ITEM
1A. RISK FACTORS.
An investment in our securities
involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information
contained in this Annual Report on Form 10-K and the prospectus associated with our initial public offering, before making a decision
to invest in our securities. If any of the following events occur, our business, financial condition and operating results may
be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part
of your investment.
Risks
Relating to our Search for, and Consummation of or Inability to Consummate, a Business Combination
Our stockholders
may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of
our founder shares will participate in such vote, which means we may complete our initial business combination even though a majority
of our public stockholders do not support such a combination.
We may choose not to
hold a stockholder vote to approve our initial business combination if the business combination would not require stockholder approval
under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement,
the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell
their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such
as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
Even if we seek stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly,
we may complete our initial business combination even if a majority of our public stockholders do not approve of the business combination
we complete.
Your only opportunity
to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem
your shares from us for cash, unless we seek stockholder approval of 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 our initial business
combination. Since our board of directors may complete a business combination without seeking stockholder approval, public stockholders
may not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your
only opportunity to affect the investment decision regarding our initial business combination may be limited to exercising your
redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed
to our public stockholders in which we describe our initial business combination.
The ability of our public stockholders to redeem
their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it
difficult for us to enter into a business combination with a target.
We may seek to
enter into a business combination transaction agreement with a prospective target that requires as a closing condition that we
have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would
not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore,
in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001.
Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001
or make us unable to satisfy a minimum cash condition as described above, we would not proceed with such redemption and the related
business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks
and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of our public stockholders to exercise
redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
At the time we enter
into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights,
and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to
pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash
in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares
is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion
of the cash in the trust account or arrange for third party financing. Raising additional third party financing may involve dilutive
equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to
the extent that the anti-dilution provision of the Class B common stock results in the issues of shares of Class A common stock
on a greater than one-to-one basis upon conversion of the shares of Class B common stock at the time of our initial business combination.
In addition, the amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares
that are redeemed in connection with an initial business combination. The per share amount we will distribute to stockholders who
properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions,
the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions. The above
considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital
structure.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business
combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement requires us to
use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing,
the probability that our initial business combination would be unsuccessful is increased. If our initial business combination is
unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are
in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may
trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss
on your investment or lose the benefit of funds expected in connection with your exercise of redemption rights until we liquidate
or you are able to sell your shares in the open market.
The requirement that we consummate
our initial business combination within 24 months after the closing of our Public Offering may give potential target businesses
leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential
business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete
our initial business combination on terms that would produce value for our stockholders.
Any potential target
business with which we enter into negotiations concerning a business combination will be aware that we must consummate our initial
business combination within 24 months from the closing of our Public Offering. Consequently, such target business may obtain leverage
over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular
target business, we may be unable to complete our initial business combination with any target business. This risk will increase
as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter
into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
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 ongoing coronavirus (COVID-19) outbreak and the status of debt and equity markets.
Since it was first
reported to have emerged in December 2019, a novel strain of coronavirus, which causes COVID-19, has spread across the world, including
the United States. The COVID-19 outbreak has resulted in, and a significant outbreak of other infectious diseases could result
in, a widespread health crisis adversely affecting the economies and financial markets worldwide, potentially including the business
of any potential target business with which we intend to consummate a business combination. Furthermore, we may be unable to complete
a business combination at all if concerns relating to COVID-19 continue to restrict travel, limit the ability to have meetings
with potential investors or make it impossible or impractical to negotiate and consummate a transaction with the target company’s
personnel, vendors and service providers in a timely manner, if at all. 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 that
may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or 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.
In addition, our ability
to consummate a transaction may be dependent on the ability to raise equity and debt financing, which may be impacted by COVID-19
and other events, including as a result of increased market volatility, decreased market liquidity and third-party financing being
unavailable on terms acceptable to us or at all.
We may not be able
to adequately address these additional risks. If we were unable to do so, our operations might suffer, either of which may adversely
impact our business, financial condition and results of operations.
We may not be able to consummate
our initial business combination within 24 months after the closing of our Public Offering, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able
to find a suitable target business and consummate our initial business combination within 24 months after the closing of our Public
Offering. Our ability to complete our initial business combination may be negatively impacted by general market conditions, volatility
in the capital and debt markets and the other risks described herein. If we have not completed our initial business combination
within such time period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable
and up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and 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, liquidate and dissolve, subject in the case of clauses (ii) and (iii),
to our obligations under Delaware law to provide for claims of creditors and in all cases subject to the other requirements of
applicable law.
If we seek stockholder approval
of our initial business combination, our Sponsor, initial stockholders, directors, executive officers, advisors and their affiliates
may elect to purchase shares or public warrants from public stockholders, which may influence a vote on a proposed business combination
and reduce the public “float” of our Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our Sponsor, directors, officers, advisors or their affiliates may purchase shares or public
warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial
business combination, although they are under no obligation to do so. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law
and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase shares or public
warrants in such transactions. Such purchases may include a contractual acknowledgment that such stockholder, although still the
record holder of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.
In the event that our
Sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders
who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior
elections to redeem their shares. The purpose of any such purchases of shares could be to vote such shares in favor of the business
combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or to satisfy a closing
condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing
of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any such
purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters
submitted to the warrantholders for approval in connection with our initial business combination. Any such purchases of our securities
may result in the completion of our initial business combination that may not otherwise have been possible. Any such purchases
will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting
requirements.
In addition, if such
purchases are made, the public “float” of our Class
A common stock or public warrants and the number of beneficial holders of our securities may be reduced, possibly making it difficult
to obtain or maintain the quotation, listing or trading of our securities on a national securities exchange.
If a stockholder fails to receive
notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the
procedures for submitting or tendering its shares, such shares may not be redeemed.
We will comply with
the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination.
Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable,
such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly tender or submit public shares for redemption. For example,
we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold
their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer
agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender
offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the scheduled
vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder
vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption
to our transfer agent two business days prior to the scheduled vote in which the name of the beneficial owner of such shares is
included. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer
materials, as applicable, its shares may not be redeemed.
You will not be entitled to
protections normally afforded to investors of many other blank check companies.
Since the net proceeds
of our Public Offering and the sale of the Private Placement Warrants are intended to be used to complete an initial business combination
with a target business that has not been selected, we may be deemed to be a “blank check” company under the United
States securities laws. However, because we will have net tangible assets in excess of $5,000,000 upon the completion of our Public
Offering and the sale of the Private Placement Warrants and will file a Current Report on Form 8-K, including an audited balance
sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such
as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means
our units will be immediately tradable and we will have a longer period of time to complete our initial business combination than
do companies subject to Rule 419. Moreover, if our Public Offering were subject to Rule 419, that rule would prohibit the release
of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust Account were released to
us in connection with our completion of an initial business combination.
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of stockholders are deemed to hold in excess of 15% of our shares of Class A common stock, you will lose the ability to redeem
all such shares in excess of 15% of our shares of Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined in Section 13 of the Exchange Act ), will be restricted from seeking redemption rights with respect to more than an
aggregate of 15% of the shares sold in our Public Offering without our prior consent, which we refer to as the “Excess Shares.”
However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for
or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability
to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares
in open-market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we
complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding 15% and,
in order to dispose of such shares, would be required to sell your shares in open-market transactions, potentially at a loss.
Because of our limited resources
and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial
business combination. If we are unable to complete our initial business combination, our public stockholders may receive only their
pro rata portion of the funds in the Trust Account that are available for distribution to public stockholders, and our warrants
will expire worthless.
We expect to encounter
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 similar or greater technical, human and other resources to ours 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 Public Offering and the
sale of the Private Placement Warrants, our ability to compete with respect to the acquisition of certain target businesses that
are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares the
right to redeem their shares for cash at the time of our initial business combination in conjunction with a stockholder vote or
via a tender offer. Target companies will be aware that this may reduce the resources available to us for our initial business
combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the Trust Account that are available for distribution to public stockholders, and our warrants will expire worthless.
If the net proceeds
of the Public Offering and the sale of the Private Placement Warrants not being held in the Trust Account are insufficient to allow
us to operate until December 22, 2022, it could limit the amount available to fund our search for a target business or businesses
and complete our initial business combination, and we will depend on loans from our sponsor or management team to fund our search
and to complete our initial business combination.
The funds available
to us outside of the Trust Account may not be sufficient to allow us to operate until December 22, 2022, assuming that our initial business
combination is not completed during that time. We believe that the funds available to us outside of the trust account will be sufficient
to allow us to operate until December 22, 2022; however, we cannot assure you that our estimate is accurate. Of the funds available
to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target
business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions
with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business
combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement
where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds
(whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due
diligence with respect to, a target business.
If we are required
to seek additional capital, we would need to borrow funds from our Sponsor, management team or other third parties to operate or
may be forced to liquidate. Neither our Sponsor, members of our management team nor any of their affiliates is under any obligation
to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the Trust Account
or from funds released to us upon completion of our initial business combination. If we are unable to complete our initial business
combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust
Account. Consequently, our public stockholders may only receive an estimated $10.00 per share, or possibly less, on our redemption
of our public shares, and our warrants will expire worthless.
If third parties bring claims
against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.00 per share.
Our placing of funds
in the Trust Account may not protect those funds from third party claims against us. Although we will seek to have all vendors,
service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders,
such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims
against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain 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 consider whether competitive alternatives are reasonably
available to us and will only enter into an agreement with such third party if management believes that such third party’s
engagement would be in the best interests of the Company under the circumstances.
Marcum LLP, our independent
registered public accounting firm, and the underwriters of our Public Offering will not execute agreements with us waiving such
claims to the monies held in the Trust Account.
Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those
of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing
to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the
future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against
the Trust Account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination
within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination,
we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the
10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than
the $10.00 per public share initially held in the Trust Account, due to claims of such creditors. Our Sponsor has agreed that it
will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective
target business with which we have entered into a written letter of intent, confidentiality or other similar agreement or business
combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii)
the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than
$10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not
apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held
in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters
of our Public Offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked
our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient
funds to satisfy its indemnity obligations and we believe that our Sponsor’s only assets are securities of the Company. Therefore,
we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully
made against the Trust Account, the funds available for our initial business combination and redemptions could be reduced to less
than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not
to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account
available for distribution to our public stockholders.
In the event that the
proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per public share
held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per share due to reductions
in the value of the trust assets, in each case less taxes payable, and our Sponsor asserts that it is unable to satisfy its obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do
so in any particular instance if, for example, the cost of such legal action is deemed by the independent directors to be too high
relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. If our independent
directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution
to our public stockholders may be reduced below $10.00 per share.
If, after we distribute the
proceeds in the Trust Account to our public stockholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy
or insolvency 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 or insolvency petition or an involuntary bankruptcy
or insolvency petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board
of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing
itself and us to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims
of creditors.
If, before distributing the
proceeds in the Trust Account to our public stockholders, we file a bankruptcy or insolvency petition or an involuntary bankruptcy
or insolvency 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 or insolvency petition or an involuntary bankruptcy
or insolvency petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to
be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities,
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each of which may make it difficult for us to complete
our initial business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be
regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that
we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not
include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and
complete a business combination and thereafter to operate the post-transaction business or assets for the long buy
unrelated businesses or assets or to be a passive investor.
