Item 1. Business
Introduction
Therapeutics
Acquisition Corp. d/b/a Research Alliance Corp. I (the "Company") is a blank check company incorporated on April 15,
2020 as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization, or similar business combination with one or more businesses, which we refer to throughout this Form 10-K as
our initial business combination. We have not identified any business combination target and we have not, nor has anyone on our
behalf, initiated any substantive discussions, directly or indirectly, with any business combination targe. We intend to effectuate
our initial business combination using cash from the proceeds of the initial public offering and the shares, our shares, debt of
a combination of cash, equity and, debt.
On July 10, 2020, we consummated
the initial public Offering of 13,570,000 shares of Class A common stock at $10.00 per share, generating gross proceeds of
$135.7 million, and incurring offering costs of approximately $8.1 million, inclusive of approximately $4.8 million in deferred
underwriting commissions.
Simultaneously with the closing of
the initial public offering, we consummated a private sale of 471,400 shares of Class A Common Stock (the “Private Placement”
or “Private Placement Shares”) at a price of $10.00 per Private Placement Share to our sponsor, Therapeutics Acquisition
Holdings LLC (our “Sponsor”), generating gross proceeds of approximately $4.7 million.
Following the closing of the initial
public offering, an amount of $135.7 million from the net proceeds of the sale of the Units in the initial public offering and
the sale of the private placement shares was placed in a trust account (the “Trust Account”) established for the benefit
of the Company’s public stockholders and the underwriters of the initial public offering, with Continental Stock Transfer &
Trust Company acting as trustee. Except with respect to interest earned on the funds in the trust account that may be released
to us to pay our taxes, if any, the proceeds from the Initial Public Offering will not be released from the trust account until
the earliest to occur of: (a) the completion of our initial Business Combination, (b) the redemption of any public shares
properly tendered in connection with a stockholder vote to amend our amended and restated memorandum and articles of association
(i) to modify the substance or timing of its obligation to redeem 100% of our public shares if we do not complete our initial
Business Combination within 24 months from the closing of the Initial Public Offering or (ii) with respect to any other provisions
relating to stockholders’ rights pre-initial Business Combination activity and (c) the redemption of all our public
shares if we have not completed our initial Business Combination within 24 months from the closing of the Initial Public Offer,
subject to applicable law.
While we may pursue an acquisition
opportunity in any business, industry, sector or geographical location, we intend to focus on industries that complement our management
team’s background, and to capitalize on the ability of our management team to identify and acquire a business focusing on
the healthcare industry, with an emphasis on the biotechnology sector where our management has extensive investment experience.
Our sponsor, Therapeutics Acquisitions
Holdings LLC, is an affiliate of RA Capital, a leading life sciences focused investment firm. We believe the experience of our
team and broad network of strategic relationships with healthcare companies will allow us to source, identify and execute an attractive
transaction for our stockholders.
RA Capital invests across the capital
structure and throughout a company’s growth cycle, which provides access to a broad universe of management teams and companies
seeking flexible capital solutions. RA Capital was one of the first public-oriented investors participating in pre-IPO financing
rounds, now commonly referred to as “crossovers.” RA Capital has been one of the most active participants in crossover
financings since this model for pre-IPO financing became prominent in 2012.
Industry Opportunity
Our primary focus will be on the
healthcare industry in the United States. We believe the healthcare industry, particularly the biotechnology sector,
represents an enormous and growing target market with a large number of potential target acquisition opportunities. Overall,
total U.S. national health expenditures grew to $3.8 trillion in 2019 and accounted for 17.7% of U.S Gross Domestic Product.
Medicare and Medicaid Services grew to represent 21% and 16%, respectively of total national health expenditures. In addition
to these industry-wide dynamics in healthcare, specifically within the biotechnology sector, the past decade has seen a shift
in the research and development strategy of the Big Pharma companies to external innovation through licensing partnerships
and strategic acquisitions, resulting in 969 merger and acquisition transactions totaling $710 billion from 2015 to 2019
according to Evaluate. Furthermore, there has been a gradual increase in U.S. Food and Drug Administration (FDA) approval of new drugs, from 182 in the five
year period from 2011 to 2015, to 228 in the five year period from 2016 to 2020. In 2020 alone, the FDA approved 53 novel drugs, the second
highest annual count in over 20 years. According to Evaluate Pharma, worldwide prescription drug sales are expected to reach nearly $1.4
trillion in 2026, representing a 7.4% 2020 - 2026 compound annual growth rate. We believe that these trends present a favorable
opportunity for investors in preclinical to pre-commercial companies within the biotechnology sector, which is where RA
Capital has largely focused since inception.
We believe that there are major benefits
for privately-held, pre-commercial stage biotechnology companies to become publicly-traded, including greater access to capital,
a broader investor base, more liquid securities, and increased market awareness. An acquisition by a special purpose acquisition
company with a management team that is well-known and respected by biotechnology company founders, their investors, and management
teams, we believe, will become a preferred route for a high-quality private healthcare company to access the public markets. Furthermore,
we believe that market volatility caused by the COVID-19 pandemic is likely to make such an on-ramp to the public markets even
more attractive to private companies, as it promises more certainty about deal completion, a more efficient path to the public
markets, and a defined investor base.
In addition, we believe that the current
state of the biotechnology IPO market may enhance our ability to locate an attractive target. Approximately 310 biotechnology companies
have gone public since 2015 in the United States. Despite the current level of IPO activity, according to IBISWorld, in February 2020,
there were estimated to be approximately 9,500 biotechnology companies globally, only a fraction of which are publicly traded.
We believe that there is tremendous
investor demand for IPOs in the biotechnology sector and that the COVID-19 pandemic has led to a renewed appreciation of the critical
contributions the biotechnology sector makes to society, which in turn will continue to fuel investor demand. Given our sponsor’s
track record of identifying, evaluating, and investing in leading biotechnology companies, we believe a business combination target
we identify will benefit by partnering with us to go public.
Acquisition Strategy
We believe our management team is uniquely
positioned within the healthcare sector to identify opportunities in healthcare, for the reasons detailed below:
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Outstanding track record as healthcare investors: Since 2012, RA Capital has invested over $2.1 billion in 174 private companies, of which
more than $1 billion was invested since January 2020. 78 of these private companies have gone on to become public or have been acquired,
including Black Diamond Therapeutics, Inc. (Nasdaq:BDTX), Eidos Therapeutics, Inc. (formerly Nasdaq:EIDX; acquired by BridgeBio Pharma),
Everest Medicines Ltd (Hong Kong: 1952), Forma Therapeutics (Nasdaq:FMTX), iTeos Therapeutics, Inc. (Nasdaq: ITOS), Inhibrx Inc. (Nasdaq:
INBX), Kinnate Biopharma Inc. (Nasdaq: KNTE), Peloton Therapeutics, Inc. (acquired by Merck & Co.), Phathom Pharmaceuticals, Inc.
(Nasdaq:PHAT), Ra Pharmaceuticals (formerly Nasdaq:RARX; acquired by UCB), Satsuma Pharmaceuticals Inc (Nasdaq: STSA), Synthorx, Inc.
(formerly Nasdaq:THOR; acquired by Sanofi), Vaxcyte, Inc. (Nasdaq: PCVX), Vor Biopharma Inc. (Nasdaq: VOR) and many others. According
to Silicon Valley Bank's Healthcare Investments and Exits report for 2021, RA Capital was the most active new investor in U.S. and European
biopharmaceutical deals from 2019 to 2020. If one compares the initial offering price and the price on February 19, 2021 on an aggregate
basis for all (29) RA Capital private company investments that went public between January 1, 2019 and February 19, 2021, on average,
they doubled (with only 5 of the 29 dropping below their IPO price).
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Deep fundamental scientific and industry insight and expertise through
TechAtlas, RA Capital's dedicated research platform: RA Capital's in-house research team creates competitive
landscape maps that capture intricacies of drug development across more than 100 relevant disease areas. The TechAtlas team enables
RA Capital to capture, analyze, contextualize, and distill down to critical insights an enormous volume of data, which directly
informs investment decisions. Since 2011 these efforts have been instrumental in building internal expertise across all major therapeutic
areas, including those where no drug is currently approved, thereby helping the RA Capital investment team to proactively identify
and create investment opportunities. TechAtlas is tasked with keeping RA Capital's investment team apprised of material developments
in every therapeutic area and maintaining contact with every company working on potentially compelling drug development programs.
The TechAtlas domain experts rapidly put new information into context and work with the investment team to efficiently triage investment
opportunities, thereby allowing the investment team to focus on the opportunities offering the highest risk-adjusted return potential.
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High volume of investment opportunities attributed to RA Capital's
large footprint in the industry: in 2020 RA Capital met with over 1000 private companies and over 400 public companies, in
addition to regular interactions with academic and medical experts. This level of ongoing search and evaluation is made possible
by the efforts of the 30+ trained scientists on the TechAtlas team and the 15+ investment professionals on the investment team.
With many technologies in a given space aspiring to be better than the current standard of care, the RA Capital team focuses on
determining which technologies, of all of those under development, would be the most likely to be commercially successful if all
were approved.
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Our selection process will combine
our ongoing diligence efforts and our relationships with leading life science investment funds, executives of private and public
companies, as well as leading investment banking firms, which we believe should provide us with a key competitive advantage in
sourcing potential business combination targets. Given our profile and industry expertise, we anticipate that target business candidates
may be brought to our attention from various unaffiliated sources, including investors in other private and public companies in
our networks.
We believe that RA Capital's reputation,
experience, and track record of making investments in the healthcare space will make us a preferred partner for companies we would
be interested in acquiring, in part because one of RA Capital's core investing principles is to provide more than capital. RA Capital
has a unique ability among biotech investors to provide to its portfolio companies the coordinated output of its entire team, including
expertise across all major disease areas through proprietary internal research, strategic guidance, and operational support. For
example, RA Capital's TechAtlas team has successfully led pipeline prioritization initiatives for multiple portfolio companies,
and RA Capital employees have the expertise necessary to step in to work with its portfolio companies on financial scenario planning,
clinical trial design, regulatory strategy, and many other operational initiatives.
Based on RA Capital's extensive experience
as an active participants in crossover financings and subsequent initial public offerings, we believe that the SPAC can serve as
a faster and more efficient path to going public by combining the crossover financing and IPO into a single transaction.
Consistent with our strategy, we have
identified the following criteria to evaluate prospective target businesses. We may, however, decide to enter into our initial
business combination with a target business that does not meet these criteria. We intend to seek to acquire companies that we believe:
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possess fundamental scientific data that indicate a drug candidate
or platform is likely to generate a differentiated therapeutic for patients suffering from devastating conditions;
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have a well-defined path to generate further clinical data that will
bring one or more drug candidates closer to FDA approval and be appreciated by the public markets and potential acquirers;
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are led by competent management teams and have strong corporate governance
and reporting policies in place;
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would be funded for at least one year past a key value inflection
point after consummating a merger with us;
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provide the potential for exceptional returns for our stockholders.
