ITEM
1. BUSINESS
Introduction
We
are a blank check company incorporated in Delaware on July 24, 2017 for the purpose of entering into a merger, stock exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses
or entities (a “business combination”). Our efforts in identifying a prospective target business are not limited to
a particular industry or geographic region of the world, though we are currently focusing on prospective target businesses in
Mexico.
All
activity through December 31, 2019 relates to our formation, initial public offering, and search for a target business with which
to complete a prospective initial business combination.
Initial
Public Offering
On
March 16, 2018, we closed our initial public offering of 10,000,000 units with each unit consisting of one share of common stock
and one warrant. Simultaneously with the consummation of the initial public offering, we consummated the private placement of
400,000 private placement units at a price of $10.00 per private placement unit, generating gross proceeds of $4,000,000. The
private placement units were purchased by Axis Public Ventures, Lion Point, and the other initial stockholders.
We
also sold a unit purchase option to purchase up to 750,000 units to EarlyBirdCapital for a purchase price of $100. The unit purchase
option is exercisable at $10.00 per unit (for an aggregate exercise price of $7,500,000), beginning on the consummation of our
initial business combination. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s
option, and expires on March 17, 2023. We also entered into a contingent forward purchase contract with Lion Point, wherein Lion
Point agreed to purchase in a private placement to occur concurrently with the consummation of our initial business combination
3,000,000 units at $10.00 per unit, for aggregate gross proceeds of $30,000,000.
On
March 20, 2018, in connection with the underwriters’ exercise of their overallotment option in full, we consummated the
sale of an additional 1,500,000 units and the sale of an additional 45,000 private placement units, each at a purchase price of
$10.00 per unit, generating additional gross proceeds of $15,450,000.
The
initial public offering, including the exercise in full of the underwriters’ overallotment option, and the simultaneous
private placement, generated gross proceeds of $119,450,000. An amount of $116,150,000 ($10.10 per Unit) from the net proceeds
of the sale of the units and private placement units was placed in trust.
On September 16, 2019, our stockholders approved
an amendment to our Amended and Restated Certificate of Incorporation to extend the period of time for which we were required to
consummate a Business Combination from September 16, 2019 to November 15, 2019 (the “First Extension”). In connection
with the approval of the First Extension, stockholders elected to redeem an aggregate of 2,282,753 shares of common stock, of which
we paid cash in the aggregate amount of approximately $23.6 million, or approximately $10.34 per share, to redeeming stockholders.
On
November 15, 2019, our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to extend the
period of time for which we are required to consummate a Business Combination from November 15, 2019 to January 15, 2020 (the
“Second Extension”). In connection with the approval of the Second Extension, stockholders elected to redeem an aggregate
of 228,001 shares of common stock, of which we paid cash in the aggregate amount of approximately $2.4 million, or approximately
$10.43 per share, to redeeming stockholders.
On
January 15, 2020, our stockholders approved a further amendment to our Amended and Restated Certificate of Incorporation to extend
the period of time for which we are required to consummate a Business Combination from January 15, 2020 to March 16, 2020 (the
“Third Extension”). In connection with the approval of the Third Extension, stockholders elected to redeem an aggregate
of 18,133 shares of common stock, of which we paid cash in the aggregate amount of $190,800, or approximately $10.52 per share,
to redeeming stockholders.
On March 16, 2020, our stockholders approved
a further amendment to our Amended and Restated Certificate of Incorporation to extend the period of time for which we are required
to consummate a Business Combination from March 16, 2020 to June 18, 2020 (the “Fourth Extension”). In connection with
the approval of the Fourth Extension, stockholders elected to redeem an aggregate of 4,428,044 shares of common stock, of which
we paid cash in the aggregate amount of $46.97 million, or approximately $10.61 per share, to redeeming stockholders.
Our
focus after the initial public offering has been to search for target businesses.
Effecting
a Business Combination
General
We
are not presently engaged in, and we will not engage in, any operations until after the consummation of our initial business combination.
We intend to utilize cash derived from the proceeds of our initial public offering and the private placement of private placement
units, our capital stock, debt or a combination of these in effecting a business combination. Although substantially all of the
net proceeds of the initial public offering and the private placement of private placement units are intended to be applied generally
toward effecting a business combination, the proceeds are not otherwise being designated for any more specific purposes.
If
we pay for our initial business combination using stock or debt securities, or we do not use all of the funds released from the
trust account for payment of the purchase price in connection with our business combination or for redemptions or purchases of
our common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including
for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred
in consummating our initial business combination, to fund the purchase of other companies or for working capital.
A
business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital
but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences
of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance
with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company
that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business
combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect
only a single business combination.
Sources
of Target Businesses
We
expect that our principal means of identifying potential target businesses will be through the extensive contacts and relationships
of our sponsor, officers and directors. While our officers and directors are not required to commit any specific amount of time
in identifying or performing due diligence on potential target businesses, our officers and directors believe that the relationships
they have developed over their careers and their access to our sponsor’s contacts and resources will generate a number of
potential business combination opportunities that will warrant further investigation. We anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment bankers, venture capital funds, private
equity funds, leveraged buyout funds, management buyout funds and other members of the financial community. Target businesses
may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These
sources may also introduce us to other target businesses in which they think we may be interested on an unsolicited basis. Our
sponsor, officers and directors, as well as their affiliates, may also bring to our attention target business candidates that
they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have,
as well as attending trade shows or conventions. They must present to us all target business opportunities that have a fair market
value of at least 80% of the assets held in the trust account (excluding taxes payable on the income accrued in the trust account)
at the time of the agreement to enter into the initial business combination, subject to any pre-existing fiduciary or contractual
obligations.
We
may determine to engage the services of professional firms or other individuals that specialize in business acquisitions on a
formal basis. If we do, we may pay such firms a finder’s fee, consulting fee or other compensation to be determined in an
arm’s length negotiation based on the terms of the transaction. In no event, however, will our sponsor or any of our existing
officers, directors, special advisors or initial stockholders, or any entity with which they are affiliated, be paid any finder’s
fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the consummation of
a business combination (regardless of the type of transaction). If we decide to enter into a business combination with a target
business that is affiliated with our officers, directors or initial stockholders, we will do so only if we have obtained an opinion
from an independent investment banking firm, another independent firm that commonly renders valuation opinions on the type of
target business we are seeking to acquire, that the business combination is fair to our unaffiliated stockholders from a financial
point of view.
Selection
of a Target Business and Structuring of a Business Combination
Subject
to our management team’s pre-existing fiduciary duties and the Nasdaq requirement that a target business have a fair market
value of at least 80% of the balance in the trust account (excluding taxes payable on the income earned on the trust account)
at the time of the execution of a definitive agreement for our initial business combination, and that we must acquire a controlling
interest in the target business, our management will have virtually unrestricted flexibility in identifying and selecting a prospective
target business, although we will not be permitted to effectuate our initial business combination with another blank check company
or a similar company with nominal operations. If our securities are not listed on Nasdaq at the time of our initial business combination,
we will no longer be subject to the Nasdaq requirement. In any case, we intend to consummate our initial business combination
only if we (or any entity that is a successor to us in a business combination) will acquire a majority of the outstanding voting
securities or assets of the target with the objective of making sure that we are not required to register as an investment company
under the Investment Company Act of 1940, as amended (the “Investment Company Act”). We believe that, if we own a
majority of the target’s outstanding voting securities, we will not be required to register as an investment company under
the Investment Company Act since the securities of a majority owned subsidiary that is not itself deemed an investment company
are not deemed to be “investment securities” as defined in the Investment Company Act, and since we expect that 60%
or more of the value of our total assets (excluding government securities and cash) will be represented by the securities of our
target business which we expect will be an operating business. We will seek to acquire established companies that have demonstrated
sound historical financial performance. Although we are not restricted from doing so, we do not intend to acquire start-up companies.