We do not believe that
our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust
Account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the
Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act that invest only in direct U.S. government treasury obligations. Pursuant to the trust
agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds
to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than
on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment
company” within the meaning of the Investment Company Act. The Trust Account is intended as a holding place for funds pending
the earliest to occur of either: (i) the completion of our initial business combination; (ii) the redemption of any public shares
properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to
modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or to
redeem 100% of our public shares if we do not consummate our initial business combination within 24 months from the closing of
our Public Offering or (B) with respect to any other provisions relating to stockholders’ rights or pre-initial business
combination activity; or (iii) absent consummating our initial business combination within 24 months from the closing of our Public
Offering, our return of the funds held in the Trust Account to our public stockholders as part of our redemption of the public
shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we
were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional
expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable to
complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the
Trust Account that are available for distribution to public stockholders, and our warrants will expire worthless.
Changes in laws or regulations,
or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and
complete our initial business combination, and results of operations.
We are subject to laws
and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain
SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes
could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with
applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
We may not hold an annual meeting
of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders
to appoint directors.
In accordance with
Nasdaq corporate governance requirements, we are not required to hold an annual meeting of stockholders until no later than one
year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required
to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election
is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors
prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the
DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation
of our initial business combination, they may attempt to force us to hold one by submitting an application
to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
Because we neither are limited
to evaluating a target business in a particular industry sector nor have selected any target businesses with which to pursue our
initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Our efforts to identify
a prospective initial business combination target will not be limited to a particular industry, sector or geographic region. While
we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on the ability of
our management team to identify and acquire a business or businesses that can benefit from our management team’s established
global relationships and operating experience. Our management team has a differentiated ability to underwrite transactions across
the financial services landscape, including the wealth and investment management sectors. Our amended and restated certificate
of incorporation prohibits us from effectuating a business combination with another blank check company or similar company with
nominal operations. Because we have not yet selected or approached any specific target business with respect to a business combination,
there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations,
cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be
affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in
the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess
all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these
risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely
impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable
to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders
who choose to remain stockholders following the business combination could suffer a reduction in the value of their securities.
Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the
reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as
applicable, relating to the business combination contained an actionable material misstatement or material omission.
Although we have identified
general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our
initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target business
with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria
and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which
we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders
may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that
requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is
required by law, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to
attain stockholder approval of our initial business combination if the target business does not meet our general criteria and guidelines.
If we are unable to complete our initial business combination, our public stockholders may only receive their pro rata portion
of the funds in the Trust Account that are available for distribution to public stockholders, and our warrants will expire worthless.
We are not required to obtain
an opinion from an independent investment banking firm or from a valuation or appraisal firm, and consequently, you may have no
assurance from an independent source that the price we pay in our initial business combination is fair to the Company from a financial
point of view.
Unless we complete
our initial business combination with an affiliated entity or our board of directors cannot independently determine the fair market
value of the target business or businesses (including with the assistance of financial advisors), we are not required to obtain
an opinion from an independent investment banking firm or from a valuation or appraisal firm that the price we are paying is fair
to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our
board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such
standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial business
combination.
We may issue notes or other
debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage
and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no
commitments as of the date of this Annual Report on Form 10-K to issue any notes or other debt securities, or to otherwise incur
outstanding debt following the Public Offering, we may choose to incur substantial debt to complete our initial business combination.
We and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any
right, title, interest or claim of any kind in or to the monies held in the Trust Account. As such, no issuance of debt will affect
the per share amount available for redemption from the Trust Account. Nevertheless, the incurrence of debt could have a variety
of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay
our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we
breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation
of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain
such financing while the debt security is outstanding;
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our inability to pay dividends on our Class A common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available
for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate
purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in
government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who
have less debt.
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We may only be able to complete
one business combination with the proceeds of our Public Offering and the sale of the Private Placement Warrants, which will cause
us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability. The net proceeds from our Public Offering and the Private Placement Warrants
provided us with $258,750,000 that we may use to complete our initial business combination (after taking into account the $9,056,250
of the underwriters’ marketing fee being held in the Trust Account).
We may effectuate our
initial business combination with a single target business or multiple target businesses simultaneously or within a short period
of time. However, we may not be able to effectuate our initial business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack
of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different industries or different areas of a single industry.
Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously
complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial business
combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to
simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that
our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more
difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due
diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of
the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We may seek business combination
opportunities in industries or sectors that may be outside of our management’s areas of expertise.
We will consider a
business combination outside of our management’s areas of expertise if a business combination candidate is presented to us
and we determine that such candidate offers an attractive business combination opportunity for our company. Although our management
will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will
adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will
not ultimately prove to be less favorable to investors in our Public Offering than a direct investment, if an opportunity were
available, in a business combination candidate. In the event that we elect to pursue a business combination outside of the areas
of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation or operation,
and the information contained in this Form 10-K regarding the areas of our management’s expertise would not be relevant to
an understanding of the business that we elect to acquire. As a result, our management may not be able to ascertain or assess adequately
all of the relevant risk factors. Accordingly, any stockholders who choose to remain stockholders following our initial business
combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction
in value.
We may attempt to complete
our initial business combination with a private company about which little information is available, which may result in a business
combination with a company that is not as profitable as we suspected, if at all.
In pursuing our business
combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public
information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial business combination on the basis of limited information, which may result in a business combination with a company that
is not as profitable as we suspected, if at all.
We do not have a specified
maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business
combination with which a substantial majority of our stockholders do not agree.
Our amended and restated
certificate of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible
assets to be less than $5,000,001. In addition, our proposed initial business combination may impose a minimum cash requirement
for (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes
or (iii) the retention of cash to satisfy other conditions. As a result, we may be able to complete our initial business combination
even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares
or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares
to our Sponsor, officers, directors, advisors or any of their affiliates. In the event the aggregate cash consideration we would
be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to
satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available
to us, we will not complete the business combination or redeem any shares, all shares of Class A common stock submitted for redemption
will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial
business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters
and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended
and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our
initial business combination and that our stockholders may not support.
