. Mr.
Satter is also on the Board of Advisors of Accelerate Institute and
is on the board of directors of the Navy SEAL Foundation and
Northwestern Medical Group. Mr. Satter is on the Board of Trustees
of Northwestern University, where he was also previously Chairman
of the Finance Committee. Mr. Satter is also a former board member
of World Business Chicago and the Nature Conservancy, where he was
Chairman of the Finance Committee overseeing a $1.8 billion
endowment. Mr. Satter received a B.A. in Economics from
Northwestern University, a J.D. from Harvard Law School and an
M.B.A. from Harvard Business School. We believe that Mr. Satter is
qualified to serve on our board of directors due to his extensive
investment experience.
Koryn Estrada is a Partner, co-CEO and co-CIO of Axon Capital, an
asset management firm in New York. Ms. Estrada oversees a portfolio
of concentrated long-term public and private investments, and in
particular has driven the firm’s sizable portfolio of investments
in early-stage growth companies. Prior to joining Axon Capital in
2011, Ms. Estrada worked at Shumway Capital Partners, and prior to
that in the Oil & Gas group of the UBS Investment Banking
Division. She is a co-founder of and partner at RiseWell, a rapidly
growing oral care company, inspired by her passion for wellness and
natural products. She is also a director of various growth
companies including HeyMama and NuMilk (Plant Tap Inc.). She
received her BA from Columbia University with majors in Economics
and Philosophy.
William Ulrich has 15 years of experience within the energy and
finance sectors and is focused on deploying technology to drive
behavior change in the energy industry. Mr. Ulrich is currently the
co-CEO and a Director of Presidio Petroleum. Fort Worth-based
Presidio is an oil and gas efficiency company founded to acquire,
operate, and optimize producing oil and natural gas properties in
established U.S. onshore basins. The company leverages engineering
efficiency and the embedding of technology to improve
decision-making, achieve best-in-class operations, and enhance free
cash flow in an environmentally and socially responsible manner
across its portfolio of over 5,500 oil and gas wells. From 2009 to
2016, Mr. Ulrich served in senior corporate development roles at
Atlas Energy (NYSE: ATLS), Atlas Pipeline Partners L.P. (NYSE: APL)
and Atlas Resource Partners L.P. (NYSE: ARP). From 2005 to 2009,
Mr. Ulrich was an investment banker at UBS Investment Bank. We
believe that Mr. Ulrich is qualified to serve on our board of
directors due to his extensive business and public company
experience.
Number, Terms of Office and Election of Officers and
Directors
Our board of directors consists of five members. In accordance with
Nasdaq corporate governance requirements, we are not required to
hold an annual meeting until one year after our first fiscal year
end following our listing on Nasdaq. The term of office of our
initial directors will expire at our first annual meeting of
stockholders.
Prior to consummation of our initial business combination, holders
of our Class B common stock will have the right to elect all of our
directors and remove members of our board of directors for any
reason. Holders of our Public Shares will not have the right to
vote on the election of directors during such time. These
provisions of our Certificate of Incorporation may only be amended
if approved by holders of at least 90% of the outstanding shares of
our Common Stock voting at a stockholder meeting. Approval of our
initial business combination will require the affirmative vote of a
majority of our board directors, which must include a majority of
our independent directors. Subject to any other special rights
applicable to the stockholders, prior to our initial business
combination, any vacancies on our board of directors may be filled
by the affirmative vote of a majority of the directors present and
voting at the meeting of our board of directors that includes any
directors representing our Sponsor then on our board of directors,
or by holders of a majority of the outstanding shares of our Class
B common stock.
Our officers are appointed by the board of directors and serve at
the discretion of the board of directors, rather than for specific
terms of office. Our board of directors is authorized to appoint
persons to the offices set forth in our bylaws as it deems
appropriate. Our bylaws provide that our officers may consist of a
Chairman of the Board, a Chief Executive Officer, a President, a
Chief Operating Officer, a Chief Financial Officer, a Secretary and
such other officers (including without limitation, Vice Presidents,
Assistant Secretaries and a Treasurer) as may be determined from
time to time by the board of directors.
Committees of the board of directors
Our board of directors has two standing committees: an audit
committee and a compensation committee, each of which is composed
solely of independent directors. Subject to phase-in rules, the
rules of Nasdaq and Rule 10A-3 of the Exchange Act require that the
audit committee of a listed company be comprised solely of
independent directors and the rules of Nasdaq require that the
compensation committee of a listed company be comprised solely of
independent directors. Each committee operates under a charter that
has been approved by our board of directors and has the composition
and responsibilities described below. The charter of each committee
is available on our website.
Audit Committee
We have established an audit committee of the board of directors.
The members of our audit committee are Muneer Satter, William
Ulrich and Richard Spencer. Muneer Satter serves as chairman of the
audit committee.
Each member of the audit committee is financially literate, and our
board of directors has determined that Muneer Satter qualifies as
an “audit committee financial expert” as defined in applicable SEC
rules and has accounting or related financial management
expertise.