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We may use other criteria as well.
Any evaluation relating to the merits of a particular initial business combination may be based on these general guidelines as
well as other considerations, factors, and criteria that our management may deem relevant.
Our Initial Business Combination
Process
In evaluating a prospective target
business, we expect to conduct a thorough due diligence review which will encompass, amount to other things, meetings with incumbent
management, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information
which will be made available to us. We will also utilize our operational and capital planning experience.
We
are not prohibited from pursuing an initial business combination or subsequent transaction with a company that is affiliated with
RA Capital or our sponsor, founders, officers, or directors. In the event we seek to complete our initial business combination
with a company that is affiliated with RA Capital, our sponsor or any of our founders, officers or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent
valuation or accounting firm that such initial business combination or transaction is fair to our company from a financial point
of view.
Affiliates
of RA Capital and members of our board of directors will directly or indirectly own founder shares following the initial
public offering and, accordingly, may have a conflict of interest in determining whether
a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the
retention or resignation of any such officers or directors were to be included by a target business as a condition to any agreement
with respect to our initial business combination.
We
currently do not have any specific business combination under consideration. Our officers and directors have neither individually
selected nor considered a target business nor have they had any substantive discussions regarding possible target businesses among
themselves or with our underwriters or other advisors. RA Capital is continuously made aware of potential business opportunities,
one or more of which we may desire to pursue for a business combination, but we have not (nor has anyone on our behalf) contacted
any prospective target business or had any substantive discussions, formal or otherwise, with respect to a business combination
transaction with our company. We have not (nor have any of our agents or affiliates) been approached by any candidates (or representative
of any candidates) with respect to a possible acquisition transaction with our company and we will not consider a business combination
with any company that has already been identified to RA Capital as a suitable acquisition candidate for it, unless RA Capital,
in its sole discretion, declines such potential business combination or makes available to our company a co-investment opportunity
in accordance with RA Capital's applicable existing and future policies and procedures. Additionally, we have not, nor has anyone
on our behalf, taken any substantive measure, directly or indirectly, to select or locate any suitable acquisition candidate for
us, nor have we engaged or retained any agent or other representative to select or locate any such acquisition candidate.
RA Capital may manage multiple investment
vehicles and raise additional funds and/or successor funds in the future, which may be during the period in which we are seeking
our initial business combination. These RA Capital investment entities may be seeking acquisition opportunities and related financing
at any time. We may compete with any one or more of them on any given acquisition opportunity.
In addition, our sponsor and our officers
and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment
ventures during the period in which we are seeking an initial business combination. Any such companies, businesses or investments
may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such
potential conflicts would materially affect our ability to complete our initial business combination.
Each of our officers and directors
presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant
to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of
our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she
has then-current fiduciary or contractual obligations to present the opportunity to such entity, he or she will honor his or her
fiduciary or contractual obligations to present such opportunity to such entity. In addition, we may, at our option, pursue an
Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary or contractual obligation.
Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise
additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated
certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer
unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company
and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to
pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal
obligation.
In addition, our founders, officers
and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest
in allocating management time among various business activities, including identifying potential business combinations and monitoring
the related due diligence. Moreover, our founders, officers and directors have, and will have in the future, time and attention
requirements for current and future investment funds, accounts, co-investment vehicles and other entities managed by RA Capital.
To the extent any conflict of interest arises between, on the one hand, us and, on the other hand, investments funds, accounts,
co-investment vehicles and other entities managed by RA Capital (including, without limitation, arising as a result of certain
of our founders, officers and directors being required to offer acquisition opportunities to such investment funds, accounts, co-investment
vehicles and other entities), RA Capital and its affiliates will resolve such conflicts of interest in their sole discretion in
accordance with their then existing fiduciary, contractual, and other duties, and there can be no assurance that such conflict
of interest will be resolved in our favor.
Any past experience and performance
of RA Capital or our management team is not a guarantee either: (1) that we will be able to successfully identify a suitable
candidate for our initial business combination; or (2) of any results with respect to any initial business combination we
may consummate. You should not rely on the historical record of RA Capital or our management team's performance as indicative of
the future performance of an investment in us or the returns we will, or are likely to, generate going forward. An investment in
us is not an investment in RA Capital. None of our sponsor, officers, directors or RA Capital has had experience with a blank check
company or special purpose acquisition company in the past.
Initial Business Combination
Nasdaq listing rules require that
our initial business combination must be with one or more target businesses that together have an aggregate fair market value equal
to at least 80% of the value of the trust account (excluding any deferred underwriters fees and taxes payable on the income earned
on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. We
refer to this as the 80% of net assets test. If our board of directors is not able to independently determine the fair market value
of the target business or businesses, we will obtain an opinion from an independent investment banking firm that is a member of
FINRA, or from an independent accounting firm, with respect to the satisfaction of such criteria.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own
shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets
of the target business in order to meet certain objectives of the prior owners of the target business, the target management team
or stockholders or for other reasons, but we will only complete such business combination if the post-transaction company owns
or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the
target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended.
Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior
to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately
prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the
post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes
of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test will
be based on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial
business combination for purposes of a tender offer or for seeking shareholder approval, as applicable.
In
addition, our sponsor has indicated an interest to purchase $25,000,000 of our shares of common stock in a private placement that
would occur concurrently with the consummation of our initial business combination. However, because indications of interest are
not binding agreements or commitments to purchase, our sponsor may determine not to purchase any such shares, or to purchase fewer
shares than it has indicated an interest in purchasing. Furthermore, we are not under any obligation to sell any such shares. If
we sell shares to our sponsor (or any other investor) in connection with our initial business combination, the equity interest
of investors in the initial public offering in the combined company may be diluted
and the market prices for our securities may be adversely affected.
Effecting our Initial Business Combination
General
We are not presently engaged in, and
we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business combination
using cash proceeds of the initial public offering, the private placements of the private placement shares, our equity, debt or
a combination of these as the consideration to be paid in our initial business combination. We may seek to complete our initial
business combination with a company or business that may be financially unstable or in its early stages of development or growth,
which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination
is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the
consideration in connection with our initial business combination or used for redemptions of our shares of Class A common
stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for
maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness
incurred in completing our initial business combination, to fund the purchase of other companies or for working capital.
We have not selected any business combination
target and we have not, nor has anyone on our behalf, initiated any substantive discussions with any business combination target.
Additionally, we have not engaged or retained any agent or other representative to select or locate any suitable acquisition candidate,
to conduct any research or take any measures, directly or indirectly, to locate or contact a target business, other than our officers
and directors.
We
may need to obtain additional financing to complete our initial business combination, either because the transaction requires more
cash than is available from the proceeds held in our trust account, or because we become obligated to redeem a significant number
of our public shares upon completion of the business combination, in which case we may issue additional securities or incur debt
in connection with such business combination. There are no prohibitions on our ability to issue securities or incur debt in connection
with our initial business combination. We are not currently a party to any arrangement or understanding with any third party with
respect to raising any additional funds through the sale of securities, the incurrence of debt or otherwise.
Sources
of Target Business
Certain members of our management team
have spent significant portions of their careers working with businesses in the healthcare industry, including the biotechnology
sector, and have developed a wide network of professional services contacts and business relationships in that industry. The members
of our board of directors also have significant executive management and public company experience with healthcare and biotechnology
companies. Our process of identifying acquisition targets will leverage our management team's unique industry experiences, proven
deal sourcing capabilities and broad and deep network of relationships in numerous industries, including executives and management
teams, private equity groups and other institutional investors, large business enterprises, lenders, investment bankers and other
investment market participants, restructuring advisers, consultants, attorneys and accountants, which we believe should provide
us with a number of business combination opportunities. We expect that the collective experience, capability and network of our
founders, directors and officers, combined with their individual and collective reputations in the investment community, will help
to create prospective business combination opportunities.
In addition, we anticipate that target
business candidates may be brought to our attention from various unaffiliated sources, including investment bankers and private
investment funds. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested
on an unsolicited basis, since many of these sources will have read this prospectus and know what types of businesses we are targeting.
Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates of which they
become aware through their business contacts as a result of formal or informal inquiries or discussions they may have, as well
as attending trade shows or conventions.
While we do not presently anticipate
engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis,
we may engage these firms or other individuals in the future, in which event we may pay a finder's fee, consulting fee or other
compensation to be determined in an arm's length negotiation based on the terms of the transaction. We will engage a finder only
to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available
to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best
interest to pursue. Payment of a finder's fee is customarily tied to completion of a transaction; in which case any such fee will
be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors,
or any entity with which they are affiliated, be paid any finder's fee, consulting fee or other compensation by the company prior
to, or for any services they render in order to effectuate, the completion of our initial business combination (regardless of the
type of transaction that it is). None of our sponsor, executive officers or directors, or any of their respective affiliates, will
be allowed to receive any compensation, finder's fees or consulting fees from a prospective business combination target in connection
with a contemplated acquisition of such target by us.
We are not prohibited from pursuing
an initial business combination with a business combination target that is affiliated with our sponsor, officers or directors,
or from making the acquisition through a joint venture or other form of shared ownership with our sponsor, officers or directors.
Although we will not be specifically focusing on, or targeting, any transactions with affiliated entities, we would pursue such
a transaction if we determined that such affiliated entity met our criteria for a business combination as set forth below and such
transaction was approved by a majority of our independent and disinterested directors. In the event we seek to complete our initial
business combination with a business combination target that is affiliated with our sponsor, executive officers or directors, we,
or a committee of independent directors, would obtain an opinion from an independent investment banking which is a member of FINRA
or an independent valuation or accounting firm, that such an initial business combination is fair to our company from a financial
point of view. We are not required to obtain such an opinion in any other context.
If any of our executive officers becomes
aware of a business combination opportunity that falls within the line of business of any entity, including private funds under
the management of RA Capital and their respective portfolio companies, to which he or she has pre-existing fiduciary or contractual
obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such
business combination opportunity to us. In addition, existing and future funds managed by RA Capital and their respective portfolio
companies may compete with us for business combination opportunities and if such opportunities are pursued by such entities, we
may be precluded from pursuing such opportunities. All of our executive officers currently have certain relevant fiduciary duties
or contractual obligations that may take priority over their duties to us. In addition, we may pursue an Affiliated Joint Acquisition
opportunity with an entity to which an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest
with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete
the acquisition by issuing to such entity a class of equity or equity-linked securities. Our second amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and
such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Evaluation of a Target Business
and Structuring of our Initial Business Combination
NASDAQ rules require that we must complete one or more
business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account
(excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of
our signing a definitive agreement in connection with our initial business combination. The fair market value of our initial business
combination will be determined by our board of directors based upon one or more standards generally accepted by the financial community,
such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation based
on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able to independently
determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking
firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria.