In order to effectuate
a business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters
and governing instruments, including their warrant agreements. For example, special purpose acquisition companies have amended
the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business
combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash
and/or other securities. Amending our amended and restated certificate of incorporation will require the approval of holders of
65% of our Common Stock, and amending our warrant agreement will require a vote of holders of at least 50% of the public warrants
and, solely with respect to any amendment to the terms of the Private Placement Warrants or any provision of the warrant agreement
with respect to the Private Placement Warrants, 50% of the number of the then outstanding Private Placement Warrants. In addition,
our amended and restated certificate of incorporation will require us to provide our public stockholders with the opportunity to
redeem their public shares for cash if we propose an amendment to 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 consummate our initial business combination
within 24 months of the closing of our Public Offering or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity. To the extent any of such amendments would be deemed to fundamentally change
the nature of the securities offered through this registration statement, we would register, or seek an exemption from registration
for, the affected securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend
the time to consummate an initial business combination in order to effectuate our initial business combination.
If we are unable to consummate
our initial business combination within 24 months from the closing of our Public Offering, our public stockholders may be forced
to wait beyond 24 months before redemption from our Trust Account can occur.
If we are unable to
consummate our initial business combination within 24 months from the closing of our Public Offering, the proceeds then on deposit
in the Trust Account, including interest (which interest shall be net of taxes payable and up to $100,000 of interest to pay dissolution
expenses), will be used to fund the redemption of our public shares, as further described herein. Any redemption of public stockholders
from the Trust Account will be effected automatically by function of our amended and restated certificate of incorporation prior
to any voluntary winding up. If we are required to wind up, liquidate the Trust Account and distribute such amount therein, pro
rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and distribution must comply
with the applicable provisions of the Delaware General Corporation Law (“DGCL”). In that case, investors may be forced
to wait beyond 24 months from the closing of our Public Offering before the redemption proceeds of our Trust Account become available
to them, and they receive the return of their pro rata portion of the proceeds from our Trust Account.
We have no obligation to return funds to investors prior to the date of our redemption or liquidation unless we consummate our
initial business combination prior thereto and only then in cases where stockholders have sought to redeem their shares of Class
A common stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions if we are unable
to complete our initial business combination.
The provisions of our amended
and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of
the agreement governing the release of funds from our Trust Account) may be amended with the approval of holders of 65% of our
Common Stock, which is a lower amendment threshold than that of some other special purpose acquisition companies. It may be easier
for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business
combination that some of our stockholders may not support.
Our amended and restated
certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the requirement
to deposit proceeds of our Public Offering and the private placement of warrants into the Trust Account and not release such amounts
except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended
if approved by holders of 65% of our Common Stock entitled to vote thereon and corresponding provisions of the trust agreement
governing the release of funds from our Trust Account may be amended if approved by holders of 65% of our Common Stock entitled
to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority
of our outstanding Common Stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange
rules. Our initial stockholders, who collectively beneficially own 20% of our Common Stock upon the closing of our Public Offering,
may participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have
the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated
certificate of incorporation which govern our pre-business combination behavior more easily than some other special purpose acquisition
companies, and this may increase our ability to complete a business combination with which you do not agree. Our stockholders may
pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our Sponsor, executive
officers and directors have agreed, pursuant to written agreements with us, that they will not propose any amendment to our amended
and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not consummate our initial business combination within 24 months from the closing of the Public Offering or with respect
to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, unless we
provide our public stockholders with the opportunity to redeem their Class A common stock upon approval of any such amendment at
a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned
on the funds held in the Trust Account (net of permitted withdrawals), divided by the number of then outstanding public shares.
Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability
to pursue remedies against our Sponsor, executive officers or directors for any breach of these agreements. As a result, in the
event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
Certain agreements
related to the Public Offering may be amended without stockholder approval.
Each of the agreements
related to the Public Offering to which we are a party, other than the warrant agreement and the investment management trust agreement,
may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement among us and
our initial stockholders, sponsor, officers and directors; the registration rights agreement among us and our initial stockholders;
the Private Placement Warrants purchase agreement among us, our Sponsor and our initial stockholders; and the administrative services
agreement among us, our Sponsor and an affiliate of our Sponsor. These agreements contain various provisions that our public stockholders
might deem to be material. For example, our letter agreement and the underwriting agreement contain certain lock-up provisions
with respect to the Founder Shares, Private Placement Warrants and other securities held by our initial stockholders, sponsor,
officers and directors. Amendments to such agreements would require the consent of the applicable parties thereto and would need
to be approved by our board of directors, which may do so for a variety of reasons, including to facilitate our initial business
combination. While we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial
business combination, it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary
duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection with the consummation
of our initial business combination will be disclosed in our proxy solicitation or tender offer materials, as applicable, related
to such initial business combination, and any other material amendment to any of our material agreements will be disclosed in a
filing with the SEC. Any such amendments would not require approval from our stockholders, may result in the completion of our
initial business combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment
in our securities. For example, amendments to the lock-up provision discussed above may result in our initial stockholders selling
their securities earlier than they would otherwise be permitted, which may have an adverse effect on the price of our securities.
We may be unable to obtain
additional financing to complete our initial business combination or to fund the operations and growth of a target business, which
could compel us to restructure or abandon a particular business combination.
We have not selected
any specific business combination target but intend to target businesses with enterprise values that are greater than we could
acquire with the net proceeds of the Public Offering and the sale of the Private Placement Warrants. As a result, if the cash portion
of the purchase price exceeds the amount available from the Trust Account, net of amounts needed to satisfy any redemption by public
stockholders, we may be required to seek additional financing to complete such proposed initial business combination. We cannot
assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves
to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction
or abandon that particular business combination and seek an alternative target business candidate. Further, we may be required
to obtain additional financing in connection with the closing of our initial business combination for general corporate purposes,
including for maintenance or expansion of operations of the post-transaction businesses, the payment of principal or interest due
on indebtedness incurred in completing our initial business combination, or to fund the purchase of other companies. If we are
unable to complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds
in the Trust Account that are available for distribution to public stockholders, and our warrants will expire worthless. In addition,
even if we do not need additional financing to complete our initial business combination, we may require such financing to fund
the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect
on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide
any financing to us in connection with or after our initial business combination.