We have adopted an audit committee charter, which details the
purpose and responsibilities of the audit committee,
including:
|
• |
the appointment, compensation, retention, replacement, and
oversight of the work of the independent registered public
accounting firm and any other independent registered public
accounting firm engaged by us;
|
|
• |
pre-approving all audit and non-audit services to be provided
by the independent registered public accounting firm or any other
registered public accounting firm engaged by us, and establishing
pre-approval policies and procedures;
|
|
• |
reviewing and discussing with the independent registered
public accounting firm all relationships the auditors have with us
in order to evaluate their continued independence;
|
|
• |
setting clear hiring policies for employees or former
employees of the independent registered public accounting
firm;
|
|
• |
setting clear policies for audit partner rotation in
compliance with applicable laws and regulations;
|
|
• |
obtaining and reviewing a report, at least annually, from the
independent registered public accounting firm describing (1) the
independent registered public accounting firm’s internal
quality-control procedures and (2) any material issues raised by
the most recent internal quality-control review, or peer review, of
the audit firm, or by any inquiry or investigation by governmental
or professional authorities, within the preceding five years
respecting one or more independent audits carried out by the firm
and any steps taken to deal with such issues;
|
|
• |
reviewing and approving any related party transaction required
to be disclosed pursuant to Item 404 of Regulation S-K promulgated
by the SEC prior to us entering into such transaction; and
|
|
• |
reviewing with management, the independent registered public
accounting firm, and our legal advisors, as appropriate, any legal,
regulatory or compliance matters, including any correspondence with
regulators or government agencies and any employee complaints or
published reports that raise material issues regarding our
financial statements or accounting policies and any significant
changes in accounting standards or rules promulgated by the
Financial Accounting Standards Board, the SEC or other regulatory
authorities.
|
Compensation Committee
We have established a compensation committee of the board of
directors. The members of our compensation committee are Muneer
Satter, William Ulrich and Richard Spencer. Muneer Satter serves as
chairman of the compensation committee.
We have adopted a compensation committee charter, which details the
purpose and responsibilities of the compensation committee,
including:
|
• |
reviewing and approving on an annual basis the corporate goals
and objectives relevant to our Chief Executive Officer’s
compensation, evaluating our Chief Executive Officer’s performance
in light of such goals and objectives and determining and approving
the remuneration (if any) of our Chief Executive Officer based on
such evaluation;
|
|
• |
reviewing and making recommendations to our board of directors
with respect to the compensation, and any incentive compensation
and equity-based plans that are subject to board approval of all of
our other officers;
|
|
• |
reviewing our executive compensation policies and plans;
|
|
• |
implementing and administering our incentive compensation
equity-based remuneration plans;
|
|
• |
assisting management in complying with our proxy statement and
annual report disclosure requirements;
|
|
• |
approving all special perquisites, special cash payments and
other special compensation and benefit arrangements for our
officers and employees;
|
|
• |
producing a report on executive compensation to be included in
our annual proxy statement (if applicable); and
|
|
• |
reviewing, evaluating and recommending changes, if
appropriate, to the remuneration for directors.
|
The charter also provides that the compensation committee may, in
its sole discretion, retain or obtain the advice of a compensation
consultant, legal counsel or other adviser and will be directly
responsible for the appointment, compensation and oversight of the
work of any such adviser. However, before engaging or receiving
advice from a compensation consultant, external legal counsel or
any other adviser, the compensation committee will consider the
independence of each such adviser, including the factors required
by Nasdaq and the SEC.
Director Nominations
We do not have a standing nominating committee, though we intend to
form a corporate governance and nominating committee as and when
required to do so by applicable law or stock exchange rules. In
accordance with Rule 5605(e)(2) of the Nasdaq listing rules, a
majority of the independent directors may recommend a director
nominee for selection by the board of directors. The board of
directors believes that the independent directors can
satisfactorily carry out the responsibility of properly selecting
or approving director nominees without the formation of a standing
nominating committee. In accordance with Rule 5605(e)(1)(A) of the
Nasdaq listing rules, all such directors are independent. As there
is no standing nominating committee, we do not have a nominating
committee charter in place.
Prior to our initial business combination, the board of directors
will also consider director candidates recommended for nomination
by our stockholders during such times as they are seeking proposed
nominees to stand for election at an annual meeting of stockholders
(or, if applicable, a special meeting of stockholders). Our
stockholders that wish to nominate a director for election to the
Board should follow the procedures set forth in our bylaws.
We have not formally established any specific, minimum
qualifications that must be met or skills that are necessary for
directors to possess. In general, in identifying and evaluating
nominees for director, the board of directors considers educational
background, diversity of professional experience, knowledge of our
business, integrity, professional reputation, independence, wisdom,
and the ability to represent the best interests of our
stockholders.