While we consider it unlikely that our board of directors will not be able to make an independent determination of the fair market
value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects.
We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.
Subject to this requirement, our management has virtually unrestricted flexibility in identifying and selecting one or more prospective
target businesses, although we are not permitted to effectuate our initial business combination with another blank check company
or a similar company with nominal operations.
In any case, we will only complete an initial business combination
in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If we
own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business
or businesses that are owned or acquired by the post-transaction company is what will be taken into account for purposes of NASDAQ’s
80% fair market value test.
To the extent we effect our initial
business combination with a company or business that may be financially unstable or in its early stages of development or growth
we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the
risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In evaluating a prospective target
business, we expect to conduct a thorough due diligence review which may encompass, among other things, meetings with incumbent
management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review
of financial, operational, legal and other information which will be made available to us. If we determine to move forward with
a particular target, we will proceed to structure and negotiate the terms of the business combination transaction.
The time required to select and evaluate
a target business and to structure and complete our initial business combination, and the costs associated with this process, are
not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation
of, and negotiation with, a prospective target business with which our initial business combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to complete another business combination. The company
will not pay any consulting fees to members of our management team, or any of their respective affiliates, for services rendered
to or in connection with our initial business combination.
Lack of Business Diversification
For an indefinite period of time after
the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in
one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks
of being in a single line of business. By completing our initial business combination with only a single entity, our lack of diversification
may:
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subject us to negative economic, competitive and regulatory developments,
any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business
combination; and
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cause us to depend on the marketing and sale of a single product or
limited number of products or services.
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Limited Ability to Evaluate the
Target’s Management Team
Although we intend to closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business's management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members
of our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether
any of the members of our management team will remain with the combined company will be made at the time of our initial business
combination. While it is possible that one or more of our directors will remain associated in some capacity with us following our
initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial
business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We cannot assure you that any of our
key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following a business combination, we
may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that
we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Stockholders May Not Have the
Ability to Approve Our Initial Business Combination
We may conduct redemptions without
a stockholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our second amended and restated
certificate of incorporation. However, we will seek stockholder approval if it is required by law or applicable stock exchange
rule, or we may decide to seek stockholder approval for business or other legal reasons.
Under Nasdaq's listing rules, stockholder
approval would be required for our initial business combination if, for example:
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we issue (other than in a public offering for cash) common stock that
will either (a) be equal to or in excess of 20% of the number of shares of Class A common stock then outstanding or (b) have
voting power equal to or in excess of 20% of the voting power then outstanding;
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any of our directors, officers or substantial stockholders (as defined
by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly,
in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result
in an increase in outstanding common stock or voting power of 5% or more; or
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the issuance or potential issuance of common stock will result in
our undergoing a change of control.
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The decision as to whether we will
seek stockholder approval of a proposed business combination in those instances in which stockholder approval is not required by
law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors,
including, but not limited to:
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the timing of the transaction, including in the event we determine
stockholder approval would require additional time and there is either not enough time to seek stockholder approval or doing so
would place the company at a disadvantage in the transaction or result in other additional burdens on the company;
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the expected cost of holding a stockholder vote;
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the risk that the stockholders would fail to approve the proposed
business combination;
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other time and budget constraints of the company; and
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additional legal complexities of a proposed business combination that
would be time-consuming and burdensome to present to stockholders.
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Permitted Purchases of Our Securities
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, executive officers, advisors or their affiliates may purchase shares in privately
negotiated transactions or in the open market either prior to or following the completion of our initial business combination.
However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms
or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such transactions.
If they engage in such transactions, they will not make any such purchases when they are in possession of any material non-public
information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.
In the event that our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from stockholders who have already
elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem
their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange
Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers
will comply with such rules.
The purpose of any such purchases of
shares could be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining
stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that
requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it
appears that such requirement would otherwise not be met. Any such purchases of our shares may result in the completion of our
initial business combination that may not otherwise have been possible.
In addition, if such purchases are
made, the public "float" of our shares of Class A common stock may be reduced and the number of beneficial holders
of our shares of Class A common stock may be reduced, which may make it difficult to maintain or obtain the quotation, listing
or trading of our Class A common stock on a national securities exchange.
Our sponsor, officers, directors and/or
their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders (in the case of shares of Class A common stock) following our mailing of proxy materials in connection
with our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter
into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election
to redeem their shares for a pro rata share of the trust account or vote against our initial business combination, whether or not
such stockholder has already submitted a proxy with respect to our initial business combination but only if such shares have not
already been voted at the stockholder meeting related to our initial business combination. Our sponsor, executive officers, directors,
advisors or any of their affiliates will select which stockholders to purchase shares from based on the negotiated price and number
of shares and any other factors that they may deem relevant, and will only purchase shares if such purchases comply with Regulation M
under the Exchange Act and the other federal securities laws.
Our sponsor, officers, directors and/or
their affiliates will not make purchases of shares if the purchases would violate Section 9(a)(2) or Rule 10b-5
of the Exchange Act. 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.
Redemption Rights for Stockholders
upon Completion of Our Initial Business Combination
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
as of two business days prior to the consummation of the initial business combination including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares,
subject to the limitations described herein. Our sponsor and our directors and executive
officers have also agreed (A) that they will not propose any amendment to our second amended and restated certificate of incorporation
that would modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial
business combination within 24 months from the closing of the initial 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 shares and (B) to waive their redemption rights with respect to their founder shares,
any private placement shares and any public shares they may acquire during or after the initial public offering in connection with
the completion of our initial business combination. However, if our sponsor or members of our management team acquire public shares
after the initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such
public shares if we fail to consummate an initial business combination within 24 months from the closing of the initial public
offering.
Limitations on Redemptions
Our
second 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 (so that we are not subject to the SEC's "penny stock"
rules). However, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners,
(ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention
of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate
cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate
amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A
common stock submitted for redemption will be returned to the holders thereof.
Manner of Conducting Redemptions
We
will provide our stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the
business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a
proposed business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety
of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder
approval under applicable law or stock exchange listing requirement or whether we were deemed to be a foreign private issuer (which
would require a tender offer rather than seeking stockholder approval under SEC rules). Asset acquisitions and stock purchases
would not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions
where we issue more than 20% of our outstanding common stock or seek to amend our second amended and restated certificate of incorporation
would require stockholder approval. We currently intend to conduct redemptions in connection with a stockholder vote unless stockholder
approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions pursuant
to the tender offer rules of the SEC for business or other legal reasons.
If we held a stockholder vote to approve
our initial business combination, we will, pursuant to our second amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant
to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules;
and
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file proxy materials with the SEC.
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In the event that we seek stockholder
approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, we
will complete our initial business combination only if a majority of the shares of Class A common stock voted, on an as converted
basis, are voted in favor of the business combination. In such case, our sponsor and our directors and executive officers have
agreed to vote the founder shares and private placement shares and any public shares purchased by them after the initial public
offering in favor of our initial business combination. As a result, in addition to the founder shares and private placement shares,
we would need 4,853,051, or 35.8%, of the 13,570,000 public shares sold in the initial public offering to be voted in favor of
an initial business combination in order to have our initial business combination approved (assuming all outstanding shares are
voted and the over-allotment option is not exercised). Each stockholder may elect to redeem their public shares irrespective of
whether they vote for or against the proposed transaction. In addition, our sponsor and our directors and executive officers have
entered into an agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder
shares, private placement shares and public shares in connection with the completion of a business combination.
If we conduct redemptions pursuant
to the tender offer rules of the SEC, we will, pursuant to our second amended and restated certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E
of the Exchange Act, which regulate issuer tender offers; and
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file tender offer documents with the SEC prior to completing our initial
business combination which contain substantially the same financial and other information about the initial business combination
and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement of our
initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase
shares of Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply
with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under
the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender
offer period. In addition, the tender offer will be conditioned on stockholders not tendering more than the number of public shares
we are permitted to redeem. If stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer
and not complete the initial business combination.
Limitation on Redemption upon Completion
of Our Initial Business Combination If We Seek Stockholder Approval
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 second amended and restated certificate of incorporation provides that a stockholder, together with
any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a "group"
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to Excess
Shares. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts
by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to
force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable
terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in the initial public
offering could threaten to exercise its redemption rights if such holder's shares are not purchased by us, our sponsor or our management
at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders' ability to redeem no
more than 15% of the shares sold in the initial public offering without our prior consent, we believe we will limit the ability
of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly
in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth or
a certain amount of cash.
However, we would not be restricting
our stockholders' ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering Share Certificates in
Connection with Redemption Rights or a Tender Offer
Public stockholders seeking to exercise
their redemption rights, whether they are record holders or hold their shares in "street name," will be required to either
tender their certificates (if any) to our transfer agent prior to the date set forth in the proxy solicitation or tender offer
materials, as applicable, mailed to such holders, or to deliver their shares to the transfer agent electronically using The Depository
Trust Company's DWAC (Deposit/ Withdrawal At Custodian) System, at the holder's option, in each case up to two business days prior
to the initially scheduled vote to approve the business combination. The proxy solicitation or tender offer materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will indicate the applicable
delivery requirements, which will include the requirement that a beneficial holder must identify itself in order to validly redeem
its shares. Accordingly, a stockholder would have from the time we send out our tender offer materials up to two days prior to
the vote on the business combination to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively
short period in which to exercise redemption rights, it is advisable for stockholders to use electronic delivery of their public
shares.
There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System.
The transfer agent will typically charge the tendering broker a fee of approximately $80.00 and it would be up to the broker whether
or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require
holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising
redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the
procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations,
many blank check companies would distribute proxy materials for the stockholders' vote on an initial business combination, and
a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was
seeking to exercise their redemption rights. After the business combination was approved, the company would contact such stockholder
to arrange for them to deliver their certificate to verify ownership.
As a result, the stockholder then had
an "option window" after the completion of the business combination during which he or she could monitor the price of
the company's shares in the market. If the price rose above the redemption price, they could sell their shares in the open market
before actually delivering their shares to the company for cancellation. As a result, the redemption rights, to which stockholders
were aware they needed to commit before the stockholder meeting, would become "option" rights surviving past the completion
of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery
prior to the meeting ensures that a redeeming stockholder's election to redeem is irrevocable once the business combination is
approved.