To the extent we effect a 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.
We
have not established any specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating
a prospective target business, our management may consider a variety of factors, including one or more of the following:
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financial
condition and results of operation;
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growth
potential;
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brand
recognition and potential;
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experience
and skill of management and availability of additional personnel;
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capital
requirements;
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competitive
position;
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barriers
to entry;
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stage
of development of its products, processes or services;
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existing
distribution and potential for expansion;
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degree
of current or potential market acceptance of the products, processes or services;
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proprietary
aspects of products and the extent of intellectual property or other protection for its products, processes, formulas or services;
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impact
of regulation on the business;
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regulatory
environment of the industry;
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costs
associated with effecting the business combination;
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industry
leadership, sustainability of market share and attractiveness of market industries in which a target business participates;
and
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macro
competitive dynamics in the industry within which the company competes.
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We
believe such factors will be important in evaluating prospective target businesses, regardless of the location or industry in
which such target business operates. However, this list is not intended to be exhaustive. Furthermore, we may decide to enter
into a business combination with a target business that does not meet these criteria and guidelines.
Any
evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors
as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business
objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of facilities, as well as review of financial and other
information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated
third parties we may engage.
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 a 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. We will not
pay any finders or consulting fees to members of our management team, or any of their respective affiliates, for services rendered
to or in connection with a business combination.
Fair
Market Value of Target Business
Pursuant
to Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to
at least 80% of the balance of the funds in the trust account (excluding taxes payable on the income earned on the trust account)
at the time of the execution of a definitive agreement for our initial business combination, although we may acquire a target
business whose fair market value significantly exceeds 80% of the trust account balance. We currently anticipate structuring a
business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however,
structure a business combination where we merge directly with the target business or where we acquire less than 100% of such interests
or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other
reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the
outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to
be required to register as an investment company under the Investment Company Act. Even if the post-transaction company owns or
acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange
for all of the outstanding capital of a target. In this case, we would acquire a 100% controlling interest in the target. However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business
combination could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than
100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company,
only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair
market value test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities
to the sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities.
The
fair market value of the target will be determined by our board of directors based upon one or more standards generally accepted
by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able
to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated,
independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target
business we are seeking to acquire, with respect to the satisfaction of such criteria. We will not be required to obtain an opinion
from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type
of target business we are seeking to acquire, as to the fair market value if our board of directors independently determines that
the target business complies with the 80% threshold.
Lack
of Business Diversification
Our
business combination must be with a target business or businesses that collectively satisfy the minimum valuation standard at
the time of such acquisition, as discussed above, although this process may entail the simultaneous acquisitions of several operating
businesses at the same time. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future
performance of a single business. Unlike other entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the
resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating
a business combination with only a single entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to a business combination, and
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cause
us to depend on the performance of a single operating business or the development or market acceptance of a single or limited
number of products, processes or services.
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If
we determine to simultaneously acquire several businesses and such businesses 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 acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions,
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.
Limited
Ability to Evaluate the Target Business’ Management
Although
we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business
combination, we cannot assure you that our assessment of the target business’ management will prove to be correct. We cannot
assure you that the future management will have the necessary skills, qualifications or abilities to manage a public company.
Furthermore, the future role of our officers and directors, if any, in the target business following a business combination cannot
presently be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior management
or advisory positions with us following a business combination, it is unlikely that they will devote their full time efforts to
our affairs subsequent to a business combination. Our key personnel would only be able to remain with the company after the consummation
of a business combination if they are able to negotiate employment or consulting agreements in connection with the business combination.
Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for them
to receive compensation in the form of cash payments and/or our securities for services they would render to the company after
the consummation of the business combination. Additionally, our officers and directors may not have significant experience or
knowledge relating to the operations of the particular target business.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do
recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholder
Approval of Business Combination
We
may not seek stockholder approval before we effect our initial business combination, since not all business combinations require
stockholder approval under applicable state law. We will seek stockholder approval if it is required by law or Nasdaq rules, or
we may decide to seek stockholder approval for business or other reasons. Presented in the table below are the types of initial
business combinations we may consider and whether stockholder approval is currently required under Delaware law for each such
transaction.
Type
of Transaction
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Whether
Stockholder
Approval is
Required
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Purchase
of assets
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No
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Purchase
of stock of target not involving a merger with the company
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No
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Merger
of target into a subsidiary of the company
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No
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Merger
of the company with a target
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Yes
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If
we determine not to seek stockholder approval of our initial business combination, we will provide our public stockholders with
the opportunity to sell their shares to us by means of a tender offer for an amount equal to their pro rata share of the aggregate
amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein.
Such tender offer will be structured so that each stockholder may tender all of his, her or its shares rather than some pro rata
portion of his, her or its shares.
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.
Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial
business combinations and related conversions of public shares for cash upon consummation of such initial business combination
even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders
to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act which regulate issuer tender offers. In that
case, we will file tender offer documents with the SEC which will contain substantially the same financial and other information
about the initial business combination as is required under the SEC’s proxy rules. We will consummate our initial business
combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek stockholder approval,
a majority of the outstanding shares of common stock voted are voted in favor of the business combination.
Our
sponsor and our officers and directors have agreed (1) to vote any shares of common stock owned by them in favor of any proposed
business combination, (2) not to convert any shares of common stock in connection with a stockholder vote to approve a proposed
initial business combination and (3) not sell any shares of common stock in any tender in connection with a proposed initial business
combination.
Permitted
purchases of our securities
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers or their respective affiliates
may purchase shares in the open market or in privately negotiated transactions either prior to or following the consummation of
our initial business combination. If they do effect such purchases, we anticipate that they would approach a limited number of
large holders of our securities that have voted against the business combination or sought redemption of their shares, or that
have indicated an intention to do so, and engage in direct negotiations for the purchase of such holders’ positions. All
holders approached in this manner would be institutional or sophisticated holders. There is no limit on the number of shares they
may acquire. Our sponsor, initial stockholders, directors, officers, advisors or their affiliates will not make any such purchases
when they are in possession of any material nonpublic information not disclosed to the seller or during a restricted period under
Regulation M under the Exchange Act or in transactions that would violate Section 9(a)(2) or Rule 10(b)-5 under the Exchange Act.
Although they do not currently anticipate paying any premium purchase price for such public shares, there is no limit on the price
they may pay. They may also enter into transactions to provide such stockholders with incentives to acquire shares or vote their
shares in favor of an initial business combination. We will notify stockholders of such material purchases or arrangements that
would affect the vote on an initial business combination, if any, by press release, filing a Form 8-K or by means of a supplement
to our proxy statement. No funds in the trust account may be used to effect purchases of shares in the open market or in privately
negotiated transactions.
The
purpose of such purchases would be to (i) increase the likelihood of obtaining stockholder approval of the business combination
or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain
amount of cash at the closing of the business combination, where it appears that such requirement would otherwise not be met.
This may result in the consummation of a business combination that may not otherwise have been possible.
As
a consequence of any such purchases by our initial stockholders, directors, officers or their affiliates, the public “float”
of our common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult
to obtain the continued listing of our securities on Nasdaq or another national securities exchange in connection with our initial
business combination.