Compensation Committee Interlocks and Insider Participation
None of our executive officers currently serves, and in the past
year has not served, as a member of the compensation committee of
any entity that has one or more executive officers serving on our
board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our officers,
directors and persons who own more than ten percent of a registered
class of our equity securities to file reports of ownership and
changes in ownership with the SEC. Officers, directors and ten
percent shareholders are required by regulation to furnish us with
copies of all Section 16(a) forms they file. Based solely on review
of the copies of such forms furnished to us, or written
representations that no Forms 5 were required, we believe that,
during the fiscal year ended December 31, 2021, all Section 16(a)
filing requirements applicable to our officers and directors were
complied with.
Code of Ethics
We have adopted a code of business conduct and ethics applicable to
our directors, officers and employees (our “Code of Ethics”). A
copy of the Code of Ethics may be provided without charge upon
request. We intend to disclose any amendments to or waivers of
certain provisions of our Code of Ethics in a Current Report on
Form 8-K.
Limitation on Liability and Indemnification of Officers and
Directors
Our Certificate of Incorporation provides that our officers and
directors will be indemnified by us to the fullest extent
authorized by Delaware law, as it now exists or may in the future
be amended. In addition, our Certificate of Incorporation provides
that our directors will not be personally liable for monetary
damages to us or our stockholders for breaches of their fiduciary
duty as directors, except to the extent such exemption from
liability or limitation thereof is not permitted by the DGCL.
We have entered into agreements with our officers and directors to
provide contractual indemnification in addition to the
indemnification provided for in our Certificate of Incorporation.
Our bylaws also permit us to maintain insurance on behalf of any
officer, director or employee for any liability arising out of his
or her actions, regardless of whether Delaware law would permit
such indemnification. We have obtained a policy of directors’ and
officers’ liability insurance that insures our officers and
directors against the cost of defense, settlement or payment of a
judgment in some circumstances and insures us against our
obligations to indemnify our officers and directors. A
stockholder’s investment may be adversely affected to the extent we
pay the costs of settlement and damage awards against officers and
directors pursuant to these indemnification provisions.
We believe that these provisions, the insurance and the indemnity
agreements are necessary to attract and retain talented and
experienced officers and directors.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling us pursuant to the foregoing provisions, we have been
informed that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is
therefore unenforceable.
Indemnity
Our Sponsor has agreed that it will be liable to us if and to the
extent any claims by a third party (other than our independent
registered public accounting firm) for services rendered or
products sold to us, or a prospective target business with which we
have discussed entering into a transaction agreement, reduce the
amount of funds in the Trust Account to below (1) $10.00 per Public
Share or (2) 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 (less up to
$100,000 of interest to pay dissolution expenses), 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. 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, which is a newly formed entity, has sufficient funds to
satisfy its indemnity obligations and believe that our Sponsor’s
only assets are securities of our Company and, therefore, our
Sponsor may not be able to satisfy those obligations. We have not
asked our Sponsor to reserve for such obligations. Therefore, we
cannot assure you that our Sponsor would be able to satisfy those
obligations. We believe the likelihood of our Sponsor having to
indemnify the Trust Account is limited because we will endeavor to
have all vendors and prospective target businesses as well as other
entities execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the Trust
Account.
|
Item 11. |
Executive Compensation.
|
None of our officers or directors have received any cash
compensation for services rendered to us. Commencing on the date
that our securities are first listed on Nasdaq through the earlier
of consummation of our initial business combination and our
liquidation, we will pay our Sponsor or an affiliate of our Sponsor
a total of $10,000 per month, for up to 24 months for
administrative and support services. Our Sponsor, 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. Our audit committee will review on a quarterly basis
all payments that were made by us to our Sponsor, officers,
directors or our or any of their affiliates.
After the completion of our initial business combination, directors
or members of our management team who remain with us may be paid
consulting, management or other compensation from the combined
company. All compensation will be fully disclosed to stockholders,
to the extent then known, in the tender offer materials or proxy
solicitation materials furnished to our stockholders in connection
with a proposed business combination. It is unlikely the amount of
such compensation will be known at the time such materials are
distributed, because the directors of the post-combination business
will be responsible for determining executive officer and director
compensation. Any compensation to be paid to our officers after the
completion of our initial business combination will be determined
by a compensation committee constituted solely by independent
directors.
We are not party to any agreements with our officers and directors
that provide for benefits upon termination of employment. The
existence or terms of any such employment or consulting
arrangements may influence our management’s motivation in
identifying or selecting a target business, and we do not believe
that the ability of our management to remain with us after the
consummation of our initial business combination should be a
determining factor in our decision to proceed with any potential
business combination.
|
Item 12. |
Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder
Matters.
|
Securities Authorized for Issuance Under Equity Compensation
Plans
As of December 31, 2021, we had no equity compensation plans or
outstanding equity awards. The following table is presented as of
December 31, 2021 in accordance with SEC requirements:
|
Plan Category
|
|
Number of Securities
to be Issued
Upon Exercise of
Outstanding Options,
Warrants and Rights
|
|
|
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
|
|
|
Equity compensation plans approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Equity compensation plans not approved by security
holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
The following table sets forth information regarding the beneficial
ownership of our common stock as of the date of this report, and as
adjusted to reflect the sale of our common stock included in the
Units offered in our Initial Public Offering, by:
|
• |
each person known by us to be the
beneficial owner of more than 5% of our outstanding shares of
Common Stock;
|
|
• |
each of our executive officers,
directors and director nominees; and
|
|
• |
all our executive officers,
directors and director nominees as a group.