Any request to redeem such shares,
once made, may be withdrawn at any time up to two business days prior to the vote on the proposal to approve the business combination,
unless otherwise agreed to by us. Furthermore, if a holder of a public share delivered its certificate in connection with an election
of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may
simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion
of our initial business combination.
If our initial business combination
is not approved or completed for any reason, then our stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any
certificates delivered by public holders who elected to redeem their shares.
If our initial proposed business combination
is not completed, we may continue to try to complete a business combination with a different target until 24 months from the
closing of the initial public offering.
Redemption of Public Shares and
Liquidation If No Initial Business Combination
Our second amended and restated certificate
of incorporation provides that we will have only 24 months from the closing of the initial public offering to consummate an
initial business combination. If we are unable to consummate an initial business combination within 24 months from the closing
of the initial public offering, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest
to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding public shares, which redemption
will completely extinguish public stockholders' rights as stockholders (including the right to receive further liquidation distributions,
if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to
our obligations to provide for claims of creditors and the requirements of other applicable law.
Our sponsor and our directors and executive
officers have entered into an agreement with us, pursuant to which they have waived their rights to liquidating distributions from
the trust account with respect to its founder shares and private placement shares if we fail to consummate an initial business
combination within 24 months from the closing of the initial public offering. However, if our sponsor or members of our management
team acquire public shares in or after the initial public offering, they will be entitled to liquidating distributions from the
trust account with respect to such public shares if we fail to consummate an initial business combination within 24 months
from the closing of the initial public offering.
Our sponsor and our directors and executive
officers have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our second 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 an initial business combination within 24 months from the closing of the initial 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 public shares upon approval of any such amendment at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of
taxes payable), divided by the number of then outstanding public shares. However, we may not redeem our public shares in an amount
that would cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC's "penny stock"
rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot
satisfy the net tangible asset requirement, we would not proceed with the amendment or the related redemption of our public shares
at such time. This redemption right shall apply in the event of the approval of any such amendment, whether proposed by our sponsors,
any executive officer, director or director nominee, or any other person.
We expect that all costs and expenses
associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts held outside
the trust account, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds
are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, we may request the trustee
to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net
proceeds of the initial public offering, other than the proceeds deposited in the trust account, and without taking into account
interest, if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would
be $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which would
have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount
received by stockholders will not be less than $10.00. While we intend to pay such amounts, if any, we cannot assure you that we
will have funds sufficient to pay or provide for all creditors' claims.
Although we will seek to have all vendors,
service providers (excluding our independent registered public accounting firm), prospective target businesses and other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements
or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but
not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including
the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held
in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement
with a third party that has not executed a waiver if management believes that such third party's engagement would be significantly
more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to
be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. The underwriters will not execute agreements with us waiving such claims
to the monies held in the trust account. In addition, there is no guarantee that such entities will agree to waive any claims they
may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse
against the trust account for any reason. In order to protect the amounts held in the trust account, our sponsor has agreed that
it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective
target business with which we have discussed entering into a transaction agreement, reduce the amounts 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, in each case less taxes payable, provided that such liability will not apply to any claims by a third party who executed
a waiver of any and all rights to seek access to the trust account nor will it apply to any claims under our indemnity of the underwriters
of the initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an
executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to the extent of any liability
for such third party claims. 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 our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses.
In the event that the proceeds in the
trust account are reduced below 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, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its indemnification
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance.
Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be
less than $10.00 per share.
We seek to reduce the possibility that
our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers
(excluding our independent registered public accounting firm), prospective target businesses or other entities with which we do
business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of the initial public offering against
certain liabilities, including liabilities under the Securities Act.
If we file a bankruptcy petition
or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be
subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with
priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you
we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be
viewed under applicable debtor/creditor and/or bankruptcy laws as either a "preferential transfer" or a "fraudulent
conveyance." As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore,
our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith,
and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account
prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our
public shares if we do not consummate an initial business combination within 24 months from the closing of the initial
public offering, (ii) in connection with a stockholder vote to amend our second 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 an initial business combination within 24 months from the closing of the initial public offering
or with respect to any other material provisions relating to stockholders' rights or pre-initial business combination activity
or (iii) if they redeem their respective shares for cash upon the completion of the initial business combination. In no other
circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder
approval in connection with our initial business combination, a stockholder's voting in connection with the business combination
alone will not result in a stockholder's redeeming its shares to us for an applicable pro rata share of the trust account. Such
stockholder must have also exercised its redemption rights described above. These provisions of our second amended and restated
certificate of incorporation, like all provisions of our second amended and restated certificate of incorporation, may be amended
with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter intense competition
from other entities having a business objective similar to ours, including other blank check companies, private equity groups and
leveraged buyout funds, public companies, operating businesses seeking strategic acquisitions. Many of these entities are well
established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover,
many of these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger
target business will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing
the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our stockholders who exercise
their redemption rights may reduce the resources available to us for our initial business combination and the future dilution they
potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive
disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters
but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business
combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the stage of the business combination process we are in. We do not intend to have any
full time employees prior to the completion of our initial business combination.
Item 1A. Risk Factors
You should carefully consider all
of the following risk factors and all of the other information contained in this Report, including the financial statements. If
any of the following risks occur, our business, financial condition or results of operations may be materially and adversely affected.
In that event, the trading price of our securities could decline, and you could lose all or part of your investment. The risk factors
described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and
our business.
We are a recently formed company
with no operating history and no revenues (other than interest earned on the funds held in the Trust Account), and you have no
basis on which to evaluate our ability to achieve our business objective.
We are a recently formed company with
no operating results. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our
business objective of completing our initial business combination with one or more target businesses. We may be unable to complete
our business combination. If we fail to complete our business combination, we will never generate any operating revenues.
Past performance by RA Capital,
including our management team, may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with, RA Capital is presented for informational purposes only. Any past experience
and performance of RA Capital or our management team is not a guarantee either: (1) that we will be able to successfully identify
a suitable candidate for our initial business combination; or (2) of any results with respect to any initial business combination
we may consummate. You should not rely on the historical record of RA Capital or our management team's performance as indicative
of the future performance of an investment in us or the returns we will, or are likely to, generate going forward. An investment
in us is not an investment in RA Capital. None of our sponsor, officers, directors or RA Capital has had experience with a blank
check company or special purpose acquisition company in the past.
We are dependent upon our executive
officers and directors and their loss would adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.
We believe that our success depends on the continued service of our officers and directors, at least until we have completed our
initial business combination. In addition, our executive officers and directors are not required to commit any specified amount
of time to our affairs and, accordingly, will have conflicts of interest in allocating 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 executive officers. The unexpected loss of the services of one
or more of our directors or executive officers could have a detrimental effect on us.
Our search for a business combination,
and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the
recent COVID-19 coronavirus pandemic and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced, which has and is continuing to spread throughout
the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the COVID-
19 coronavirus disease a "Public Health Emergency of International Concern." On January 31, 2020, U.S. Health and
Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare
community in responding to COVID-19, and on March 11, 2020, the World Health Organization characterized the outbreak as a
"pandemic." COVID-19 could materially and adversely affect the business of any potential target business with which we
consummate a business combination. Furthermore, we may be unable to complete a business combination if continued concerns relating
to COVID-19 restrict travel, limit the ability to have meetings with potential investors, if the target company's personnel, vendors
and service providers are unavailable to negotiate and consummate a transaction in a timely manner, or if COVID-19 causes a prolonged
economic downturn. The extent to which COVID-19 impacts our search for a business combination will depend on future developments,
which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19
and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of
global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations of
a target business with which we ultimately consummate a business combination, may be materially adversely affected.
In addition, our ability to consummate
a business combination may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and
other events.
Because we intend to seek a business
combination with a target business in the healthcare industry, we expect our future operations to be subject to risks associated
with the healthcare industry.
Healthcare and biotechnology related
companies are generally subject to greater governmental regulation than most other industries at the U.S. state and federal levels,
and internationally. In recent years, both local and national governmental budgets have come under pressure to reduce spending
and control healthcare costs, which could both adversely affect regulatory processes and public funding available for healthcare
products, services and facilities. In March 2010, comprehensive healthcare reform legislation was enacted in the United States.
These laws are intended to increase health insurance coverage through individual and employer mandates, subsidies offered to lower
income individuals, tax credits available to smaller employers and broadening of Medicaid eligibility.
While one intent of healthcare reform
is to expand health insurance coverage to more individuals, it may also involve additional regulatory mandates and other measures
designed to constrain medical costs, including coverage and reimbursement for healthcare services. Healthcare reform has had a
significant impact on the healthcare industry in the United States and consequently has the ability to affect companies within
the healthcare industry and the biotechnology sector. The ultimate effects of federal healthcare reform or any future legislation
or regulation, or healthcare initiatives, if any, on the healthcare industry, including the biotechnology sector, whether implemented
at the federal or state level or internationally, cannot be predicted with certainty and such reform, legislation, regulation or
initiatives may adversely affect the performance of a potential business combination.
Changes in governmental policies may
have a material effect on the demand for or costs of certain products and services. A healthcare or biotechnology related company
must receive government approval before introducing new drugs and medical devices or procedures. This process may delay the introduction
of these products and services to the marketplace, resulting in increased development costs, delayed cost recovery and loss of
competitive advantage to the extent that rival companies have developed competing products or procedures, adversely affecting the
company's revenues and profitability. Failure to obtain governmental approval of a key drug or device or other regulatory action
could have a material adverse effect on the business of a target company. Additionally, expansion of facilities by healthcare related
providers is subject to "determinations of need" by the appropriate government authorities. This process not only increases
the time and cost involved in these expansions, but also makes expansion plans uncertain, limiting the revenue and profitability
growth potential of healthcare related facilities operators.
Certain healthcare and biotechnology
related companies depend on the exclusive rights or patents for the products they develop and distribute. Patents have a limited
duration and, upon expiration, other companies may market substantially similar "generic" products that are typically
sold at a lower price than the patented product, causing the original developer of the product to lose market share and/or reduce
the price charged for the product, resulting in lower profits for the original developer. As a result, the expiration of patents
may adversely affect the profitability of these companies. The profitability of healthcare and biotechnology related companies
may also be affected, among other factors, by restrictions on government reimbursement for medical expenses, rising or falling
costs of medical products and services, pricing pressure, an increased emphasis on outpatient services, a limited product offering,
industry innovation, changes in technologies and other market developments. Finally, because the products and services of healthcare
and biotechnology related companies affect the health and well-being of many individuals, these companies are especially susceptible
to product liability lawsuits.