Our
sponsor, initial stockholders, officers, directors and/or their respective affiliates anticipate that they will identify the public
stockholders with whom they may pursue privately negotiated purchases through either direct contact by the public stockholders
or by our receipt of redemption requests or votes against the business combination submitted by such public stockholders following
our mailing of proxy materials in connection with our initial business combination. The sellers of any shares so purchased by
our sponsor, initial stockholders, officers, advisors, directors and/or their affiliates would, as part of the sale arrangement,
revoke their election to redeem such shares and withdraw their vote against the business combination. The terms of such purchases
would operate to facilitate our ability to consummate a proposed business combination by potentially reducing the number of shares
redeemed for cash.
Conversion
rights for public stockholders upon consummation of our initial business combination
We
will provide our stockholders with the opportunity to redeem their shares upon the consummation 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, including any amounts
representing interest earned on the trust account, less any interest released to us to pay our franchise and income taxes, divided
by the number of then outstanding public shares, subject to the limitations described herein. As of December 31, 2019, the amount
in the trust account is approximately $10.52 per public share. Our sponsor, officers, and directors have each agreed with respect
to their founder shares and private placement shares, and any public shares held by them, to waive their respective conversion
rights in connection with the consummation of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our
initial business combination either in connection with a stockholder meeting called to approve the business combination or by
means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct
a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the
transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange
listing requirement. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the Securities
and Exchange Commission (“SEC”) unless stockholder approval is required by law or by a Nasdaq listing requirement
or we choose to seek stockholder approval for business or other legal reasons.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will,
pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and any
limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of the
proposed business combination, and
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file
tender offer documents with the SEC prior to consummating our initial business combination that will contain substantially
the same financial and other information about the initial business combination and the conversion rights as is required under
Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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If
we conduct redemptions pursuant to the tender offer rules, our offer to redeem must remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to consummate our initial business combination
until the expiration of the tender offer period.
In
connection with the consummation of our business combination, we may redeem pursuant to a tender offer up to that number of shares
of common stock that would permit us to maintain net tangible assets of $5,000,001. However, the redemption threshold may be further
limited by the terms and conditions of our proposed initial business combination. For example, the proposed business combination
may require: (i) cash consideration to be paid to the target or members of its management team, (ii) cash to be transferred to
the target for working capital or other general corporate purposes or (iii) the allocation of cash to satisfy other conditions
in accordance with the terms of the proposed business combination. If the aggregate cash consideration we would be required to
pay for all shares of common stock that are validly tendered plus the amount of any cash payments required pursuant to the terms
of the proposed business combination exceeds the aggregate amount of cash available to us, taking into consideration the requirement
that we maintain net tangible assets of at least $5,000,001 or such greater amount depending on the terms of our potential business
combination, we will not consummate the business combination, we will not purchase any shares of common stock pursuant to the
tender offer and any shares of common stock tendered pursuant to the tender offer will be returned to the holders thereof following
the expiration of the tender offer.
When
we conduct a tender offer to redeem our public shares upon consummation of our initial business combination, in order to comply
with the tender offer rules, the offer will be made to all of our stockholders, not just our public stockholders. In connection
with any such tender offer, our sponsor, officers, and directors have agreed to waive their conversion rights with respect to
their founder shares, private placement shares and public shares.
If,
however, stockholder approval of the transaction is required by law or Nasdaq rule, or we decide to obtain stockholder approval
for business or other reasons, we will:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the
solicitation of proxies, and not pursuant to the tender offer rules, and
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file
proxy materials with the SEC.
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If
we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith,
provide our public stockholders with the conversion rights described above upon consummation of the initial business combination.
Further,
if we seek stockholder approval, we will consummate our initial business combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the business combination. Our initial stockholders have agreed to vote their founder
shares and private placement shares and any public shares held by them in favor of our initial business combination. Each public
stockholder may elect to redeem its public shares, irrespective of whether it votes for or against the proposed transaction, for
cash equal to its pro rata share of the aggregate amount then on deposit in the trust account, including interest but less interest
released to us to pay taxes, as described below. Our sponsor, officers, and directors have agreed to waive their conversion rights
with respect to their founder shares, private placement shares and public shares in connection with the consummation of a business
combination.
Many
blank check companies would not be able to consummate a business combination if the holders of the company’s public shares
voted against a proposed business combination and elected to redeem or convert more than a specified maximum percentage of the
shares sold in such company’s initial public offering, which percentage threshold has typically been between 19.99% and
39.99%. As a result, many blank check companies have been unable to complete business combinations because the number of shares
voted, against their initial business combination by their public stockholders electing conversion exceeded the maximum conversion
threshold pursuant to which such company could proceed with a business combination. Since we have no such specified maximum redemption
threshold and since even those public stockholders who vote in favor of our initial business combination will have the right to
redeem their public shares, our structure is different in this respect from the structure that has been used by many blank check
companies. This may make it easier for us to consummate our initial business combination. However, in no event will we redeem
our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial
business combination. Moreover, the redemption threshold may be further limited by the terms and conditions of our initial business
combination. If the amount of redemptions plus any cash required by our initial business combination would cause our net tangible
assets to fall below $5,000,001, we would not proceed with the redemption of our public shares and the related business combination,
and instead may search for an alternate business combination.
Tendering
stock certificates in connection with conversion rights
If
we hold a stockholder meeting to approve a potential business combination, we may require our public stockholders seeking to exercise
their conversion rights, whether they are record holders or hold their shares in “street name,” to either tender their
certificates to our transfer agent up to two business days prior to the meeting date or to deliver their shares to the transfer
agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s
option. The proxy materials that we will furnish to holders of our public shares in connection with our initial business combination
will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder
would have until two days prior to the vote on the business combination to tender its shares if it wishes to seek to exercise
its conversion rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery
of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $45.00 and it would be up to the broker
whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not
we require holders seeking to exercise conversion rights to tender their shares. The need to deliver shares is a requirement of
exercising conversion rights regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect conversion rights in connection
with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote
on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on
the proxy card indicating such holder was seeking to exercise his conversion rights. After the business combination was approved,
the company would contact such stockholder to arrange for him to deliver his certificate to verify ownership. As a result, the
stockholder then had an “option window” after the consummation of the business combination during which he could monitor
the price of the company’s stock in the market. If the price rose above the redemption price, he could sell his shares in
the open market before actually delivering his shares to the company for cancellation. As a result, the conversion rights, to
which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving
past the consummation of the business combination until the redeeming holder delivered its certificate. The requirement for physical
or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the
business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials
or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share
delivers its certificate in connection with an election of conversion rights and subsequently decides prior to the applicable
date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically
or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their
shares will be distributed promptly after the completion of a business combination.
If
the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their conversion rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed business combination
is not consummated, we may continue to try to consummate a business combination with a different target until June 18, 2020 (or
such later date as may be approved by our stockholders).
Redemption
of public shares and liquidation if no initial business combination
Holders of founder shares, and our officers
and directors, have agreed that we will have until June 18, 2020 (or such later date as may be approved by our stockholders, the
“combination period”) to complete our initial business combination. If we are unable to consummate our initial business
combination during the combination period, we will distribute the aggregate amount then on deposit in the trust account (net of
interest released for the payment of our tax obligations), pro rata to our public shareholders by way of redemption and cease all
operations except for the purposes of winding up of our affairs, as further described herein. If we have not consummated a business
combination before the end of the combination period, or earlier, at the discretion of our board pursuant to the expiration of
a tender offer conducted in connection with a failed business combination, we will: (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem all public shares
then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
any amounts representing interest earned on the trust account, less any interest released to us for the payment of taxes, divided
by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve
and liquidate, subject in the case of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law.