Our initial stockholders control
a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in
a manner that you do not support.
Upon closing of the
Public Offering, our initial stockholders owned approximately 20% of our issued and outstanding shares of Common Stock (assuming
they do not purchase any units in the Public Offering). Accordingly, they may exert a substantial influence on actions requiring
a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate
of incorporation. If our initial stockholders purchase any additional shares of Class A common stock in the aftermarket or in privately
negotiated transactions, this would increase their control. Factors that would be considered in making such additional purchases
would include consideration of the current trading price of our Class A common stock. In addition, our board of directors, whose
members were appointed by our Sponsor, is and will be divided into three classes, each of which will generally serve for a term
of three years with only one class of directors being appointed in each year. We may not hold an annual meeting of stockholders
to appoint new directors prior to the completion of our initial business combination, in which case all of the current directors
will continue in office until at least the completion of the business combination. If there is an annual meeting of stockholders,
as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered
for appointment and our initial stockholders, because of their ownership position, will have considerable influence regarding the
outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial business
combination.
Because we must furnish our
stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business
combination with some prospective target businesses.
The federal proxy rules
require that the proxy statement with respect to the vote on an initial business combination include historical and pro forma financial
statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether
or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance
with, or be reconciled to, accounting principles generally accepted in the United States of America (“GAAP”) or international
financial reporting standards as issued by the International Accounting Standards Board (“IFRS”) depending on the circumstances
and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the pool of potential target
businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such
statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
Compliance obligations under
the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial financial
and management resources, and increase the time and costs of completing an initial business combination.
Section 404 of the
Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on
Form 10-K for the year ending December 31, 2021. Only in the event that we are deemed to be a large accelerated filer or an accelerated
filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public
accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an
emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements
of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which
we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such business combination.
Risks Relating to
the Post-Business Combination Company
Subsequent to our completion
of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other
charges that could have a significant negative effect on our financial condition, our results of operations and our share price,
which could cause you to lose some or all of your investment.
Even if we conduct
due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues
that may be present within a particular target business, that it would be possible to uncover all material issues through a customary
amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result
of these factors, we may be forced to later write down or write off assets, restructure our operations, or incur impairment or
other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even
though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of
this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may
cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a
target business or by virtue of our obtaining debt financing to partially finance the initial business combination or thereafter.
Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction in
the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able
to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary
duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation
or tender offer materials, as applicable, relating to the business combination contained an actionable material misstatement or
material omission.
Resources could be expended
in researching business combinations that are not completed, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders
may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to public stockholders,
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,
consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to public
stockholders, and our warrants will expire worthless.
Our ability to successfully
effect our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel,
some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. However, the role of our key personnel
in the target business cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our initial business combination, it is likely that some or all of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial
business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals
may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time
and resources helping them become familiar with such requirements.
Our key personnel may negotiate
employment or consulting agreements with a target business in connection with a particular business combination, and a particular
business combination may be conditioned on the retention or resignation of such key personnel. These agreements may 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 is the most advantageous.
Our key personnel may
be able to remain with our company after the completion of our initial business combination only if they are able to negotiate
employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously
with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of
cash payments and/or our securities for services they would render to us after the completion of the business combination. Such
negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal
and financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject
to their fiduciary duties under Delaware law.
We may have a limited ability
to assess the management of a prospective target business and, as a result, may effect our initial business combination with a
target business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the
desirability of effecting our initial business combination with a prospective target business, our ability to assess the target
business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them,
or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials,
as applicable, relating to the business combination contained an actionable material misstatement or material omission.
The officers and directors
of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business combination
target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition
candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although
we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition
candidate following our initial business combination, it is possible that members of the management of an acquisition candidate
will not wish to remain in place, which could negatively impact the operations and profitability of our post-combination business.
Our management may not be able
to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon loss of
control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate
such business.
We may structure our
initial business combination so that the post-transaction company in which our public stockholders own shares will own less than
100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will
not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-business
combination company, depending on valuations ascribed to the target and us in the business combination. For example, we could pursue
a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding
capital stock, shares or other equity securities 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 Class A common stock, our stockholders immediately prior to
such transaction could own less than a majority of our issued and outstanding shares of Class A 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 shares than we initially acquired. Accordingly, this may
make it more likely that our management will not be able to maintain control of the target business. 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.
If we effect our
initial business combination with a company located outside of the United States, we would be subject to a variety of additional
risks that may adversely affect us.
If we effect a business
combination with a company located outside of the United States, we would be subject to any special considerations or risks associated
with companies operating in the target business’s home jurisdiction, including any of the following:
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costs and difficulties inherent in managing cross-border business operations;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations
may be effected;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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challenges in managing and staffing international operations;
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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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underdeveloped or unpredictable legal or regulatory systems;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks and wars; and
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deterioration of political relations with the United States.
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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 within 24 months from the closing of our Public Offering may be considered
a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the
DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which
any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims
brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability
of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share
of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third
anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following
the eighteenth month from the closing of the Public Offering in the event we do not consummate our initial business combination
and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not
be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies
with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the
stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess
all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to
the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary
of such date. Furthermore, if the pro rata portion of our Trust Account distributed to our public stockholders upon the redemption
of our public shares in the event we do not consummate our initial business combination within 24 months from the closing of our
Public Offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be
unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are
currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be
six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
Risks Relating to
our Management Team
We may not have sufficient
funds to satisfy indemnification claims of our directors and officers.