The healthcare industry and the biotechnology
sector spend heavily on research and development. Research findings (e.g., regarding side effects or comparative benefits
of one or more particular treatments, services or products) and technological innovation (together with patent expirations) may
make any particular treatment, service or product less attractive if previously unknown or underappreciated risks are revealed,
or if a more effective, less costly or less risky solution is or becomes available. Any such development could have a material
adverse effect on the companies that are target businesses for investment.
The requirement that the target
business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds
in the trust account (excluding any taxes payable) at the time of the execution of a definitive agreement for our initial business
combination may limit the type and number of companies with which we may complete such a business combination.
Nasdaq
rules and our certificate of incorporation require that the target business or businesses that we acquire must collectively
have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding any taxes payable) at
the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and
number of companies that we may complete a business combination with. If we are unable to locate a target business or businesses
that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata
portion of the funds in the trust account, which may be less than $10.00 per share.
Our public stockholders may not
be afforded an opportunity to vote on our proposed business combination, which means we may consummate our initial business combination
even though a majority of our public stockholders do not support such a combination.
If
a stockholder vote is not required, we may conduct redemptions via a tender offer. Accordingly, we may consummate our initial business
combination even if holders of a majority of our public shares do not approve the business combination.
Your only opportunity to affect
the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your
shares from us for cash.
At the time of your investment in us,
you will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Because
our board of directors may consummate our initial business combination without seeking stockholder approval, public stockholders
may not have the right or opportunity to vote on the business combination. Accordingly, your only opportunity to affect the investment
decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time
(which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we
describe our business combination.
If we seek shareholder approval
of our initial business combination, our sponsor has agreed to vote in favor of such initial business combination, regardless of
how our public stockholders vote.
Our sponsor owns 22% of our outstanding
common stock immediately following the completion of our initial public offering. Our sponsor also may from time to time purchase
shares of Class A common stock prior to our initial business combination. Our amended and restated certificate of incorporation
provides that, if we seek stockholder approval of an initial business combination, such initial business combination will be approved
if we receive the affirmative vote of a majority of the shares voted at such meeting, including the founder shares. As a result,
in addition to our sponsor's founder shares and the private placement shares, we would need 4,853,051, or 35.8%, of the 13,570,000
public shares sold in our initial public offering to be voted in favor of an initial business combination in order to have our initial business
combination approved (assuming all outstanding shares are voted and the over-allotment option is not exercised). Accordingly, if
we seek stockholder approval of our initial business combination, the agreement by our sponsor to vote in favor of our initial
business combination will increase the likelihood that we will receive the requisite shareholder approval for such 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 our initial business combination with a target.
We may enter into a transaction agreement
with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If
too many public stockholders exercise their redemption rights, we may 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 such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for an
alternate business combination. Prospective targets would be aware of these risks and, thus, may be reluctant to enter into our
initial business combination transaction with us.
The ability of a large number of
our stockholders to exercise redemption rights may not allow us to consummate the most desirable business combination or optimize
our capital structure.
In connection with the successful consummation
of our business combination, we may redeem up to that number of shares of common stock that would permit us to maintain net tangible
assets of $5,000,001. If our business combination requires us to use substantially all of our cash to pay the purchase price, the
redemption threshold may be further limited. Alternatively, we may need to arrange third party financing to help fund our business
combination in case a larger percentage of stockholders exercise their redemption rights than we expect. If the acquisition involves
the issuance of our shares as consideration, we may be required to issue a higher percentage of our shares to the target or its
stockholders to make up for the failure to satisfy a minimum cash requirement. Raising additional funds to cover any shortfall
may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to
effectuate the most attractive business combination available to us.
The requirement that we maintain
a minimum net worth or retain a certain amount of cash could increase the probability that we cannot consummate our business combination
and that you would have to wait for liquidation in order to redeem your shares.
If, pursuant to the terms of our proposed
business combination, we are required to maintain a minimum net worth or retain a certain amount of cash in trust in order to consummate
the business combination and regardless of whether we proceed with redemptions under the tender offer or proxy rules, the probability
that we cannot consummate our business combination is increased. If we do not consummate our business combination, you would not
receive your pro rata portion of the trust account until we liquidate. 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 in our trust account. In either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your shares
in the open market.
The requirement that we complete
our initial business combination within 24 months from the closing of our initial public offering may give potential target businesses leverage
over us in negotiating our initial business combination.
Any potential target business with
which we enter into negotiations concerning our initial business combination will be aware that we must consummate our initial
business combination within 24 months from the closing of our initial public offering. Consequently, such target businesses may obtain leverage
over us in negotiating our initial business combination, knowing that if we do not complete our initial business combination with
that particular target business, we may be unable to complete our initial business combination with any target business. This risk
will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence
and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to consummate
our initial business combination within the required time period, in which case we would cease all operations except for the purpose
of winding up and we would redeem our public shares and liquidate.
We may not be able to find a
suitable target business and consummate an initial business combination within 24 months after the closing of our
initial 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 consummated an
initial business combination within such applicable 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 (less up to $100,000 of interest to pay dissolution expenses and net of taxes payable), divided by the
number of then outstanding public shares, which redemption will completely extinguish public stockholders' rights as
stockholders (including the right to receive further liquidation distributions, if any); and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of
directors, 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 the requirements of other applicable law.
If we seek stockholder approval
of our business combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from
stockholders, in which case they may influence a vote in favor of a proposed business combination that you do not support.
If we seek stockholder approval of
our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer
rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares or equity-linked securities in privately
negotiated transactions or in the open market either prior to or following the consummation of our initial business combination.
Such purchases will not be made if our sponsor, directors, officers, advisors or their affiliates are in possession of any material
non-public information that has not been disclosed to the selling stockholder, although they are under no obligation to do so.
However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for any such transactions. In the event 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. It is intended that, if Rule 10b-18 would apply to purchases by our sponsor, directors, officers, advisors or their
affiliates, then such purchases will comply with Rule 10b-18 under the Exchange Act, to the extent it applies, which provides
a safe harbor for purchases made under certain conditions, including with respect to timing, pricing and volume of purchases.
The purpose of such purchases would
be to (1) increase the likelihood of obtaining stockholder approval of the business combination or (2) satisfy a closing
condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing
of the business combination, where it appears that such requirement would otherwise not be met. This may result in the consummation
of an initial business combination that may not otherwise have been possible.
Purchases of shares of common stock
in the open market or in privately negotiated transactions by our sponsor, directors, officers, advisors or their affiliates may
make it difficult for us to maintain the listing of our shares on a national securities exchange following the consummation of
an initial business combination.
If our sponsor, directors, officers,
advisors or their affiliates purchase shares of common stock in the open market or in privately negotiated transactions, the public
"float" of our shares of common stock and the number of beneficial holders of our securities would both be reduced, possibly
making it difficult to maintain the listing or trading of our securities on a national securities exchange following consummation
of the business combination.
If a shareholder fails to receive
notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the
procedures for tendering its shares, such shares may not be redeemed.
We will comply with the 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 shareholder fails to receive our proxy solicitation or tender offer materials, as applicable,
such shareholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer
materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination
will describe the various procedures that must be complied with in order to validly redeem or tender public shares. In the event
that a shareholder fails to comply with these procedures, its shares may not be redeemed. See " Effecting Our Initial Business
Combination — Tendering Share Certificates in Connection with a Tender Offer or Redemption Rights."
You will not have any rights or
interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore,
you may be forced to sell your public shares, potentially at a loss.
Our public stockholders shall be
entitled to receive funds from the trust account only in the event of a redemption to public stockholders prior to any
winding up in the event we do not consummate our initial business combination or our liquidation, if they redeem their shares
in connection with an initial business combination that we consummate or if we seek to amend our certificate of incorporation
to modify the substance or timing of our redemption obligation to redeem all public shares if we cannot complete an initial
business combination within 24 months of the closing of our initial public offering or with respect to any other
material provisions relating to stockholders' rights or pre-initial business combination activity. In no other circumstances
will a stockholder have any right or interest of any kind to the funds in the trust account. Accordingly, to liquidate your
investment, you may be forced to sell your public shares, potentially at a loss.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Because the net proceeds of our initial public offering
are intended to be used to complete our initial business combination with a target business that has not been identified, we may
be deemed to be a "blank check" company under the United States securities laws. However, because we have net tangible
assets in excess of $5,000,000, 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, offerings subject to Rule 419 would prohibit the release of any interest earned on funds held in the trust account
to us.
If we seek stockholder approval
of our 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 common stock, you will lose the ability to redeem all such
shares in excess of 15% of our shares of common stock.
If we seek stockholder approval of
our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the
tender offer rules, our certificate of incorporation provides that a public stockholder, individually or together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a "group" (as defined under
Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate
of 15% of the shares sold in our initial public offering. Your inability to redeem more than an aggregate of 15% of the shares sold in our initial public offering
will reduce your influence over our ability to consummate our initial business combination and you could suffer a material loss
on your investment in us if you sell such excess shares in open market transactions. As a result, you will continue to hold that
number of shares exceeding 15% and, in order to dispose of such shares, you would be required to sell your shares in open market
transaction, potentially at a loss.
If the net proceeds of our initial public offering
not being held in the trust account are insufficient to allow us to operate for at least the next 24 months, we may be unable
to complete our initial business combination.
The funds available to us outside of
the trust account may not be sufficient to allow us to operate for at least the next 24 months, assuming that our initial
business combination is not consummated during that time. Of the funds available to us, we could use a portion of the funds available
to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as
a down payment or to fund a "no-shop" provision (a provision in letters of intent designed to keep target businesses
from "shopping" around for transactions with other companies on terms more favorable to such target businesses) with
respect to a particular proposed business combination, although we do not have any current intention to do so. If we are unable
to fund such down payments or "no shop" provisions, our ability to close a contemplated transaction could be impaired.
Furthermore, if we entered into a letter of intent where we paid for the right to receive exclusivity from a target business and
were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient
funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to complete our
initial business combination, our public stockholders may only receive a pro rata portion of the amount then in the trust account
(which may be less than $10.00 per share) (whether or not the underwriters' over-allotment option is exercised in full) on our
redemption.
Subsequent to our consummation of
our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges.
Even if we conduct thorough due diligence
on a target business with which we combine, this diligence may not surface all material issues that may be present inside a particular
target business. And, regardless of how comprehensive our diligence may be, factors outside of the target business and outside
of our control may arise later. As a result of these factors, we may be forced to later write-down
or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses.
Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize
in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an
immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions
about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we
may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination
debt financing.
Our directors may decide not to
enforce indemnification obligations against 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 $10.00 per share (whether or not the underwriters' overallotment option is exercised in full) 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 on our behalf whether to take legal action against our sponsor to enforce its
indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against
our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their
business judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these
indemnification obligations on our behalf, the amount of funds in the trust account available for distribution to our public stockholders
may be reduced below $10.00 per share.