Our sponsor, officers, and directors have
agreed to waive their conversion rights with respect to their founder shares and private placement shares (i) in connection with
the consummation of a business combination, (ii) in connection with a stockholder vote to amend our amended and restated certificate
of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination during the combination period and (iii) if we fail to consummate a business combination or liquidate
on June 18, 2020 (or such later date as may be approved by our stockholders). Our sponsor, officers, and directors have also agreed
to waive their conversion rights with respect to public shares in connection with the consummation of a business combination and
in connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or
timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination during the
combination period. However, if our sponsor or any of our officers, directors or their affiliates acquire public shares, they will
be entitled to conversion rights with respect to such public shares if we fail to consummate our initial business combination or
liquidate within the required time period.
Our
sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any
amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination during the combination period unless
we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned
on the funds held in the trust account and not previously released to us to pay our franchise and income taxes, divided by the
number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible
assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules).
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from the net proceeds from our initial public offering and the private placement held out of trust. If such funds
are insufficient, our sponsor has contractually agreed to advance us the funds necessary to complete such liquidation (currently
anticipated to be no more than approximately $15,000) and has contractually agreed not to seek repayment for such expenses.
The
proceeds deposited in the trust account could become subject to the claims of our creditors which would have higher priority than
the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders
will not be less than the $10.52 per public share on deposit in the trust account (as of December 31, 2019). Under Section 281(b)
of the Delaware General Corporation Law (“DGCL”), our plan of dissolution must provide for all claims against us to
be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims
must be paid or provided for before we make any distribution from the trust account to our stockholders. While we intend to pay
such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to
be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive
any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, pursuant
to a written agreement, our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services
rendered or products sold to us, or a prospective target business with which we have discussed entering into a definitive transaction
agreement, reduce the amounts in the trust account to below $10.10 per share, except as to any claims by a third party who executed
a waiver of rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of
our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an
executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any
liability for such third party claims. We cannot assure you, however, that our sponsor will be able to satisfy those obligations.
If
the proceeds in the trust account are reduced below $10.10 per public share and our sponsor asserts that it is unable to satisfy
any applicable 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 his indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so
in a particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share
redemption price will not be less than $10.10 per public share.
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 if we do not consummate our initial business combination during the combination period may be considered
a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of
the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during
which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any
claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability
of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share
of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third
anniversary of the dissolution.
Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate
our initial business combination by during the combination period is not considered a liquidation 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 liquidation distribution. If we have not consummated a business combination before the end of the combination period, or earlier
at the discretion of our board, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem all public shares then outstanding at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned
on the trust account, less any interest released to us to pay our franchise and income taxes, divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right
to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following June 18, 2020 (or such
later date as may be approved by our stockholders) and, therefore, we do not intend to comply with those procedures. As such, our
stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability
of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained
in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account. As a result of this obligation and our sponsor’s indemnification of the trust account against
certain claims as previously described in this section, we believe that the claims that could be made against us will be significantly
limited and that the likelihood that any claim that would result in any liability extending to the trust account is remote.
We
anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after the end of the business
combination period and anticipate it will take no more than 10 business days to effectuate such distribution. The holders of the
founders’ shares and private shares have waived their rights to participate in any liquidation distribution from the trust
account with respect to such shares. There will be no distribution from the trust account with respect to our warrants, which
will expire worthless. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account.
If such funds are insufficient, our sponsor has contractually agreed to advance us the funds necessary to complete such liquidation
(currently anticipated to be no more than approximately $15,000) and has contractually agreed not to seek repayment for such expenses.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.10 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received
by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have
acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from
the trust account prior to addressing the claims of creditors.
We
cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public
shares if we do not consummate a business combination during the combination period, (ii) in connection with a stockholder vote
to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination during the combination period or (iii) if they redeem
their respective shares for cash upon the consummation of the initial business combination. Also, our management may cease to
pursue a business combination prior to the end of the combination period (our board of directors may determine to liquidate the
trust account prior to such expiration if it determines, in its business judgment, that it is improbable within the remaining
time to identify an attractive business combination or satisfy regulatory and other business and legal requirements to consummate
a business combination). In no other circumstances will a stockholder have any right or interest of any kind to or in the trust
account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the business combination alone will not result in a stockholder’s redeeming its shares for an
applicable pro rata share of the trust account. Such stockholder must have also exercised its conversion rights described above.
Competition
In
identifying, evaluating and selecting a target business for a business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will
be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition
of a target business. Furthermore, our obligation to pay cash to our public stockholders who exercise their conversion rights
may reduce the resources available to us for an initial business combination. In addition, the number of our outstanding warrants,
and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these
factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the
target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete
effectively.
Facilities
We
currently maintain our executive offices at 410 Park Avenue, Suite 900, New York, NY 10022.
Employees
We
currently have two executive officers. These individuals are not obligated to devote any specific number of hours to our affairs
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 they will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the stage of the business combination process we are in. We do not intend to have any
full time employees prior to the consummation of our initial business combination.
ITEM
1A. RISK FACTORS
An
investment in our securities involves a high degree of risk. You should consider carefully the material risks described below,
which we believe represent the material risks related to our business and our securities, together with the other information
contained in this annual report on Form 10-K, before making a decision to invest in our securities. This annual report on Form
10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially
from those anticipated in the forward-looking statements as a result of specific factors, including the risks described below.
We
are a company with no operating history and no revenue and, accordingly, you have no basis on which to evaluate our ability to
achieve our business objective.
We
are a company with no operating history and no revenue. We will not commence operations until we consummate our initial business
combination. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business
objective of acquiring one or more operating businesses or entities. If we fail to complete a business combination, we will never
generate any operating revenues.
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt
about our ability to continue as a “going concern.”
As
of December 31, 2019, we had $17,862 in cash and working capital deficit of $286,557, which excludes prepaid income taxes and
franchise and income taxes payable, of which such amounts will be paid from interest earned on the trust account. Further, we
have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Management’s
plans to address this need for capital are discussed in the section of this report titled “Management’s Discussion
and Analysis of Financial Condition and Results of Operations.” We cannot assure you that our plans to raise capital
or to consummate an initial business combination will be successful. These factors, among others, raise substantial doubt about
our ability to continue as a going concern. The financial statements contained elsewhere in this report do not include any adjustments
that might result from our inability to continue as a going concern.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, unless such vote is required
by law or Nasdaq rule, which means we may consummate our initial business combination even though a majority of our public stockholders
do not support such a combination.
We
may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder
approval under applicable state law or the rules of Nasdaq or if we decide to hold a stockholder vote for business or other reasons.
For example, 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 structure a business combination that requires us to issue more than
20% of our outstanding shares, we would seek stockholder approval of such business combination. However, except as required by
law, the decision as to whether we will seek stockholder approval of a proposed business combination 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, 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 to vote the founder shares and any private placement shares and public shares they hold in favor of our initial business
combination. Our sponsor, officers, and directors own approximately 6.0% of our common stock as of the date of this annual report.
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 holders of founder shares agreed to vote their founder shares, private placement
shares and public shares in accordance with the majority of the votes cast by our public stockholders.
Your
ability to affect the investment decision regarding a potential business combination may be limited to the exercise of your right
to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any
target businesses. Since our board of directors may consummate a business combination without seeking stockholder approval, public
stockholders may not have the right to vote on the business combination unless we seek such stockholder vote. Accordingly, your
ability to affect the investment decision regarding a potential business combination may be limited to exercising your conversion
rights with respect to a proposed business combination.
The
ability of our public stockholders to redeem their shares for cash may make us unattractive to potential business combination
targets, which may make it difficult for us to enter into a business combination with a target.