|
Unless otherwise indicated, we believe that all persons named in
the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them.
| |
|
Class A
|
|
|
Class B
|
|
| |
|
Number of
Shares
Beneficially
Owned
|
|
|
Percentage
of Class
|
|
|
Number of
Shares
Beneficially
Owned(2)
|
|
|
Percentage
of Class
|
|
|
Name of Beneficial Owner(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal Stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AxonPrime Infrastructure Sponsor LLC
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
3,025,000
|
|
|
|
80.7
|
%
|
|
683 Capital Management, LLC
(4)
|
|
|
1,000,000
|
|
|
|
6.70
|
%
|
|
|
50,000
|
|
|
|
1.6
|
%
|
|
Arena Capital Advisors, LLC
(5)
|
|
|
1,485,000
|
|
|
|
9.90
|
%
|
|
|
—
|
|
|
|
—
|
|
|
FIG LLC (6)
|
|
|
1,000,000
|
|
|
|
6.70
|
%
|
|
|
—
|
|
|
|
—
|
|
|
Polar Asset Management Partners Inc.
(7)
|
|
|
1,185,500
|
|
|
|
7.90
|
%
|
|
|
—
|
|
|
|
—
|
|
|
Sandia Investment Management L.P.
(8)
|
|
|
1,000,000
|
|
|
|
6.70
|
%
|
|
|
—
|
|
|
|
—
|
|
|
Sculptor Capital LP (9)
|
|
|
1,484,100
|
|
|
|
9.89
|
%
|
|
|
—
|
|
|
|
—
|
|
|
Directors and Named Executive
Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dinakar Singh (3),(10)
|
|
|
1,500,000
|
|
|
|
10.0
|
%
|
|
|
3,025,000
|
|
|
|
80.7
|
%
|
|
Jon Layman
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Richard Spencer
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
*
|
|
|
Muneer Satter
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
*
|
|
|
Koryn Estrada
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
William Ulrich
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
*
|
|
|
Directors and executive officers as
a group (6 individuals)
|
|
|
1,500.000
|
|
|
|
10.0
|
%
|
|
|
3,100,000
|
|
|
|
82.7
|
%
|
| (1) |
Unless otherwise noted, the business address of each of the
following entities or individuals is 126 E 56th Street, 30th Floor,
New York, New York 10022.
|
| (2) |
Interests shown consist solely of Founder Shares, classified
as Class B common stock. Such shares will automatically convert
into shares of Class A common stock at the time of our initial
business combination on a one-for-one basis, subject to
adjustment.
|
| (3) |
AxonPrime Infrastructure Sponsor LLC is the record holder of
the shares. The Sponsor is a direct subsidiary of AxonPrime
Infrastructure Sponsor JV LLC. 50% of the equity interests in
AxonPrime Infrastructure Sponsor JV LLC are directly owned by Prime
Infrastructure Sponsor LLC and 50% of such interests are directly
owned by Axon Infrastructure Sponsor LLC. Prime Infrastructure
Sponsor LLC is controlled by Dakin Sloss and Axon Infrastructure
Sponsor LLC is controlled by Dinakar Singh. AxonPrime
Infrastructure Sponsor LLC is therefore indirectly controlled by
Messrs. Singh and Sloss. As such, each of Messrs. Singh and Sloss
may be deemed to share beneficial ownership of the shares held
directly by the Sponsor. Each of Messrs. Singh and Sloss disclaim
any beneficial ownership of such shares, , except to the extent of
his pecuniary interest therein, if any. The Axon Fund is controlled
by Mr. Singh. The Axon Investment Manager, which is also controlled
by Mr. Singh, is the investment manager of the Axon Fund and may be
deemed to share beneficial ownership of the shares reported above
held directly by the Axon Fund and the shares that may be deemed to
be beneficially owned by Mr. Singh. The Axon Fund may be deemed to
be part of a group that beneficially owns more than 10% of the
outstanding shares of Class A Common Stock. Mr. Singh disclaims
beneficial ownership of such shares, except to the extent of his
pecuniary interest therein, if any.
|
| (4) |
The information in the table above is based solely on
information contained in this stockholder’s Schedule 13G under the
Exchange Act filed with the SEC on October 26, 2021 on behalf of
683 Capital Management, LLC, 683 Capital Partners, LP, and Ari
Zweiman, each of which share voting and dispositive power with
respect to certain of the reported shares shown above. 683 Capital
Management, LLC, as the investment manager of 683 Capital Partners,
LP, may be deemed to have beneficially owned the 1,000,000 shares
of Common Stock beneficially owned by 683 Capital Partners, LP. Ari
Zweiman, as the Managing Member of 683 Capital Management, LLC, may
be deemed to have beneficially owned the 1,000,000 shares of Common
Stock beneficially owned by 683 Capital Management, LLC. The
address of 683 Capital Management, LLC is 3 Columbus Circle, Suite
2205, New York, NY 10019.