Unlike some other similarly structured
special purpose acquisition companies, our sponsor will receive additional shares of Class A common stock if we issue certain
shares to consummate an initial business combination.
The founder shares will automatically
convert into shares of Class A common stock concurrently with or immediately following the consummation of our initial business
combination on a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations
and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock
or equity-linked securities are issued or deemed issued in connection with our initial business combination, the number of shares
of Class A common stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as converted basis,
20% of the total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions
of shares of Class A common stock by public stockholders). This amount will include the total number of shares of Class A
common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued
or deemed issued, by the Company in connection with or in relation to the consummation of the initial business combination, but
will exclude any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into
shares of Class A common stock issued, or to be issued, to any seller in the initial business combination, provided that such
conversion of founder shares will never occur on a less than one-for-one basis. This is different than some other similarly structured
special purpose acquisition companies in which the initial stockholders will only be issued an aggregate of 20% of the total number
of shares to be outstanding prior to our initial business combination.
Our executive officers and directors
will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to
devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for a business combination and their other
businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination. Each
of our executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation,
and our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent
directors also serve as officers and board members for other entities. If our executive officers' and directors' other business
affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could
limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business
combination.
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, including private funds under the management of RA Capital and their respective
portfolio companies, pursuant to which such officer or director is or will be required to present a business combination opportunity
to such entity. In addition, existing and future funds managed by RA Capital and their respective portfolio companies may compete
with us for business combination opportunities and, if such opportunities are pursued by such entities, we may be precluded from
pursuing such opportunities. Accordingly, they may have conflicts of interest in determining to which entity a particular business
opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented
to another entity prior to its presentation to us. Our amended and restated certificate of incorporation 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 such opportunity is one we are legally and contractually
permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted
to refer that opportunity to us without violating another legal obligation. In addition, our sponsor and our officers and directors
may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business or investment ventures
during the period in which we are seeking an initial business combination. Any such companies, businesses or ventures may present
additional conflicts of interest in pursuing an initial business combination. However, we do not believe that any such potential
conflicts would materially affect our ability to complete our initial business combination.
Our executive officers, directors,
security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly
prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial
interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors or
executive officers, although we do not intend to do so, or we may acquire a target business through an Affiliated Joint Acquisition
with one or more affiliates of RA Capital and/or one or more investors in RA Capital funds. Nor do we have a policy that expressly
prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly,
such persons or entities may have a conflict between their interests and ours. In particular, certain of the RA Capital funds are
focused on investments in the healthcare industry, in particular the biotechnology sector. As a result, there may be substantial
overlap between companies that would be a suitable business combination for us and companies that would make an attractive target
for the RA Capital funds. In addition, our amended and restated certificate of incorporation provides that we renounce our interest
in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely
in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer
that opportunity to us without violating another legal obligation.
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 may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, executive officers,
directors or existing holders which may raise potential conflicts of interest.
In light of the involvement of our
sponsor, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated with
our sponsor, executive 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 as set forth in " Effecting
our initial business combination — Selection of a target business and structuring of our initial business combination"
and such transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain
an opinion from an independent investment banking firm which 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, executive officers, directors or existing holders, potential conflicts of interest still may exist
and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be
absent any conflicts of interest.
Moreover, we may pursue an Affiliated
Joint Acquisition opportunity with one or more affiliates of RA Capital and/or one or more investors in RA Capital. Any such parties
may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds
to complete the business combination by issuing to such parties a class of equity or equity-linked securities. Accordingly, such
persons or entities may have a conflict between their interests and ours.
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 restrictions on the nature of our investments
and restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
In addition, we may have imposed upon us burdensome requirements, including registration as an investment company, adoption of
a specific form of corporate structure and reporting, record keeping, voting, proxy and disclosure requirements and other rules and
regulations. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens
would require additional expenses for which we have not allotted funds and may hinder our ability to consummate our initial business
combination.
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 or warrant holders do not agree.
Our amended and restated certificate
of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares
in an amount that would cause our net tangible assets to be less than $5,000,001. 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
in connection with such initial business combination, 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.
Changes in laws or regulations,
or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations
enacted by national, regional and local governments, in particular, the Securities and Exchange Commission, or the SEC. 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 also may change from time to time and those changes could have a material adverse effect
on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as
interpreted and applied, could have a material adverse effect on our business and results of operations.
If we are unable to consummate our
initial business combination, our public stockholders may be forced to wait up to 24 months or longer before redemption from
our trust account.
If we are unable to consummate
our initial business combination within 24 months from the closing of our initial public offering, we will, as promptly
as reasonably possible but not more than five business days thereafter (subject to our certificate of incorporation and
applicable law), distribute the aggregate amount then on deposit in the trust account (net of taxes payable), pro rata to our
public stockholders by way of redemption and cease all operations except for the purposes of winding up of our affairs by way
of a voluntary liquidation, as further described herein. Any redemption of public stockholders from the trust account shall
be effected as required by our certificate of incorporation prior to our commencing any voluntary liquidation. Except as
otherwise described herein, we have no obligation to return funds to investors prior to the date of any redemption required
as a result of our failure to consummate our initial business combination within the period described above or our
liquidation, unless we consummate our initial business combination prior thereto and only then in cases where investors have
sought to redeem their shares of common stock. Only upon any such redemption of public shares as we are required to effect,
or any liquidation, will public stockholders be entitled to distributions if we are unable to complete our initial business
combination.
The grant of registration rights
to our sponsor 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 common stock.
Pursuant to an agreement to be entered
into on the date of this prospectus, our sponsor (and/or our sponsor's designees) and their permitted transferees can demand that
we register the founder shares, the underlying securities and any securities issued upon conversion of working capital loans. 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 shares of 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 stockholder 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 shares of common stock that is expected to occur when the securities owned
by our sponsor, holders of our private units or their respective permitted transferees are registered.
Because we have not selected a particular
business or specific geographic location or any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business' operations.
Although we have a stated focus on
certain target businesses in a specific geographic location as indicated elsewhere in this prospectus, we may pursue acquisition
opportunities in any geographic region. While we may pursue an acquisition opportunity in any business industry or sector, we intend
to initially focus on those industries or sectors that complement our management team's background. Except for the limitations
that a target business have a fair market value of at least 80% of the value of the trust account (excluding any taxes payable)
and that we are not permitted to effectuate our initial business combination with another blank check company or similar company
with nominal operations, we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition
candidate. Because we have not yet identified or approached any specific target business with respect to our initial business combination,
there is no basis to evaluate the possible merits or risks of any particular target business' operations, results of operations,
cash flows, liquidity, financial condition or prospects. To the extent we consummate 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 may not properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our
control and thus leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
In addition, investors will be relying on the business judgment of our board of directors, which will have significant discretion
in choosing the standard used to establish the fair market value of a particular target business. An investment in our units may
not ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in an acquisition
target.
We may seek investment opportunities
outside our management's area of expertise and our management may not be able to adequately ascertain or assess all significant
risks associated with the target company.
There is no limitation on the industry
or business sector we may consider when contemplating our initial business combination. We may therefore be presented with a business
combination candidate in an industry unfamiliar to our management team, but determine that such candidate offers an attractive
investment opportunity for our company. In the event we elect to pursue an investment outside of our management's expertise, our
management's experience may not be directly applicable to the target business or their evaluation of its operations.
Although we 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 specific
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 consummate 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 our initial 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 the Nasdaq,
or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder
approval of our initial business combination if the target business does not meet our general criteria and guidelines. If we are
unable to complete our initial business combination, our public stockholders may only receive $10.00 per share or even less (whether
or not the underwriters' over-allotment option is exercised in full) on our redemption.
Management's flexibility in identifying
and selecting a prospective acquisition candidate, along with our management's financial interest in consummating our initial business
combination, may lead management to enter into an acquisition agreement that is not in the best interest of our stockholders.
Subject to the requirements in Nasdaq
rules and our certificate of incorporation that we must complete one or more business combinations having an aggregate fair
market value of at least 80% of the value of the trust account (excluding any taxes payable) at the time of the agreement to enter
into such initial business combination, we will have virtually unrestricted flexibility in identifying and selecting a prospective
acquisition candidate. Investors will be relying on management's ability to identify business combinations, evaluate their merits,
conduct or monitor diligence and conduct negotiations. Management's flexibility in identifying and selecting a prospective acquisition
candidate, along with management's financial interest in consummating our initial business combination, may lead management to
enter into an acquisition agreement that is not in the best interest of our stockholders, which would be the case if the trading
price of our shares of common stock after giving effect to such business combination was less than the per-share trust liquidation
value that our stockholders would have received if we had dissolved without consummating our initial business combination.
We are not required to obtain an
opinion from an independent investment banking firm, and consequently, an independent source may not confirm that the price we
are paying for the business is fair to our stockholders from a financial point of view.
Unless we consummate our initial business
combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that
the price we are paying is fair to our stockholders from a financial point of view. If no opinion is obtained, our stockholders
will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted
by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials,
as applicable, related to our initial business combination.
Resources could be wasted in researching
acquisitions that are not consummated.
We anticipate that the investigation
of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and
other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others.
If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction
likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to consummate
our initial business combination for any number of reasons including those beyond our control. Any such event will result in a
loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate and acquire or
merge with another business. If we are unable to complete our initial business combination, our public stockholders may only receive
$10.00 per share or even less (whether or not the underwriters' over-allotment option is exercised in full) on our redemption.
Our ability to successfully effect
our initial business combination and to be successful thereafter will be largely dependent upon the efforts of our officers, directors
and key personnel, some of whom may join us following our initial business combination.
Our operations are dependent upon a
relatively small group of individuals and, in particular, our officers and directors. We believe that our success depends on the
continued service of our officers and directors, at least until we have consummated 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 management time among various business activities, including identifying potential business combinations
and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any
of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental
effect on us.
The role of such persons in the target
business, however, cannot presently be ascertained. Although some of such persons 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, our assessment of these individuals may not 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.
Members of our management team may
negotiate employment or consulting agreements with a target business in connection with a particular business combination. These
agreements may provide for them to receive compensation following our business combination and as a result, may cause them to have
conflicts of interest in determining whether a particular business combination is the most advantageous.
Members of our management team may
be able to remain with the company after the completion of our business combination only if they are able to negotiate employment
or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the
negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the business combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe
the ability of such individuals to remain with us after the completion of our business combination will not be the determining
factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however,
that any members of our management team will remain with us after the completion of our business combination. We cannot assure
you that any members of our management team will remain in senior management or advisory positions with us. The determination as
to whether any members of our management team will remain with us will be made at the time of our initial business combination.