We
may enter into a 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. Our amended and restated certificate of incorporation requires us to provide all of our stockholders
with an opportunity to redeem all of their shares in connection with the consummation of any initial business combination, although
our sponsor, officers, and directors have each agreed to waive his, her or its respective conversion rights with respect to founder
shares, private placement shares, and public shares, held by him, her or it in connection with the consummation of our initial
business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets
to be less than the amount necessary to satisfy a closing condition as described above, or less than the $5,000,001 minimum of
tangible net assets which we are required to maintain, we would not proceed with such redemption and the related business combination.
Prospective targets would be aware of these risks and, thus, may be reluctant to enter into a business combination transaction
with us.
The
ability of our stockholders to exercise conversion rights may not allow us to consummate the most desirable business combination
or optimize our capital structure.
In
connection with the consummation of our business combination, we may redeem up to that number of shares of common stock that would
permit us to maintain net tangible assets of $5,000,001 upon consummation of our initial business combination. However, we may
be required to maintain significantly larger amounts of cash depending upon the terms of the business combination. Accordingly,
we may need to arrange third party financing to help fund our business combination in case a larger percentage of stockholders
exercise their conversion rights than we expect. Raising additional funds to cover any shortfall may involve dilutive equity financing
or incurring indebtedness at higher than desirable levels. This may limit our ability to effectuate the most attractive business
combination available to us.
If,
pursuant to the terms of our proposed business combination, we are required to maintain a minimum net worth or retain a certain
amount of cash in trust in order to consummate the business combination, the ability of our public shareholders to cause us to
redeem their shares in connection with such proposed transaction will increase the risk that we will not meet that condition and,
accordingly, that we will not be able to complete the proposed transaction. If we do not complete a proposed business combination,
you would not receive your pro rata portion of the trust account until we liquidate or you are able to sell your stock in the
open market. If you were to attempt to sell your stock in the open market at that time, the price you receive could represent
a discount to the pro rata amount in our 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.
The requirement that we complete
a business combination by June 18, 2020 (or such later date as may be approved by our stockholders) may give potential target businesses
leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business
combination targets as we approach our dissolution deadline, which could undermine our ability to consummate a 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 consummate a business combination on or
before June 18, 2020 (or such later date as may be approved by our stockholders). Consequently, such target businesses may obtain
leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with it, we may
be unable to identify another target business and complete a business combination with any target business. This risk will increase
as we get closer to the end of the combination period. Depending upon when we identify a potential target business, we may have
only a limited time to conduct due diligence and may enter into a business combination on terms that we might have rejected upon
a more comprehensive investigation.
We
may not be able to consummate a business combination during the combination period, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate.
We must complete our initial business combination
by June 18, 2020 (or such later date as may be approved by our stockholders). We may not be able to find a suitable target business
and consummate a business combination within that time period. If we have not consummated a business combination before the end
of the combination period, or earlier, at the discretion of our board pursuant to the expiration of a tender offer conducted in
connection with a failed business combination, we will: (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem all public shares then outstanding at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing
interest earned on the trust account, less any interest released to us for the payment of taxes, divided by the number of then
outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of
clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
If
we are unable to complete our initial business combination within the prescribed time frame, our warrants will expire worthless.
Our
outstanding warrants may not be exercised until after the completion of our initial business combination and are not entitled
to participate in the redemption of the shares of our common stock conducted in connection with the consummation of our business
combination. Accordingly, our warrants will expire worthless if we are unable to consummate a business combination before the
end of the combination period, or earlier if our board resolves to liquidate and dissolve in connection with a failed business
combination.
You
will not have any rights to or interest in funds from the trust account, except under limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your shares or warrants, potentially at a loss.
Our public stockholders will be entitled
to receive funds from the trust account only upon the earlier to occur of: (i) the consummation of our initial business combination;
(ii) the redemption of our public shares if we are unable to consummate a business combination during the combination period, subject
to applicable law; (iii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our
amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public
shares if we do not complete our initial business combination during the combination period; or (iv) otherwise upon our liquidation
or in the event our board of directors resolves to liquidate the trust account and ceases to pursue the consummation of a business
combination before the end of the combination period (our board of directors may determine to liquidate the trust account prior
to such expiration if it determines, in its business judgment, that it is improbable within the remaining time that we will be
able to identify an attractive business combination or satisfy regulatory and other business and legal requirements to consummate
a business combination). In addition, if our plan to redeem our public shares if we are unable to consummate an initial business
combination by June 18, 2020 (or such later date as may be approved by our stockholders) is not consummated for any reason, 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 June 18, 2020 before they
receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind
in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, 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 a business combination. If we are unable to complete our initial business combination, you may receive only $10.10
per share from our redemption of your shares, and our warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international,
competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have
extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess greater technical, human and other resources, or more local
industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these
competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our initial
public offering, 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. 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
$10.10 per share from our redemption of our shares, and our warrants will expire worthless.
If
the net proceeds from our initial public offering and the private placement held out of trust are insufficient to allow us to
operate until we consummate an initial business combination, we may be unable to complete such initial business combination.
We
cannot assure you that available funds will be sufficient to allow us to consummate an initial business combination within the
required time period. Our initial stockholders, officers, directors or their affiliates are not obligated to loan any funds to
us. Additionally, if we 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 expend funds available to us more rapidly than we currently expect. If our funds are insufficient,
and we are unable to generate funds from other sources, we may be forced to liquidate.
Subsequent
to consummation of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on our financial condition, results of operations and our stock
price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this examination will
uncover all material risks that may be presented by a particular target business, or that factors outside of the target business
and outside of our control will not later arise. Even if our due diligence successfully identifies the principal risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. As a
result, from time to time following our initial business combination, we may be forced to write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. 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.
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 $10.10 per share.
Placing
funds in the trust account may not protect those funds from third party claims against us. Although we will seek to have all vendors,
service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim 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, claims for fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver. If any third party refuses to execute
an agreement waiving 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 without a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any available alternative.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills management believes to be significantly superior to those of other consultants
who would execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason.
Upon redemption of our public shares, if we are unable to complete a business combination within the required time frame, or upon
the exercise of a redemption right in connection with a 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 $10.10 per share initially held in the trust account
due to claims of such creditors. Pursuant to a written agreement, our sponsor has agreed that it will be liable to us if and to
the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we
discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.10 per share except as to
any claims by a third party who executed a waiver of 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, if an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible
to the extent of any liability for such third party claims. We have not independently verified whether our sponsor has sufficient
funds to satisfy his indemnity obligations, we have not asked our sponsor to reserve for such indemnification obligations and
we cannot assure you that he would be able to satisfy those obligations.
Our
directors may decide not to enforce our sponsor’s indemnification obligations, resulting in a reduction in the amount of
funds in the trust account available for distribution to our public stockholders.
If
proceeds in the trust account are reduced below $10.10 per public share and our sponsor asserts that it is unable to satisfy its
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against our sponsor to enforce his indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against our sponsor to enforce his indemnification obligations to
us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular
instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust
account available for distribution to our public stockholders may be reduced below $10.10 per share.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, by making distributions
to public stockholders before making provision for creditors, our board of directors may be viewed as having breached its fiduciary
duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims for punitive damages.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be subject to burdensome regulatory requirements
and our activities may be restricted, which may make it difficult for us to complete a 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;
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restrictions
on the issuance of securities; and
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restrictions
on the incurrence of debt;
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each
of which may make it difficult for us to complete a business combination.
In
addition, we may have to:
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register
as an investment company;
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adopt
a specific form of corporate structure; and
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file
reports, maintain records, and adhere to voting, proxy, disclosure and other requirements.