|
| (5) |
The information in the table above is based solely on
information contained in this stockholder’s Schedule 13G under the
Exchange Act filed with the SEC on February 14, 2022 on behalf of
Arena Capital Advisors, LLC – CA, Series A of Arena Short Duration
High Yield Fund, LP and Series 8, 10, 11 and 16 of Arena Capital
Fund, LP. Members of this group include private funds managed by
Arena Capital Advisors, LLC, over which such group has sole voting
and dispositive power with respect to certain of the reported
shares shown above. The address of Arena Capital Advisors, LLC is
12121 Wilshire Blvd., Ste. 1010, Los Angeles, California
90025.
|
| (6) |
The information in the table above is based solely on
information contained in this stockholder’s Schedule 13G under the
Exchange Act filed with the SEC on August 23, 2021, on behalf of
FIG LLC, Fortress Operating Entity I LP, FIG Corp. and Fortress
Investment Group LLC, each of which share voting and dispositive
power with respect to certain of the reported shares shown above.
FIG LLC indirectly controls investment advisors to certain
investment funds (“Funds”) that hold the Units and may therefore be
deemed to beneficially own the shares of Common Stock included in
such Units. Fortress Operating Entity I LP directly or indirectly
controls the general partners or sole members of the Funds, as
applicable, and is the holder of all the issued and outstanding
shares of FIG LLC. FIG Corp. is the general partner of Fortress
Operating Entity I LP. Fortress Investment Group LLC is the holder of all the issued and
outstanding shares of FIG Corp. Therefore, any of Fortress
Operating Entity I LP, FIG Corp. or Fortress Investment Group
LLC may be deemed to beneficially own the shares reported above.
The address of FIG LLC is c/o Fortress Investment Group LLC, 1345
Avenue of the Americas, 46th Floor, New York, NY 10105.
|
| (7) |
The information in the table above is based solely on
information contained in this stockholder’s Schedule 13G under the
Exchange Act filed with the SEC on February 7, 2022, on behalf of
Polar Asset Management Partners Inc. (“Polar”), which has sole
voting and dispositive power with respect to certain of the
reported shares shown above. Polar serves as the investment advisor
to Polar Multi-Strategy Master Fund (“PMSMF”) with respect to the
shares directly held by PMSMF. The address of Polar Asset
Management Partners Inc. is 16 York Street, Suite 2900, Toronto,
Ontario, Canada M5J 0E6.
|
| (8) |
The information in the table above is based solely on
information contained in this stockholder’s Schedule 13G under the
Exchange Act filed with the SEC on February 14, 2022 on behalf of
Sandia Investment Management L.P. (“Sandia”) and Timothy J.
Sichler, each of which share voting and dispositive power with
respect to certain of the reported shares shown above. The shares
reported above are beneficially owned by Sandia in its capacity as
investment manager to a private investment vehicle and separately
managed accounts. Mr. Sichler serves as managing member of the
general partner of Sandia and in such capacity may be deemed to
indirectly beneficially own the shares reported above. The address
of Sandia Investment Management L.P. is 201 Washington Street,
Boston, Massachusetts 02108.
|
| (9) |
The information in the table above is based solely on
information contained in this stockholder’s Schedule 13G/A under
the Exchange Act filed with the SEC on February 14, 2022 on behalf
of Sculptor Capital LP (“Sculptor”), Sculptor Capital II LP
(“Sculptor-II”), Sculptor Capital Holding Corp. (“SCHC”),
Sculptor Capital Holding II LLC (“SCHC-II”), Sculptor Capital
Management, Inc. (“SCU”), Sculptor Master Fund, Ltd., Sculptor
Special Funding, LP, Sculptor Credit Opportunities Master Fund,
Ltd., Sculptor SC II LP and Sculptor Enhanced Master Fund, Ltd.,
each of which share voting and dispositive power with respect to
certain of the reported shares shown above. Sculptor and
Sculptor-II serve as the principal investment managers to a number
of private funds and discretionary accounts (collectively, the
“Accounts”), which hold the Common Stock reported above, and thus
may be deemed beneficial owners of the shares of Class A
common stock in the Accounts managed by Sculptor and Sculptor-II.