We may have a limited ability to
assess the management of a prospective target business and, as a result, may effectuate 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' management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target's management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should
the target's management not possess the skills, qualifications or abilities necessary to manage a public company, the operations
and profitability of the post-combination business may be negatively impacted.
The officers and directors of an
acquisition candidate may resign upon consummation of our initial business combination. The loss of an acquisition target's key
personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate's
key personnel upon the consummation of our initial business combination cannot be ascertained at this time. Although we contemplate
that certain members of an acquisition candidate's management team will remain associated with the acquisition candidate following
our initial business combination, it is possible that some members of the management team of an acquisition candidate will not
wish to remain in place.
Our executive officers and directors
will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to
devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for a business combination and their other businesses. We do not intend to have
any full-time employees prior to the completion of our initial business combination. Each of our executive officers is engaged
in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not
obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers
and board members for other entities. If our executive officers' and directors' other business affairs require them to devote substantial
amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our
affairs which may have a negative impact on our ability to complete our initial business combination.
Certain of our officers and directors
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended
to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity
a particular business opportunity should be presented.
Following the completion of our
initial public offering and until we consummate our initial business combination, we intend to engage in the business of
identifying and combining with one or more businesses. Our sponsor and officers and directors are, and may in the future
become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar
business.
Our officers and directors also may
become aware of business opportunities which may be appropriate for presentation to us and the other entities in the future to
which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which
entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential
target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate of incorporation
provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity
is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Our officers, directors, 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
(subject to certain approvals and consents), 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.
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 or directors. 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 business combination with any entities with which they are affiliated, and there have been no preliminary
discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on,
or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated
entity met our criteria for a business combination and such transaction was approved by a majority of our disinterested directors.
Despite our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent
accounting firm, regarding the fairness to our company from a financial point of view of a business combination with one or more
domestic or international businesses affiliated with our 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 business combination is not completed, a conflict of interest may arise
in determining whether a particular business combination target is appropriate for our initial business combination.
In April 2020, our sponsor acquired
2,875,000 founder shares for an aggregate purchase price of $25,000. In June 2020, our sponsor transferred 30,000 founder
shares to each of Messrs. Grau, Gray and Lubner. On July 8, 2020, we effected a 1:1.18 stock split of our Class B
common stock, resulting in our sponsor holding an aggregate of 3,286,300 founder shares and there being an aggregate of 3,392,500
founder shares outstanding. Prior to the initial investment in the company of $25,000 by our sponsor, the company had no assets,
tangible or intangible. The number of founder shares issued was determined based on the expectation that such founder shares would
represent 20% of the outstanding shares after the initial public offering (excluding the private placement shares). In addition,
our sponsor has agreed to purchase 471,400 shares of Class A common stock, at a price of $10.00 per share in a private placement
for an aggregate purchase price of $4,714,000 that closed simultaneously with the closing of the initial public offering. The private
placement shares are identical to the shares of Class A common stock sold in the initial public offering, subject to certain
limited exceptions as described in the final prospectus dated July 9, 2020. The founder shares and private placement shares
will be worthless if we do not complete an initial business combination. Our sponsor and our directors and executive officers have
agreed (A) to vote any shares owned by them in favor of any proposed business combination and (B) not to redeem any founder
shares or private placement shares in connection with a stockholder vote to approve a proposed initial business combination. In
addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director, up to $1,500,000 of such loans
may be convertible into private placement shares of the post business combination entity at a price of $10.00 per share at the
option of the lender. 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.
Certain shares beneficially owned
by our officers and directors will not participate in liquidating distributions and, therefore, our officers and directors may
have a conflict of interest in determining whether a particular target business is appropriate for our initial business combination.
Our sponsor has agreed to
(i) waive its redemption rights with respect to its founder shares and (ii) waive its rights to liquidating
distributions from the trust account with respect to its founder shares if we fail to consummate an initial business
combination within 24 months from the closing of our initial public offering. Our sponsor and our directors and
executive officers have entered into agreements with us, pursuant to which they have agreed to waive their redemption rights
with respect to their founder shares and any public shares they may acquire during or after our initial public offering in
connection with the completion of our initial business combination. However, if our sponsor, directors or executive officers
acquire public shares in or after our initial public offering, they will be entitled to liquidating distributions from the
trust account with respect to such public shares if we fail to consummate an initial business combination within
24 months from the closing of our initial public offering. Accordingly, the founder shares will be worthless if we do not
consummate our initial business combination. 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.
We may issue notes or other debt
securities, or otherwise incur substantial debt, to complete our initial business combination, which may adversely affect our 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 prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose
to incur substantial debt to complete our initial business combination. If we incur any indebtedness without a waiver from the
lender of any right, title, interest or claim of any kind in or to any monies held in the trust account, the incurrence of debt
could have a variety of negative effects, including:
§
default and foreclosure on our assets if our operating revenues after
our initial business combination are insufficient to repay our debt obligations;
§
acceleration of our obligations to repay the indebtedness even if we make
all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios
or reserves without a waiver or renegotiation of that covenant;
§
our immediate payment of all principal and accrued interest, if any, if
the debt security is payable on demand;
§
our inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
§
our inability to pay dividends on our shares of common stock;
§
using a substantial portion of our cash flow to pay principal and interest
on our debt, which will reduce the funds available for dividends on our shares of common stock if declared, expenses, capital expenditures,
acquisitions and other general corporate purposes;
§
limitations on our flexibility in planning for and reacting to changes
in our business and in the industry in which we operate;
§
increased vulnerability to adverse changes in general economic, industry
and competitive conditions and adverse changes in government regulation; and
§
limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages
compared to our competitors who have less debt.
We may only be able to complete
one business combination with the proceeds of our initial public offering, 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 the initial public
offering together with the funds we received from the sale of the Private Placement Shares (excluding $1,000,000 of net proceeds
that were not placed in the trust account) provided us with approximately $131,950,500 that we may use to complete our initial
business combination.
We may effectuate our initial business
combination with a single target business or multiple target businesses simultaneously. 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 consummating
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 solely dependent
upon the performance of a single business, property or asset, or dependent upon the development or market acceptance of a single
or limited number of products or services. This lack of diversification may subject us to numerous economic, competitive and regulatory
developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent
to our initial business combination.
We may attempt to simultaneously
consummate business combinations with multiple prospective targets, which may hinder our ability to consummate 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 the initial business combination. With multiple business combinations, we could also face additional
risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if
there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services
or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could
negatively impact our profitability and results of operations.
We may attempt to consummate our
initial business combination with a private company about which little information is available.
In pursuing our acquisition strategy,
we may seek to effectuate our initial business combination with a privately held company. By definition, very little public information
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business
combination on the basis of limited information, which may result in our initial business combination with a company that is not
as profitable as we suspected, if at all.
We may not be able to maintain control
of a target business after our initial business combination.
We may structure our initial business
combination to acquire less than 100% of the equity interests or assets of a target business, but we will only consummate such
business combination if we will become the majority stockholder of the target (or control the target through contractual arrangements
in limited circumstances for regulatory compliance purposes) or are otherwise not required to register as an investment company
under the Investment Company Act or to the extent permitted by law we may acquire interests in a variable interest entity, in which
we may have less than a majority of the voting rights in such entity, but in which we are the primary beneficiary. Even though
we may own a majority interest in the target, our stockholders prior to the business combination may collectively own a minority
interest in the post business combination company, depending on valuations ascribed to the target and us in the business combination
transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all
of the outstanding capital stock of a target. In this case, we acquire a 100% controlling interest in the target. However, as a
result of the issuance of a substantial number of new shares, our stockholders immediately prior to such transaction could own
less than a majority of our outstanding shares subsequent to such transaction. In addition, other minority stockholders may subsequently
combine their holdings resulting in a single person or group obtaining a larger share of the company's stock than we initially
acquired. Accordingly, this may make it more likely that we will not be able to maintain our control of the target business.
The ability of our public stockholders
to exercise their redemption rights may not allow us to effectuate the most desirable business combination or optimize our capital
structure.
If our initial business combination
requires us to use substantially all of our cash to pay the purchase price, because we will not know how many public stockholders
may exercise redemption rights, we may either need to reserve part of the trust account for possible payment upon such redemption,
or we may need to arrange third party financing to help fund our initial business combination. In the event that the acquisition
involves the issuance of our stock as consideration, we may be required to issue a higher percentage of our stock to make up for
a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness
at higher than desirable levels. This may limit our ability to effectuate the most attractive business combination available to
us.
In connection with any meeting held
to approve an initial business combination, we will offer each public stockholder the option to vote in favor of the proposed business
combination and still seek redemption of their shares.
In connection with any meeting held
to approve an initial business combination, we will offer each public stockholder (but not our sponsor, officers or directors)
the right to have their shares of common stock redeemed for cash (subject to the limitations described elsewhere in this prospectus)
regardless of whether such stockholder votes for or against such proposed business combination; provided that a stockholder must
in fact vote for or against a proposed business combination in order to have their shares of common stock redeemed for cash. If
a stockholder fails to vote for or against a proposed business combination, that stockholder would not be able to have their shares
of common stock so redeemed. We will consummate our initial business combination only if we have net tangible assets of at least
$5,000,001 upon such consummation and a majority of the outstanding shares of common stock voted are voted in favor of the business
combination. This is different than other similarly structured blank check companies where stockholders are offered the right to
redeem their shares only when they vote against a proposed business combination. This threshold and the ability to seek redemption
while voting in favor of a proposed business combination may make it more likely that we will consummate our initial business combination.
We will require public stockholders
who wish to redeem their shares of common stock in connection with a proposed business combination, or an amendment to our certificate
of incorporation to effect the substance or timing of their redemption obligation if we fail to timely complete a business combination,
to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights
prior to the deadline for exercising their rights.
We will require our public stockholders
seeking to exercise their redemption rights, whether they are record holders or hold their shares in "street name," to
either (i) tender their certificates to our transfer agent prior to the expiration date set forth in the tender offer documents
mailed to such holders, or in the event we distribute proxy materials, up to two business days prior to the vote on the proposal
to approve the business combination or amendment to our certificate of incorporation to modify the substance or timing of our redemption
obligation to redeem all public shares if we cannot complete an initial business combination or with respect to any other material
provisions relating to stockholders' rights or pre-initial business combination activity, or (ii) deliver their shares to
the transfer agent electronically using Depository Trust Company's DWAC (Deposit/Withdrawal At Custodian) System, at the holder's
option. In order to obtain a physical stock certificate, a stockholder's broker and/or clearing broker, DTC and our transfer agent
will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks
to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over
the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been
advised that it takes a short time to deliver shares through the DWAC System, this may not be the case. Under our certificate of
incorporation, we are required to provide at least 10 days advance notice of any stockholder meeting, which would be the minimum
amount of time a stockholder would have to determine whether to exercise redemption rights. Accordingly, if it takes longer than
we anticipate for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet the deadline for
exercising their redemption rights and thus may be unable to redeem their shares.