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We
do not believe that our anticipated principal activities will subject us to Investment Company Act regulation. The proceeds held
in the trust account may be invested by the trustee only in United States government treasury bills with a maturity of 180 days
or less or in money market funds investing solely in United States treasury 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 make it more difficult to complete our initial business combination. If we are unable
to complete our initial business combination, our public stockholders may only receive $10.10 per share on our redemption, and
our warrants will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and
results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments, including in particular, reporting and
other requirements under the Exchange Act. 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 result in fines, injunctive relief or
similar remedies which could be costly to us or limit our ability to complete an initial business combination or operate the post-combination
company successfully.
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 consummate our initial business combination during the combination period may be considered a liquidation distribution
under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that
it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can
be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However,
it is our intention to redeem our public shares as soon as reasonably possible following June 18, 2020 (or such later date as may
be approved by our stockholders) if we do not consummate an initial business combination and, therefore, we do not intend to comply
with those procedures.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our vendors (such as lawyers or investment bankers) 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 if we do not consummate our initial business combination within the required time period is
not considered a liquidation 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 liquidation distribution.
We
may not hold an annual meeting of stockholders until after we consummate a business combination.
We
may not hold an annual meeting of stockholders until after we consummate a business combination (unless required by Nasdaq), and
thus may not be in compliance with Section 211(b) of the DGCL, which requires that an annual meeting of stockholders be held for
the purposes of electing directors in accordance with a company’s bylaws unless directors are elected by written consent
in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business
combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance
with Section 211(c) of the DGCL.
A
registration statement covering the shares underlying our warrants may not be in place when an investor desires to exercise warrants,
thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless.
Under
the terms of the warrant agreement governing our warrants, we have agreed to use our best efforts to file a registration statement
under the Securities Act covering such shares and maintain a current prospectus relating to the common stock issuable upon exercise
of the warrants, and to use our best efforts to take such action as is necessary to register or qualify for sale, in those states
in which the warrants were initially offered by us, the shares issuable upon exercise of the warrants, to the extent an exemption
is not available. We cannot assure you that we will be able to do so. If the shares issuable upon exercise of the warrants are
not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis
under the circumstances specified in the warrant agreement. However, in no event will we be required to issue cash, securities
or other compensation in exchange for the warrants if we are unable to register or qualify the shares underlying the warrants
under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not
so registered or qualified, the warrant holder will 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 common stock included in the units. If and when the warrants become redeemable by
us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of common stock for
sale under all applicable state securities laws.
The
grant of registration rights to our initial stockholders and purchasers of Private Placement Units may make it more difficult
to complete our initial business combination, and the future exercise of such rights may reduce the market price of our common
stock.
Pursuant
to an agreement entered into concurrently with the consummation of our initial public offering, our initial stockholders, purchasers
of private placement units and their permitted transferees can demand that we register the founder shares, private placement units,
private placement shares, and private placement warrants, and the shares of common stock issuable upon conversion of the private
placement warrants, as well as any units and underlying securities issued upon conversion of working capital loans. These registration
rights with respect to the founder shares will be exercisable at any time commencing upon the date that such shares are released
from transfer restrictions and these registration rights with respect to the other securities will be exercisable at any time
commencing upon consummation of an initial business combination. 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 reduce the market price of our
common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult
to conclude 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 common stock that is expected when the
securities owned by our initial stockholders are registered.
You
will be unable to ascertain the merits or risks of any particular target business’ operations.
We
may pursue acquisition opportunities in any business sector or geographic region we wish, except that we will not, under our amended
and restated certificate of incorporation, be permitted to effectuate a business combination with another blank check company
or similar company with nominal operations. If we consummate our initial business combination, we may be affected by numerous
risks inherent in the business operations of the entity with which we combine. Because we will seek to acquire businesses that
potentially need financial, operational, strategic or managerial redirection, we may be affected by the risks inherent in the
business and operations of a financially or operationally unstable entity. Although our officers and directors will endeavor to
evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all
of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks
may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business. We also cannot assure you that an investment in our securities will ultimately prove to be more favorable to
investors than a direct investment, if such opportunity were available, in an acquisition target.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into a 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 specific criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into a business combination will not have all of these positive attributes. If we consummate a business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business
combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise
their conversion rights, which may make it difficult for us to meet any closing condition with a target business that requires
us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required
by law or Nasdaq, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to
obtain 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 only receive $10.10 per
share on our redemption, and our warrants will expire worthless.
You
may not have any assurance from an independent source that the price we are paying for the target in our initial business combination
is fair to our stockholders from a financial point of view.
Unless
we consummate our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent
third party that the price we are paying is fair to our stockholders from a financial point of view. If we do not obtain an opinion,
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 common or preferred stock to complete our initial business combination or under an employee incentive plan
after consummation of our initial business combination, which would dilute the interest of our stockholders and likely present
other risks.
We
may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination
or under an employee incentive plan after consummation of our initial business combination. The issuance of additional shares
of common or preferred stock:
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may
significantly dilute the equity interest of investors of our initial public offering;
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may
subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common
stock;
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could
cause a change in control if a substantial number of shares of common stock is issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present
officers and directors; and
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may
adversely affect prevailing market prices for our Common Stock, and/or warrants after the business combination.
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Resources
could be wasted in researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts
to locate another target business and consummate our initial business combination. If we are unable to complete our initial business
combination, our public stockholders may only receive $10.10 per share from our redemption of our shares 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 consummate 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 due to a reduction in the funds available for expenses relating to such efforts.
If we are unable to complete our initial business combination, our public stockholders may only receive $10.10 per share from
our redemption of their shares and our warrants will expire worthless.
We
are dependent upon our officers and directors; the loss of any one or more of them could adversely affect our ability to complete
a business combination.
Our
operations depend upon the background, experience and contacts of our officers and directors. We believe that our success depends
on the continued service of our officers and directors, at least until we have consummated a business combination. We do not have
an employment agreement with, or key-man insurance on the life of, any of our directors or officers. In addition, our executive
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict
of interest in allocating their time between our operations and the search for a business combination and their other business
commitments. We do not intend to have any full-time employees prior to the consummation of our business combination. Each of our
executive officers and directors is engaged in other business endeavors and is not obligated to contribute any specific number
of hours per week to our affairs. If our executive officers’ and directors’ other business commitments require them
to devote substantial amounts of time in excess of their current commitment levels, it could limit their ability to devote time
to our affairs which make it more difficult for us to identify an acquisition target and consummate our business combination.
Our
success following our initial business combination likely will depend upon the efforts of management of the target business. The
loss of any of the key personnel of the target’s management team could make it more difficult to operate the target profitably.
Although
some of our key personnel may remain with the target business in senior management or advisory positions following a business
combination, we can offer no assurance that any will do so. Moreover, as a result of the existing commitments of our key personnel,
it is likely that we will retain some or all of the management of the target business to conduct its operations. The departure
of any key members of the target’s management team could thus make it more difficult to operate the post-combination business
profitably. Moreover, to the extent that we will rely upon the target’s management team to operate the post-combination
business, we will be subject to risks regarding their managerial competence. While we intend to closely scrutinize the skills,
abilities and qualifications of any individuals we retain after a business combination, our ability to do so may be limited due
to a lack of time resources or information. Accordingly, we cannot assure you that our assessment of these individuals will prove
to be correct and that they will have the skills, abilities and qualifications we expect.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with our initial 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 a particular business combination would be advantageous
to us.
Our
key personnel may decide to remain with the company after the consummation of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take
place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the consummation of our initial
business combination. The personal and financial interests of such individuals may influence their motivation in identifying and
selecting a target business and cause them to have conflicts of interest in determining whether a particular business combination
would be advantageous to us.