We have agreed to indemnify
our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any
right, title, interest or claim of any kind in or to any monies in the Trust Account and to not seek recourse against the Trust
Account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we
have sufficient funds outside of the Trust Account or (ii) we consummate an initial business combination. Our obligation to indemnify
our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of
their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative
litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage
awards against our officers and directors pursuant to these indemnification provisions.
Past performance by our management
team and their affiliates, including investments and transactions in which they have participated and businesses with which they
have been associated, may not be indicative of future performance of an investment in the Company.
Information regarding
our management team and their affiliates, including investments and transactions in which they have participated and businesses
with which they have been associated, is presented for informational purposes only. Any past experience and performance by our
management team and their affiliates and the businesses with which they have been associated, is not a guarantee that we will be
able to successfully identify a suitable candidate for our initial business combination, that we will be able to provide positive
returns to our stockholders, or of any results with respect to any initial business combination we may consummate. You should not
rely on the historical experiences of our management team and their affiliates, including investments and transactions in which
they have participated and businesses with which they have been associated, as indicative of the future performance of an investment
in us or as indicative of every prior investment by each of the members of our management team or their affiliates. The market
price of our securities may be influenced by numerous factors, many of which are beyond our control, and our stockholders may experience
losses on their investment in our securities.
Our officers and directors
will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to
devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for a business combination and their other businesses. We do not intend to have
any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in other business
endeavors for which he may be entitled to substantial compensation, and our officers are not obligated to contribute any specific
number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities.
If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs
in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative
impact on our ability to complete our initial business combination.
Our officers and directors
presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities 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.
Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity
to such entity. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity
should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another
entity prior to its presentation to us, subject to their fiduciary duties under Delaware law. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company and
it is an opportunity that we are able to complete on a reasonable basis.
In addition, our Sponsor
and our officers and directors pursue other business or investment ventures during the period in which we are seeking an initial
business combination. Any such companies, businesses or investments may present additional conflicts of interest in pursuing an
initial business combination. We do not believe that any such potential conflicts would materially affect our ability to complete
our initial business combination.
Our officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted
a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have
an interest. In fact, we may enter into a business combination with a target business that is affiliated with our Sponsor, our
directors or officers, although we do not intend to do so. We do not have a policy that expressly prohibits any such persons from
engaging for their own account in business activities of the types conducted by us. Accordingly, such
persons or entities may have a conflict between their interests and ours.
The personal and financial
interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and
completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting
a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a
particular business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be
a breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such
individuals for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may
make against them for such reason.
We are dependent upon our officers
and directors and their loss could adversely affect our ability to operate.
Our operations are
dependent upon a relatively small group of individuals and, in particular, our officers and directors and the members of our advisory
board. We believe that our success depends on the continued service of our officers, directors and members of our advisory board,
at least until we have completed our initial business combination. In addition, our officers and directors are not required to
commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating their time among
various business activities, including identifying potential business combinations and monitoring the related due diligence. We
do not have an employment agreement with, or key-man insurance on the life of, any of our directors
or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental effect on
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 Sponsor, officers,
directors or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our Sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our
Sponsor, officers, directors or existing holders. Our directors also serve as officers and board members for other entities. Such
entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware
of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated,
and there have been no substantive discussions concerning a business combination with any such entity or entities. Although we
will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction
if we determined that such affiliated entity met our criteria for a business combination and such transaction was approved by a
majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment
banking firm that is a member of FINRA or a valuation or appraisal firm regarding the fairness to our company from a financial
point of view of a business combination with one or more domestic or international businesses affiliated with our Sponsor, officers,
directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination
may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since our Sponsor, officers
and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect
to public shares they may acquire during or after our Public Offering), a conflict of interest may arise in determining whether
a particular business combination target is appropriate for our initial business combination.
On October 13, 2020,
our Sponsor and Jones & Associates, an affiliate of one of the underwriters of the Initial Public Offering, purchased 4,715,000
and 1,035,000 shares of our Class B common stock, par value $0.0001 per share, respectively, for an aggregate of 5,750,000 shares
(the “Founder Shares”) for a total purchase price of $25,000. On December 17, 2020, we effected a 1.125-for-1 stock
split of its Class B common stock, resulting in an aggregate of 6,468,750 shares of Class B common stock outstanding. Of
the 6,468,750 Founder Shares outstanding, up to 843,750 shares were subject to forfeiture to the extent that the over-allotment
option was not exercised in full by the underwriters, so that the Founder Shares would represent 20.0% of the Company’s issued
and outstanding shares after the Initial Public Offering. The underwriters exercised their
over-allotment option in full on December 22, 2020; thus, these 843,750 Founder Shares were no longer subject to forfeiture.
The number of Founder
Shares outstanding was determined based on the expectation that the total size of our Public Offering would be a maximum of 25,875,000
units if the underwriters’ over-allotment option is exercised in full, and therefore that such Founder Shares would represent
20% of the outstanding shares after our Public Offering. The Founder Shares will be worthless if we
do not complete an initial business combination. In addition, our Sponsor purchased an aggregate of 5,587,500 Private Placement
Warrants for an aggregate purchase price of $5,587,500, or $1.00 per warrant. The Private Placement Warrants will also be worthless
if we do not complete our initial business combination.
The personal and financial
interests of our officers and directors may influence their motivation in identifying and selecting a target business combination,
completing an initial business combination and influencing the operation of the business following the initial business combination.
This risk may become more acute as the date that is 24 months after the closing of the Public Offering nears, which is the deadline
for us to consummate our initial business combination.
Risks Relating to
our Securities
You will not have any rights
or interests in funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment,
you may be forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders
will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (i) our completion of an initial business
combination, and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem,
subject to the limitations and on the conditions described herein; (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public
shares if we do not consummate our initial business combination within 24 months from the closing of our Public Offering or (B)
with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity; and (iii)
the redemption of our public shares if we are unable to consummate our initial business combination within 24 months from the closing
of our Public Offering, subject to applicable law and as further described herein. In no other circumstances will a public stockholder
have any right or interest of any kind in the Trust Account. Holders of warrants will not have any right to the proceeds held in
the Trust Account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public
shares or warrants, potentially at a loss.