SCHC-II serves as the sole general partner of Sculptor-II and is
wholly owned by Sculptor. SCHC serves as the sole general partner
of Sculptor. As such, SCHC and SCHC-II may be deemed to control
Sculptor as well as Sculptor-II and, therefore, may be deemed to be
the beneficial owners the shares reported above. SCU is the
sole shareholder of SCHC, and may be deemed a beneficial owner
of the shares reported above. The address of Sculptor Capital
LP is 9 West 57th Street, New York, New York 10019.
|
| (10) |
Represents shares of Class A common stock acquired by Axon
Partners, LP, of which Axon Capital LP is the investment manager,
in connection with the purchase of 1,500,000 units of the
Company. The general partner of Axon Partners, LP is Axon
Partners GP, L.P. The general partner of Axon Partners GP,
L.P. is Axon GP, LLC. The managing member of Axon GP, LLC is
Dinakar Singh LLC. The managing member of Dinakar Singh LLC
is Dinakar Singh. Therefore, the shares reported above may be
deemed to be beneficially owned by Mr. Singh. Mr. Singh disclaims
beneficial ownership of the such shares, except to the extent of
his pecuniary interest therein, if any.
|
|
Item 13. |
Certain Relationships and Related
Transactions, and Director Independence.
|
On August 17, 2021, the Company sold 15,000,000 Units at $10.00 per
Unit, generating gross proceeds of $150,000,000, and incurring
offering costs totaling $8,703,625, consisting of $3,000,000 of
underwriting fees, $5,250,000 of deferred underwriting fees and
$453,625 of other offering costs. Each Unit consists of one of the
Company’s Class A common stock, par value $0.0001 per share, and
one-third of one redeemable warrant. Each whole warrant entitles
the holder to purchase one Class A common stock at an exercise
price of $11.50 per whole share.
As part of the Initial Public Offering, certain Institutional
Anchor Investors not then affiliated with the Company, the Sponsor,
or the Company’s officers, directors, or any member of the
Company’s management purchased an aggregate of 12,790,000 Units at
the offering price of $10.00 per Unit.
Simultaneously with the closing of the Initial Public Offering, the
Sponsor purchased 3,333,333 Private Placement Warrants at a price
of $1.50 per warrant, generating total proceeds of $5,000,000 to
the Company. Substantially concurrently with the closing of the
Private Placement, the Sponsor sold an aggregate of 66,666 Private
Placement Warrants to the Institutional Anchor Investors for
$100,000.
Each Private Placement Warrant is identical to each warrant offered
in the Initial Public Offering, except there will be no redemption
rights or liquidating distributions from the Trust Account with
respect to Private Placement Warrants, which will expire worthless
if the Company does not consummate a business combination within
the Combination Period.
Related Party Transactions
Founder Shares; Initial Public Offering
On April 9, 2021, one of the Company’s founders paid $25,000, or
approximately $0.003 per share, to cover certain offering costs in
consideration for 8,625,000 Founder Shares. Subsequently, on April
19, 2021, all Founder Shares were assigned to the Sponsor. On July
6, 2021, the Sponsor surrendered an aggregate of 4,312,500 shares
of Class B common stock for no consideration, which were cancelled
resulting in an aggregate of 4,312,500 shares of Class B common
stock outstanding as of such date. Also on July 6, 2021, the
Sponsor transferred an aggregate of 25,000 Founder Shares to each
of the Company’s independent director nominees (75,000 shares in
total) at their original issue price.
The Company granted the underwriter a 45-day option from the date
of the Final Prospectus relating to the Initial Public Offering to
purchase up to 2,250,000 additional Units to cover over-allotments,
if any, at the Initial Public Offering price, less underwriting
discounts and commissions. Following the expiration of the
underwriter’s over-allotment option on September 26, 2021 an
aggregate of 3,750,000 Founder Shares were issued and outstanding
as of September 30, 2021 (reflecting the forfeiture by the Sponsor
of 562,500 Founder Shares). 562,500 Founder Shares were forfeited
by the Sponsor as the underwriter’s over-allotment option was not
exercised.
The Sponsor has agreed not to transfer, assign or sell any of its
Founder Shares until the earlier to occur of: (A) one year after
the completion of a business combination or (B) following the
completion of an initial business combination, the date on which
the Company completes a liquidation, merger, capital stock exchange
or similar transaction that results in the Company’s shareholders
having the right to exchange their Common Stock for cash,
securities or other property. Notwithstanding the foregoing, if the
last sale price of the Company’s Class A common stock equals or
exceeds $12.00 per share (as adjusted for share splits, share
dividends, reorganizations, recapitalizations and the like) for any
20 trading days within any 30-trading day period commencing at
least 150 days after the business combination, the Founder Shares
will be released from the lock-up.
In connection with the closing of the Initial Public Offering, the
Sponsor sold 650,000 Founder Shares to the Institutional Anchor
Investors at the original purchase price of $0.003 per share.
In addition, certain investment funds managed by an affiliate of
the Sponsor purchased an aggregate of 1,500,000 Units as part of
the Initial Public Offering. These Units were sold at the public
offering price of $10.00 per Unit, generating gross proceeds to the
Company of $15,000,000.
Promissory Note — Related Party
On April 9, 2021, the Sponsor agreed to loan the Company an
aggregate of up to $300,000 to cover expenses related to the
Initial Public Offering pursuant to a promissory note (i.e., the
Note). The Note is non-interest bearing and is payable on the
earlier of (i) December 31, 2021, or (ii) the consummation of the
Initial Public Offering. The Company borrowed approximately
$121,000 under the Note. The Company fully repaid this balance on
September 8, 2021. As of December 31, 2021, there were no amounts
outstanding on the Note since this is no longer available to the
Company.