Our
officers and directors are now and may in the future become affiliated with entities engaged in business activities similar to
those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity 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 or entities. Our executive officers and directors may in the future become affiliated with entities that are engaged
in the business of acquiring other businesses or entities. In each case, our executive officers and directors’ existing
directorships or other responsibilities may give rise to contractual or fiduciary obligations that take priority over any obligation
owed to us. Our amended and restated certificate of incorporation provides that the doctrine of corporate opportunity, or any
other analogous doctrine, will not apply to us or any of our officers or directors or in circumstances that would conflict with
any fiduciary duties or contractual obligations to other entities they may have. Accordingly, business opportunities that may
be attractive to the entities described above will not be presented to us unless such entities have declined to accept such opportunities.
As a result, our officers and directors may have conflicts of interest in determining to which entity a particular business opportunity
should be presented. We cannot assure you that these conflicts will be resolved in our favor or that a potential target business
would not be presented to another entity prior to its presentation to us.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our executive officers, directors or existing stockholders, which may raise potential conflicts of interest.
We
may decide to acquire one or more businesses affiliated with holders of founder shares, or our officers and directors. Our officers
and directors also serve as officers and board members of other entities. Such entities may compete with us for business combination
opportunities. Despite our agreement to obtain an opinion from an independent investment banking firm, a firm that regularly prepares
valuation reports on the type of company that we are seeking to acquire or an independent accounting firm regarding the fairness
to our stockholders from a financial point of view of a business combination with one or more businesses affiliated with our executive
officers, directors or holders of founder shares, potential conflicts of interest still may exist and, as a result, the terms
of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company.
When
evaluating the desirability of effecting a business combination with a prospective target business, our ability to assess the
target business’ 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 expected. 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.
The
officers and directors of an acquisition candidate may resign upon consummation of a business combination. The loss of an acquisition
target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The
role of an acquisition candidate’s key personnel upon the consummation 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 us following our initial business combination, it is possible that members of the management of an acquisition candidate
will not wish to remain in place. The loss of an acquisition target’s key personnel could negatively impact the operations
and profitability of our post-combination business.
Since
holders of founder shares and private placement units will lose some or all of their investment in us if we do not consummate
a business combination, and since certain of our officers and directors have significant financial interests in us, a conflict
of interest may arise in determining whether a particular acquisition target is appropriate for our initial business combination.
The
personal and financial interests of our officers and directors in consummating an initial business combination, along with their
flexibility in identifying and selecting a prospective acquisition candidate, may influence their motivation in identifying and
selecting a target business combination and completing an initial business combination that is not in the best interests of our
stockholders. Consequently, the discretion of our officers and directors, in identifying and selecting a suitable target business
combination may result in a conflict of interest when determining whether the terms, conditions and timing of a particular initial
business combination are appropriate and in the best interest of our public stockholders.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our financial condition and the value of our stockholders’ investment in us.
Although
we have no commitments to issue any notes or other debt securities, otherwise to incur debt, we may choose to incur substantial
debt in order to complete our initial business combination. 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 or cash flows after an initial business combination are insufficient
to meet our debt service 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 covenants
that require the maintenance of 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 and the lender demands payment;
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our
inability to obtain necessary additional financing if any debt we incur contains covenants restricting our ability to obtain
additional financing while the debt is outstanding;
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prohibitions
of, or limitations on, our ability to pay dividends on our common stock;
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use
of 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, as well as for 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 growth strategies and other purposes and other disadvantages compared to our competitors who have less debt.
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We
do not have a policy with respect to how much debt we may incur. To the extent that the amount of our debt increases, the impact
of the effects listed above may also increase.
We
may be able to complete a business combination with only one business, which would result in our success being dependent solely
on a single business which may have a limited number of products or services. This lack of diversification may harm our operations
and profitability.
We
are not limited as to the number of businesses we may acquire in our initial business combination. However, we may not be able
to effectuate a business combination with more than one target business because of various factors, including the limited amount
of the net proceeds of our initial public offering, 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 consummating an initial business combination with only a single
entity, our lack of diversification may subject us to numerous economic, competitive and regulatory risks particular to the industry
area in which the acquired business operates. 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:
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solely
depend upon the performance of a single business, property or asset, or
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depend
upon the development or market acceptance of a single or limited number of products, processes or services.
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We
may attempt to consummate business combinations with multiple prospective targets simultaneously, which may hinder our ability
to consummate an initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to acquire several businesses simultaneously that are owned by different sellers, we will need each seller 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 the 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, we may be unable to operate the combined business successfully, and you could lose some or all of your investment
in us.
We
may attempt to consummate 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 expected, or at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By
definition, very little public information 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 the information developed during our due diligence examination,
which may be limited. As a result, we could acquire a company that is not as profitable as we expected, or at all. Furthermore,
the relative lack of information about a private company may hinder our ability to properly assess the value of such a company
which could result in our overpaying for that company.
If
we effect our initial business combination with a business located outside of the United States, we would be subject to a variety
of additional risks that could result in us being unable to operate the business successfully.
We
may pursue an initial business combination with a business located outside of the United States. If we do, we would be subject
to any special considerations or risks associated with businesses operating in the target’s home jurisdiction, including
any of the following:
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks and wars; and
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deterioration
of political relations with the United States.
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We
may not be able to adequately address these additional risks. If we are unable to do so, we may be unable to operate the acquired
business successfully.
If
we effect our initial business combination with a business located outside of the United States, the laws applicable to such business
will likely govern all of our material agreements and we may not be able to enforce our legal rights.
If
we effect our initial business combination with a business located outside of the United States, the laws of the country in which
such business operates will govern almost all of the material agreements relating to its operations. The target business may not
be able to enforce any of its material agreements or enforce remedies for breaches of those agreements in that jurisdiction. The
system of laws and the enforcement of existing laws in such jurisdiction may not be as certain in implementation and interpretation
as in the United States. The inability to enforce or obtain a remedy under any of our future agreements could result in a significant
loss of business, business opportunities or capital. Additionally, if we acquire a business located outside of the United States,
it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors
might reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their
legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated
upon civil liabilities and criminal penalties of our directors and officers under federal securities laws.
We
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
anticipate structuring our initial business combination to acquire 100% of the equity interest or assets of the target business
or businesses. However, we may structure our initial business combination to acquire less than 100% of the equity interest or
assets of the target business, but only if we (or any entity that is a successor to us in a business combination) acquire a majority
of the outstanding voting securities or assets of the target. Even if we own a majority interest in the target, our stockholders
prior to the business combination may collectively own a minority interest in the post business combination company, depending
on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a
target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number
of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding
shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their
holdings resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired.
Accordingly, this may make it more likely that we will not be able to maintain our control of the target business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold will make it easier for us to
consummate a business combination with which a substantial number of our stockholders do not agree.
Since
we have no specified percentage threshold for redemption in our amended and restated certificate of incorporation, our structure
is different in this respect from the structure that has been used by many blank check companies. Many blank check companies would
not be able to consummate a business combination if the holders of the company’s public shares voted against a proposed
business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company’s
initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check
companies have been unable to complete business combinations because the amount of public shares for which conversion was elected
exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. However, we
may be able to consummate a business combination even though a substantial number of our public stockholders do not agree with
the transaction and have redeemed their shares. However, in no event will we redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination, and the amount
that we redeem may be further limited by the terms and conditions of our initial business combination. In such case, we would
not proceed with the redemption of our public shares and the related initial business combination, and instead may search for
an alternate business combination.
Provisions
of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding
provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders
owning 65% of the issued and outstanding shares of our common stock, which is a lower amendment threshold than that of many blank
check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate
the consummation of an initial business combination that our stockholders may not support.