Nasdaq may delist our securities
from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us
to additional trading restrictions.
Our units are listed
on Nasdaq. Following the date that the Class A common stock and warrants are eligible to trade separately, we anticipate that the
Class A common stock and warrants will be separately listed on Nasdaq. Although we currently meet the minimum initial listing standards
set forth in Nasdaq listing standards, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq
in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our
initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain
a minimum amount of stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally
300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance
with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements, in
order to continue to maintain the listing of our securities on Nasdaq. For instance, our share price would generally be required
to be at least $4.00 per share and our stockholders’ equity would generally be required to be at least $5.0 million. We cannot
assure you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists our
securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we
expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our shares of Class A common stock are a “penny stock,” which will require brokers trading
in our shares of Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity
in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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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.” Our units, Class A common stock and warrants will qualify
as covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal
statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a
state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State
of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to
use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed
on Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each
state in which we offer our securities.
We have not registered the
shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws, and
such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able
to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We have not registered
the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws
at this time. However, under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later
than 15 business days, after the closing of our initial business combination, we will use commercially reasonable efforts to file
with the SEC a registration statement covering the registration under the Securities Act of the shares of Class A common stock
issuable upon exercise of the warrants and thereafter will use commercially reasonable efforts to cause the same to become effective
within 60 business days following our initial business combination and to maintain a current prospectus relating to the shares
of Class A common stock issuable upon exercise of the warrants until the expiration of the warrants in accordance with the provisions
of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent
a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained
or incorporated by reference therein are not current or correct or the SEC issues a stop order.
If the shares of Class
A common stock issuable upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant
agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be
required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption from registration.
In no event will warrants
be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise
their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the
state of the exercising holder, or an exemption from registration or qualification is available.
If our shares of Class
A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy
the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit
holders of warrants who seek to exercise their warrants to do so for cash and, instead, require them to do so on a cashless basis
in accordance with Section 3(a)(9) of the Securities Act. In the event we so elect, we will not be required to file or maintain
in effect a registration statement or register or qualify the shares underlying the warrants under applicable state securities
laws, and in the event we do not so elect, we will use commercially reasonable efforts to register or qualify the shares underlying
the warrants under applicable state securities laws to the extent an exemption is not available. Exercising the warrants on a cashless
basis could have the effect of reducing the potential “upside” of the holder’s investment in our company because
the warrant holder will hold a smaller number of shares of Class A common stock upon a cashless exercise of the warrants they hold
than upon a cash exercise.
In no event will we
be required to net cash settle any warrant, or issue securities (other than upon a cashless exercise as described above) or other
compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants
under 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 or exempt from registration or qualification, the holder of such warrant 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 Class A common stock included in the
units. There may be a circumstance in which an exemption from registration exists for holders of our Private Placement Warrants
to exercise their warrants while a corresponding exemption does not exist for holders of the public warrants included as part of
units sold in our Public Offering. In such an instance, our Sponsor and its permitted transferees (which may include our directors
and executive officers) would be able to exercise their warrants and sell the shares of Common Stock underlying their warrants
while holders of our public warrants would not be able to exercise their warrants and sell the underlying
shares of Common Stock. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable
to register or qualify the underlying shares of Class A common stock for sale under all applicable state securities laws. As a
result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise their warrants.
The warrants may become exercisable
and redeemable for a security other than the shares of Class A common stock, and you do not have any information regarding such
other security at this time.
In certain situations,
including if we are not the surviving entity in our initial business combination, the warrants may become exercisable for a security
other than the shares of Class A common stock. As a result, if the surviving company redeems your warrants for securities pursuant
to the warrant agreement, you may receive a security in a company about which you do not have information at this time. Pursuant
to the warrant agreement, the surviving company will be required to use commercially reasonable efforts to register the issuance
of the security underlying the warrants within 20 business days of the closing of an initial business combination.
The grant of registration rights
to our initial stockholders and holders of our Private Placement Warrants may make it more difficult to complete our initial business
combination, and the future exercise of such rights may adversely affect the market price of our shares of Class A common stock.
Pursuant to an agreement
entered into concurrently with the issuance and sale of the securities in our Public Offering, our initial stockholders and their
permitted transferees can demand that we register the shares of Class A common stock into which Founder Shares are convertible,
holders of our Private Placement Warrants and their permitted transferees can demand that we register the Private Placement Warrants
and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants, and holders of warrants that may
be issued upon conversion of working capital loans may demand that we register the shares of Class A common Stock issuable upon
exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock.
In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for
more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the
shares of Common Stock owned by our initial stockholders, holders of our Private Placement Warrants or holders of our working capital
loans or their respective permitted transferees are registered.
We may issue additional shares
of Class A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion
of the Founder Shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution
provisions contained therein. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated
certificate of incorporation authorizes the issuance of up to 380,000,000 shares of Class A common stock, par value $0.0001 per
share, 20,000,000 Shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value
$0.0001 per share. Immediately after our Public Offering, there were 354,125,000 and 13,531,250 authorized but unissued shares
of Class A common stock and shares of Class B common stock, respectively, available for issuance which amount does not take into
account shares reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion of the shares of
Class B common stock. The shares of Class B Common Stock are automatically convertible into shares of Class A common stock at the
time of the consummation of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set
forth herein and in our amended and restated certificate of incorporation, including in certain circumstances in which we issue
shares of Class A common stock or equity-linked securities related to our initial business combination. Immediately after our Public
Offering, there will be no shares of preferred stock issued and outstanding.