In order to finance transaction costs in connection with a business
combination, the Company’s Sponsor, an affiliate of the Sponsor, or
the Company’s officers and directors may, but are not obligated to,
loan the Company funds as may be required (“Working Capital
Loans”). Such Working Capital Loans would be evidenced by
promissory notes. The Notes would either be repaid upon
consummation of a business combination, without interest, or, at
the lender’s discretion, up to $1,500,000 of notes may be converted
upon consummation of a business combination into warrants at a
price of $1.50 per warrant. The warrants will be identical to the
Private Placement Warrants. In the event that a business
combination does not close, the Company may use a portion of
proceeds held outside the Trust Account to repay the Working
Capital Loans but no proceeds held in the Trust Account would be
used to repay the Working Capital Loans. As of December 31, 2021,
there was no written agreement in place for the Working Capital
Loans.
The Sponsor has paid
expenses on behalf of the Company prior to the Company’s Public
Offering in an amount of approximately $121,000 (as borrowed under
the Note, as described in the Final Prospectus under “— Promissory
Note — Related Party”). The Company repaid the amount due to
Sponsor on September 8, 2021. As of December 31, 2021, there were
no amounts outstanding.
Administrative Services Agreement
Commencing on the date the Company’s securities were first listed,
the Company agreed to pay the Sponsor a total of $10,000 per month
for office space, secretarial and administrative services provided
to the members of the Company’s management team. Upon completion of
the initial business combination or the Company’s liquidation, the
Company will cease paying these monthly fees. The Company
recognized approximately $50,000 in connection with such services
for the period from April 1, 2021 (inception) through December 31,
2021, in general and administrative expenses in the accompanying
statement of operations, and which remains included in accrued
expenses in the balance sheet.
Director independence
Nasdaq listing rules require that a majority of our board of
directors be independent within one year of our Initial Public
Offering. An “independent director” is defined generally as a
person other than an officer or employee of the Company or its
subsidiaries or any other individual having a relationship, which,
in the opinion of the Company’s board of directors, would interfere
with the director’s exercise of independent judgment in carrying
out the responsibilities of a director.
We have three “independent directors” as defined in the Nasdaq
listing rules and applicable SEC rules. Our board has determined
that each of Muneer Satter, William Ulrich and Richard Spencer is
an independent director under applicable SEC and Nasdaq listing
rules. We expect a majority of our board of directors to be
comprised of independent directors within 12 months from the date
of listing to comply with the majority independent board
requirement of Rule 5605(b) of the Nasdaq listing rules. Our
independent directors will have regularly scheduled meetings at
which only independent directors are present.
|
Item 14. |
Principal Accountant Fees and
Services.
|
Fees for professional services provided by our independent
registered public accounting firm since inception include:
|
|
|
For the period
from
April 1,
2021
(inception)
through
December 31,
2021
|
|
Audit
Fees(1)
|
|
$
|
|
107,635
|
|
Audit-Related
Fees(2)
|
|
$
|
|
-
|
|
Tax
Fees(3)
|
|
$
|
|
-
|
|
All Other
Fees(4)
|
|
$
|
|
-
|
|
Total
Fees
|
|
$
|
|
107,635
|
| (1) |
Audit Fees. Audit fees consist of fees billed for professional
services rendered for the audit of our year-end financial
statements and services that are normally provided by our
independent registered public accounting firm in connection with
statutory and regulatory filings.
|
| (2) |
Audit-Related Fees. Audit-related fees consist of fees billed
for assurance and related services that are reasonably related to
performance of the audit or review of our year-end financial
statements and are not reported under “Audit Fees.” These services
include attest services that are not required by statute or
regulation and consultation concerning financial accounting and
reporting standards.
|
| (3) |
Tax Fees. Tax fees consist of fees billed for professional
services relating to tax compliance, tax planning and tax
advice.
|
| (4) |
All Other Fees. All other fees consist of fees billed for all
other services.
|
Policy on Board Pre-Approval of Audit and Permissible Non-Audit
Services of the Independent Auditors
Our audit committee was formed upon the consummation of our Initial
Public Offering. As a result, the audit committee did not
pre-approve all of the foregoing services, although any services
rendered prior to the formation of our audit committee were
approved by our board of directors. Since the formation of our
audit committee, and on a going-forward basis, the audit committee
has and will pre-approve all auditing services and permitted
non-audit services to be performed for us by our auditors,
including the fees and terms thereof (subject to the de minimis
exceptions for non-audit services described in the Exchange Act
which are approved by the audit committee prior to the completion
of the audit).
PART IV
|
Item 15. |
Exhibits and Financial Statement
Schedules.
|
|
(a)
|
The following documents are filed as part of this
report:
|
Reference is made to the financial statements of the Company under
Item 8 of Part II above.
|
(2) |
Financial Statement
Schedule
|
All financial statement schedules are omitted because they are not
applicable or the amounts are immaterial, not required, or the
required information is presented in the financial statements and
notes thereto in Item 8 of Part II above.