Many
blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s
stockholders. Amendment of these provisions requires approval by between 90% and 100% of the company’s public stockholders
in many cases. Our amended and restated certificate of incorporation provides that provisions related to pre-business combination
activity may be amended if approved by holders owning 65% of the issued and outstanding shares of our common stock, and corresponding
provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders
owning 65% of the issued and outstanding shares of our common stock (in each case including all shares held by the initial stockholders,
holders of placement units, our officers and our directors); provided, however, that if the effect of any proposed amendment,
if adopted, would be either to (i) reduce the amount in the trust account available to redeeming stockholders to less than $10.10
per share, or (ii) delay the date on which a public stockholder could otherwise redeem shares for such per share amount in the
trust account, we will provide a right for public shareholders to redeem public shares if such an amendment is approved). As a
result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-business
combination actions more easily that many blank check companies, and this may increase our ability to consummate a business combination
with which you do not agree.
Our
initial stockholders, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not
propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete our initial business combination during the combination period
unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such
amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, net of our
tax obligations, divided by the number of then outstanding public shares. Our stockholders are not parties to, or third-party
beneficiaries of, this written agreement with our initial stockholders, executive officers and directors and, as a result, will
not have the ability to pursue remedies against these persons and entities for any breach of such agreement. Accordingly, in the
event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 50%
of the then outstanding warrants.
Our
warrants have been issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company,
as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of
any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50%
of the then outstanding warrants to make any change that adversely affects the interests of the registered holders. Although our
ability to amend the terms of the warrants with the consent of at least 50% of the then outstanding warrants is unlimited, examples
of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise
period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants (excluding any private placement warrants held by our initial stockholders or
their permitted transferees) at any time after they become exercisable and prior to their expiration, at $0.01 per warrant, provided
that the last reported sales price (or the closing bid price of our common stock in the event the shares of our common stock are
not traded on any specific trading day) of the common stock equals or exceeds $18.00 per share for any 20 trading days within
a 30 trading-day period ending on the third business day prior to the date we send proper notice of such redemption, provided
that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we
have an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of
the warrants and a current prospectus relating to them is available. 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. Redemption of the outstanding warrants could force you: (i) to exercise your warrants and pay the exercise
price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market
price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the
outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.
Our
ability to require holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares
upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.
If
we call our warrants for redemption, we will have the option to require any holder that wishes to exercise his warrants (including
any warrants held by our initial stockholders or their permitted transferees) to do so on a “cashless basis.” If we
choose to require holders to exercise their warrants on a cashless basis, the number of shares received by a holder upon exercise
will be fewer than it would have been had such holder exercised his warrants for cash. This will have the effect of reducing the
potential “upside” of the holder’s investment in our company.
Nasdaq
may delist our securities from trading which could limit investors’ ability to make transactions in our securities and subject
us to additional trading restrictions.
Our
securities are listed on Nasdaq. However, we cannot assure you that our securities will continue to be listed on Nasdaq in the
future or prior to a business combination. In order to continue listing our securities on Nasdaq prior to a business combination,
we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders’
equity (generally $2,500,000), a minimum number of public stockholders (generally 300 public holders), and a minimum number of
shares held by non-affiliates (500,000 shares). Additionally, in connection with our business combination, it is likely that Nasdaq
may require us to file a new initial listing application and meet its initial listing requirements which are more rigorous than
Nasdaq’s continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If
Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on the Over-The-Counter Bulletin Board or the “pink sheets.” If
this were to occur, there could be 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 common stock is a “penny stock” which will require brokers trading in our 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, or no, news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because our units, common stock and
warrants will be listed on Nasdaq, we expect that our units, common stock, and warrants will be covered securities. Although the
states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies
if there is a suspicion of fraud and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale
of covered securities in a particular case. While we are not aware of a state, other than the state of Idaho, having used these
powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view
blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities.
Purchases
of common stock in the open market or in privately negotiated transactions by our initial stockholders, directors, officers or
their affiliates may make it difficult for us to continue to list our common stock on Nasdaq or another national securities exchange.
If
our initial stockholders, directors, officers or their affiliates purchase shares of our common stock in the open market or in
privately negotiated transactions, it would reduce the public “float” of our common stock and the number of beneficial
holders of our common stock, which may make it difficult to maintain the listing or trading of our common stock on a national
securities exchange if we determine to apply for such listing in connection with the business combination. If the number of our
public holders falls below 300 or if the total number of shares held by non-affiliates is less than 500,000, we will be non-compliant
with Nasdaq’s continued listing rules and our common stock could be de-listed. If our common stock were de-listed, we could
face the material consequences set forth in the immediately preceding risk factor.
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.
If
we hold a stockholder vote to approve our initial business combination, 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. If we make a tender offer for our public shares, we will include the same
financial statement disclosure in our tender offer documents that is required under the tender offer rules. These financial statements
must be prepared in accordance with, or reconciled to, accounting principles generally accepted in the United States of America,
or GAAP, or international financing reporting standards as issued by the International Accounting Standards Board, or IFRS, depending
on the circumstances and the historical financial statements must be audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target
businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such statements
in accordance with federal proxy rules and consummate our initial business combination during the combination period.
The
requirements of being a public company may strain our resources and divert management’s attention.
As
a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (which we refer
to as the Sarbanes-Oxley Act), the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (which we refer to as the Dodd-Frank
Act), the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and
regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly
and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.”
The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal
control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal
control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result,
management’s attention may be diverted from other business concerns, which could adversely affect our business and operating
results. We may need to hire more employees in the future or engage outside consultants to comply with these requirements, which
will increase our costs and expenses.
In
addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty
for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws,
regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result,
their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could
result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure
and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment
may result in increased general and administrative expenses and a diversion of management’s time and attention from operational
activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities
intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities
may initiate legal proceedings against us and our business may be adversely affected.
However,
for as long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain
exemptions from various reporting requirements that are applicable to “emerging growth companies” including, but not
limited to, not being required to comply with the auditor attestation requirements of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirement
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not
previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or
(c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of common stock that are
held by non-affiliates exceeds $700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt during the prior three year period.
As
an “emerging growth company,” we cannot be certain if the reduced disclosure requirements applicable to emerging growth
companies will make our common stock less attractive to investors.
We
are an “emerging growth company,” as defined in 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 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 shareholder approval of any golden parachute
payments not previously approved. Additionally, as an emerging growth company, we have elected to delay the adoption of new or
revised accounting standards that have different effective dates for public and private companies until those standards apply
to private companies. As such, our financial statements may not be comparable to companies that comply with all public company
accounting standards. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common
stock and our share price may be more volatile.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a business combination, require substantial
financial and management resources, and increase the time and costs of completing an acquisition.
The Sarbanes-Oxley Act requires that we
maintain a system of internal controls and that we evaluate and report on such system of internal controls. In addition, once we
are no longer an “emerging growth company,” we must have our system of internal controls audited. The fact that we
are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target company with which we seek to complete a 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 controls
of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such acquisition.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of and issue new series of preferred shares, which may make more difficult the
removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market
prices for our securities.
Our
amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State
of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’
ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought
only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit
will be deemed to have consented to service of process on such stockholder’s counsel. Any person or entity purchasing or
otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions
in our amended and restated certificate of incorporation.
This
choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect
to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate
of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such
action in other jurisdictions, which could harm our business, operating results and financial condition.
Our 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.
In December 2019, a novel
strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and
other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak
of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S.
Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare
community in responding to COVID-19. A significant outbreak of COVID-19 and other infectious diseases could result in
a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any
potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore,
we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit
the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers
are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our
search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat
its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive
period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately
consummate a business combination, may be materially adversely affected.