We may issue a substantial
number of additional shares of Class A common stock or shares of preferred stock to complete our initial business combination or
under an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common
stock upon conversion of the shares of Class B common stock at a ratio greater than one-to-one at the time of our initial business
combination as a result of the anti-dilution provisions as set forth therein. However, our amended and restated certificate of
incorporation provides, among other things, that prior to our initial business combination, we may not issue additional shares
that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote as a class with our public shares
on any initial business combination. These provisions of our amended and restated certificate of incorporation, like all provisions
of our amended and restated certificate of incorporation, may be amended with a stockholder vote. The issuance of additional shares
of common stock or shares of preferred stock:
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may significantly dilute the equity interest of investors in our Public Offering;
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may subordinate the rights of holders of Class A common stock if shares of preferred stock are
issued with rights senior to those afforded our Class A common stock;
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could cause a change in control if a substantial number of shares of Class A common stock are issued,
which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the
resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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We may reincorporate in another
jurisdiction in connection with our initial business combination and such reincorporation may result in taxes imposed on stockholders.
We may, in connection
with our initial business combination and subject to requisite stockholder approval by special resolution under the DGCL, reincorporate
in the jurisdiction in which the target company or business is located or in another jurisdiction. The transaction may require
a stockholder to recognize taxable income in the jurisdiction in which the stockholder is a tax resident or in which its members
are resident if it is a tax transparent entity. We do not intend to make any cash distributions to stockholders to pay such taxes.
Stockholders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
After our initial business
combination, it is possible that a majority of our directors and officers will live outside the United States and all of our assets
will be located outside the United States; therefore, investors may not be able to enforce federal securities laws or their other
legal rights.
It is possible that
after our initial business combination, a majority of our directors and officers will reside outside of the United States and all
of our assets will be located outside of the United States. As a result, it may be difficult, or in some cases not possible, for
investors in the United States to enforce their legal rights, to effect service of process upon all of our directors or officers
or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties on our directors and officers
under United States laws.
We may amend the terms of the
warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority
of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period
could be shortened and the number of shares of Class A common stock purchasable upon exercise of a warrant could be decreased,
all without your approval.
Our warrants will be
issued in registered form under a warrant agreement between 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 a majority of the then outstanding
public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly,
we may amend the terms of the public warrants in a manner adverse to a holder of public warrants if holders of at least a majority
of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants
with the consent of at least a majority of the then outstanding public warrants is unlimited, examples of such amendments could
be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or shares, shorten
the exercise period or decrease the number of shares of Class A common stock purchasable upon exercise of a warrant.
Our warrant agreement designates the courts of the State of New
York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions
and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable
judicial forum for disputes with our company.
Our warrant agreement provides that, subject to
applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for
the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive
forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum.
Notwithstanding the foregoing, these provisions
of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim
for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing
or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions
in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement,
is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York
(a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the
personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such
court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant
holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant
holder.
This choice-of-forum provision may limit a warrant
holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage
such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect
to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters
in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result
in a diversion of the time and resources of our management and board of directors.
We may redeem your unexpired
warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability
to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per
warrant, provided that the closing price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for adjustments
to the number of shares issuable upon exercise or the exercise price of a warrant for any 20 trading days within a 30-trading day
period ending on the third trading day prior to the date on which we send proper notice of such redemption to the warrants holders
and provided certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption
of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it
may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish
to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption,
is likely to be substantially less than the market value of your warrants.
None of the Private
Placement Warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees.
Our warrants may have an adverse
effect on the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business
combination.
We issued warrants
to purchase 12,937,500 shares of Class A common stock as part of the units sold in the Public
Offering and, simultaneously with the closing of the Public Offering, we issued an aggregate of 5,587,500 Private Placement Warrants,
at $1.00 per warrant. In addition, if our sponsor or an affiliate of our sponsor or certain of our officers
and directors makes any working capital loans, such lender may convert those loans into up to an additional 1,500,000 private placement
warrants, at the price of $1.00 per warrant.
To the extent we issue
shares of Common Stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional
shares of Class A common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target
business. Such warrants, when exercised, will increase the number of issued and outstanding shares of Class A common stock and
reduce the value of the shares of Class A common stock issued to complete the business transaction. Therefore, our warrants may
make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
General Risk Factors
We are a recently
formed blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to
achieve our business objective.
We are a recently formed
blank check company established under the laws of the State of Delaware with no operating results. Because we lack an operating
history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business
combination. We have no plans, arrangements or understandings with any prospective target business concerning a business combination
and may be unable to complete our business combination. If we fail to complete our business combination, we will never generate
any operating revenues.
We are an emerging growth company
and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive
to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies,
including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain
information they may deem important. We could be an emerging growth company for up to five years, although circumstances could
cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds
$700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following
December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our
securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading
prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out
of such extended transition period which means that when a standard is issued or revised and it has different application dates
for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Additionally, we are
a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage
of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our Common Stock
held by non-affiliates equals or exceeds $250 million as of the prior June 30th, and (2)
our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our Common Stock
held by non-affiliates equals or exceeds $700 million as of the prior June 30th. To the extent
we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public
companies difficult or impossible.
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 shares of Class A common stock and could entrench management.
Our amended and restated
certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider
to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of shares of preferred stock, which may make the removal of management more difficult
and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
Provisions in our amended and
restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated
certificate of incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative
action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director,
officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or
employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or
(iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may
be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the
State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and
the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination),
(B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court
of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court
of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. If an action is brought
outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s
counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in
the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is
enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders
will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Notwithstanding the
foregoing, our amended and restated certificate of incorporation provides that the exclusive forum provision will not apply to
suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive
jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty
or liability created by the Exchange Act or the rules and regulations thereunder. Although we believe this provision benefits us
by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision
may have the effect of discouraging lawsuits against our directors and officers.
Cyber incidents or attacks
directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital
technologies, including information systems, infrastructure and cloud applications and services, including those of third parties
with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.