We hereby file as part of this report the exhibits listed in the
attached Exhibit Index.
|
|
|
Description
|
| |
|
|
|
|
Second Amended and Restated Certificate of Incorporation of
AxonPrime Infrastructure Acquisition Corporation (the “Company”).
(1)
|
|
|
|
Bylaws of the Company. (2)
|
|
|
|
Specimen Unit Certificate. (3)
|
|
|
|
Specimen Class A Common Stock Certificate. (3)
|
|
|
|
Specimen Warrant Certificate (included in Exhibit 4.4).
(4)
|
|
|
|
Warrant Agreement, dated August 17, 2021, between the Company
and Computershare Trust Company, N.A. (4)
|
|
|
|
Description of Capital Securities of the Company. *
|
|
|
|
Amended and Restated Promissory Note, dated April 9, 2021,
issued to AxonPrime Infrastructure Sponsor LLC (the “Sponsor”).
(3)
|
|
|
|
Letter Agreement, dated August 12, 2021, among the Company,
its officers, directors and the Sponsor. (4)
|
|
|
|
Investment Management Trust Agreement, dated August 17, 2021,
between the Company and Computershare Trust Company, N.A. (4)
|
|
|
|
Registration Rights Agreement between the Company and certain
securityholders. (4)
|
|
|
|
Securities Subscription Agreement, dated April 9, 2021,
between the Company and Dakin Sloss. (3)
|
|
|
|
Securities Purchase Assignment Agreement, dated April 19,
2021, between the Company and AxonPrime Infrastructure Sponsor LLC.
(3)
|
|
|
|
Sponsor Warrants Purchase Agreement, dated August 12, 2021,
between the Company and the Sponsor. (5)
|
|
|
|
Form of Indemnity Agreement. (3)
|
|
|
|
Administrative Services Agreement, dated August 12, 2021,
between the Company and the Sponsor. (5)
|
|
|
|
Form of Investment Agreement by and among the Company,
AxonPrime Infrastructure Sponsor LLC and the institutional anchor
investors. (3)
|
|
|
|
Code of Ethics. (3)
|
|
|
|
Power of Attorney (included on signature page hereof). *
|
|
|
|
Certification of Principal
Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under
the Securities Exchange Act of 1934, as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002. **
|
|
|
|
Certification of Principal Financial Officer Pursuant to Rules
13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934,
as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002. **
|
|
|
|
Certification of Principal Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. **
|
|
|
|
Certification of Principal Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. **
|
| (1) |
Incorporated by reference to an
exhibit to the Current Report on the Company’s Form 8-K, filed with
the SEC on August 20, 2021.
|
| (2) |
Incorporated by reference to an
exhibit to the Current Report on the Company’s Form 10-Q, filed
with the SEC on September 27, 2021.
|
| (3) |
Incorporated by reference to an exhibit to the Company’s Form
S-1, filed with the SEC on July 8, 2021.
|
| (4) |
Incorporated by reference to an exhibit to the Company’s
Current Report on Form 8-K filed with the Securities and Exchange
Commission on August 23, 2021.
|
| (5) |
Incorporated by reference to an exhibit to the Company’s Form
10-Q, filed with the SEC on November 18, 2021.
|
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this Annual Report on Form 10-K to be signed on its behalf by the
undersigned, thereunto duly authorized.
| |
AxonPrime Infrastructure
Acquisition Corporation
|
| |
|
|
| |
By:
|
/s/ Dinakar Singh
|
| |
Name:
|
Dinakar Singh
|
| |
Title:
|
Chief Executive Officer
|
| |
|
|
|
|
|
|
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Jon Layman and,
and each or any one of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments to
this Annual Report on Form 10-K, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with
the United States Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite
and necessary to be done in connection therewith, as fully to all
intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or his or her substitutes or substitute,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Annual Report on Form 10-K has been signed below by
the following persons in the capacities and on the dates
indicated.
|
Name
|
|
Position
|
|
Date
|
|
|
|
|
|
|
|
/s/ Dinakar Singh
|
|
Chief Executive Officer
(Principal Executive
Officer)
|
|
March 31, 2022
|
|
Dinakar Singh
|
| |
|
|
|
|
|
/s/ Jon Layman
|
|
Chief Financial Officer,
Chief Operating Officer and
Director
(Principal Financial and
Accounting Officer)
|
|
March 31, 2022
|
|
Jon Layman
|
| |
|
|
|
|
|
/s/ Richard Spencer
|
|
Director
|
|
March 31, 2022
|
|
Richard Spencer
|
| |
|
|
|
|
|
/s/ Muneer Satter
|
|
Director
|
|
March 31, 2022
|
|
Muneer Satter
|
| |
|
|
|
|
|
/s/ Koryn Estrada
|
|
Director
|
|
March 31, 2022
|
|
Koryn Estrada
|
| |
|
|
|
|
|
/s/ William Ulrich
|
|
Director
|
|
March 31, 2022
|
|
William Ulrich
|