Redeeming stockholders may be unable
to sell their securities when they wish to in the event that the proposed business combination is not approved.
We will require public stockholders
who wish to redeem their shares of common stock in connection with any proposed business combination to comply with the delivery
requirements discussed above for redemption. If such proposed business combination is not consummated, we will promptly return
such certificates to the tendering public stockholders. Accordingly, investors who attempted to redeem their shares in such a circumstance
will be unable to sell their securities after the failed acquisition until we have returned their securities to them. The market
price for our shares of common stock may decline during this time and you may not be able to sell your securities when you wish,
even while other stockholders that did not seek redemption may be able to sell their securities.
Because of our structure, other
companies may have a competitive advantage and we may not be able to consummate an attractive business combination.
We expect to encounter intense competition
from entities other than blank check companies having a business objective similar to ours, including healthcare investment funds
and operating businesses competing for acquisitions. Many of these entities are well established and have extensive experience
in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater technical,
human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many
of these competitors. Therefore, our ability to compete in acquiring certain sizable target businesses may be limited by our available
financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target
businesses. Furthermore, seeking stockholder approval of our initial business combination may delay the consummation of a transaction.
Additionally, our rights, and the future dilution they represent (entitling the holders to receive shares of common stock on consummation
of our initial business combination), may not be viewed favorably by certain target businesses. Any of the foregoing may place
us at a competitive disadvantage in successfully negotiating our initial business combination.
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. If we are unable to complete our initial business combination,
our public stockholders may only receive $10.00 per share or even less (whether or not the underwriters' over-allotment option
is exercised in full) on our redemption.
Although we believe that the net
proceeds of our initial public offering will be sufficient to allow us to consummate our initial business combination,
because we have not yet identified any prospective target business we cannot ascertain the capital requirements for any
particular transaction or our costs to identify and consummate a transaction and to operate the target business. If the net
proceeds of our initial public offering prove to be insufficient for one or more reasons including the size of our initial
business combination, the depletion of the available net proceeds in search of a target business, the obligation to
repurchase for cash a significant number of shares from stockholders who elect redemption in connection with our initial
business combination, or the terms of negotiated transactions to purchase shares in connection with our initial business
combination, we may be required to seek additional financing or to abandon the proposed business combination. Financing may
not be available on acceptable terms, if at all. The current economic environment may make it especially difficult for
companies to obtain acquisition financing. To the extent that additional financing proves to be unavailable when needed to
consummate our initial business combination, we would be compelled to either restructure the transaction or abandon that
particular initial business combination and seek an alternative target business candidate. If we are unable to complete our
initial business combination, our public stockholders may only receive $10.00 per share or even less (whether or not the
underwriters' over-allotment option is exercised in full) on our redemption. In addition, even if we do not need additional
financing to consummate 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 sponsor controls 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.
Our
sponsor (and/its designees) collectively own 22% of our issued and outstanding shares of common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder vote,
potentially in a manner that you do not support, including amendments to our certificate of incorporation. If our sponsor purchases
any units in this offering, or if we or our sponsor purchase any additional shares of common stock in the aftermarket or in privately
negotiated transactions, this would increase their control. Neither our sponsor nor, to our knowledge, any of our officers or directors,
has any current intention to purchase additional securities. Factors that would be considered in making such additional purchases
would include consideration of the current trading price of our shares of common stock.
Once initially listed on Nasdaq,
our securities may not continue to be listed on Nasdaq in the future, which could limit investors' ability to make transactions
in our securities and subject us to additional trading restrictions.
Since the consummation of our initial
public offering, our securities are listed on Nasdaq. However, we cannot assure you of this or that our securities will continue
to be listed on Nasdaq in the future. Additionally, in connection with our business combination, Nasdaq may require us to file a
new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements.
We cannot assure you that we will be able to meet those initial listing requirements at that time. If Nasdaq delists our securities
from trading on its exchange, we could face significant material adverse consequences, including:
§
a limited availability of market quotations for our securities;
§
a reduced liquidity with respect to our securities;
§
a determination that our shares of common stock are a "penny stock"
which will require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced
level of trading activity in the secondary trading market for our shares of common stock;
§
a limited amount of news and analyst coverage for our company; and
§
a decreased ability to issue additional securities or obtain additional
financing in the future.
Because we must furnish our stockholders
with target business financial statements prepared in accordance with U.S. generally accepted accounting principles or international
financial reporting standards, we may lose the ability to complete an otherwise advantageous initial business combination with
some prospective target businesses.
The federal proxy rules require
that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical
and/or pro forma financial statement disclosure in periodic reports. These financial statements may be required to be prepared
in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or
international financial reporting standards, or IFRS, as issued by the International Accounting Standards Board or the IASB, depending
on the circumstances. Historical financial statements may be required to be audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States), or PCAOB. We will include substantially the same financial statement disclosure
in connection with any tender offer documents we use, whether or not they are required under the tender offer rules. These financial
statement requirements may limit the pool of potential target businesses with which we consummate our initial business combination,
because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal
proxy rules, and hence we may be unable to complete our initial business combination within the prescribed time frame.
Compliance obligations under the
Sarbanes-Oxley Act of 2002 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 acquisition.
Section 404 of the Sarbanes-Oxley
Act of 2002, or 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, 2020. 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 all public companies because
a target company 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 acquisition.
We are an "emerging growth
company" and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make
our securities less attractive to investors.
We are an "emerging growth company,"
as defined in the JOBS Act. We will remain an "emerging growth company" for up to five years. However, if either our
non-convertible debt issued within a three-year period, or our revenues exceed $1.07 billion, or the market value of our shares
of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given
fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we
(i) are not required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, (ii) have
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (iii) are
exempt from the requirements of holding a nonbinding advisory vote on executive compensation and obtaining stockholder approval
of any golden parachute payments not previously approved.
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, will not adopt the new or revised standard until the time private
companies are required to adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accountant standards used.
We cannot predict if investors will
find our shares less attractive because we may rely on these provisions. If some investors find our shares less attractive as a
result, there may be a less active trading market for our shares and our share price may be more volatile.
Risks Associated with Acquiring
and Operating a Business outside of the United States
We may effect our initial business
combination with a company located outside of the United States.
If we effect our initial 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' home jurisdiction, including any of the following:
§
rules and regulations or currency redemption or corporate withholding
taxes on individuals;
§
laws governing the manner in which future business combinations may be
effected;
§
exchange listing and/or delisting requirements;
§
tariffs and trade barriers;
§
regulations related to customs and import/export matters;
§
longer payment cycles;
§
tax issues, such as tax law changes and variations in tax laws as compared
to the United States;
§
currency fluctuations and exchange controls;
§
rates of inflation or deflation;
§
challenges in collecting accounts receivable;
§
cultural and language differences;
§
employment regulations;
§
crime, strikes, riots, civil disturbances, terrorist attacks, pandemics
and wars; and
§
deterioration of political relations with the United States. We may not
be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.
Social unrest, acts of terrorism,
regime changes, changes in laws and regulations, political upheaval, or policy changes or enactments may occur in a country in
which we may operate after we effect our initial business combination.
Political events in another country
may significantly affect our business, assets or operations. Social unrest, acts of terrorism, regime changes, changes in laws
and regulations, political upheaval, pandemics and policy changes or enactments could negatively impact our business in a particular
country.
Many countries have difficult and
unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject to corruption and inexperience.
Our ability to seek and enforce legal
protections, including with respect to intellectual property and other property rights, or to defend ourselves with regard to legal
actions taken against us in a given country, may be difficult or impossible, which could adversely impact our operations, assets
or financial condition.
Rules and regulations in many
countries are often ambiguous or open to differing interpretation by responsible individuals and agencies at the municipal, state,
regional and federal levels. The attitudes and actions of such individuals and agencies are often difficult to predict and inconsistent.
Delay with respect to the enforcement
of particular rules and regulations, including those relating to customs, tax, environmental and labor, could cause serious
disruption to operations abroad and negatively impact our results.
If relations between the United
States and foreign governments deteriorate, it could cause potential target businesses or their goods and services to become less
attractive.
The relationship between the
United States and foreign governments could be subject to sudden fluctuation and periodic tension. For instance, the United
States may announce its intention to impose quotas on certain imports. Such import quotas may adversely affect political
relations between the two countries and result in retaliatory countermeasures by the foreign government in industries that
may affect our ultimate target business. Changes in political conditions in foreign countries and changes in the state of
U.S. relations with such countries are difficult to predict and could adversely affect our operations or cause potential
target businesses or their goods and services to become less attractive. Because we are not limited to any specific industry,
there is no basis for our stockholders to evaluate the possible extent of any impact on our ultimate operations if relations
are strained between the United States and a foreign country in which we acquire a target business or move our principal
manufacturing or service operations.
If our management following our
initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming
familiar with such laws.
Following our initial business combination,
our management may resign from their positions as officers or directors of the company and the management of the target business
at the time of the business combination will remain in place. Management of the target business may not be familiar with United
States securities laws. If new management is unfamiliar with our laws, they may have to expend time and resources becoming familiar
with such laws. This could be expensive and time-consuming and could lead to various regulatory issues, which may adversely affect
our operations.
Currency policies may cause a target
business' ability to succeed in the international markets to be diminished.
In the event we acquire a non-U.S.
target, all revenues and income would likely be received in a foreign currency, the dollar equivalent of our net assets and distributions,
if any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target
regions fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative
value of such currency against our reporting currency may affect the attractiveness of any target business or, following consummation
of our initial business combination, our financial condition and results of operations. Additionally, if a currency appreciates
in value against the dollar prior to the consummation of our initial business combination, the cost of a target business as measured
in dollars will increase, which may make it less likely that we are able to consummate such transaction.
Because foreign law could govern
our material agreements, we may not be able to enforce our rights within such jurisdiction or elsewhere.
Foreign law could govern our material
agreements. The target business may not be able to enforce any of its material agreements and remedies may not be available outside
of such foreign jurisdiction's legal system. The system of laws and the enforcement of existing laws and contracts in such jurisdiction
may not be as certain in implementation and interpretation as in the United States. The judiciaries in certain foreign countries
may be relatively inexperienced in enforcing corporate and commercial law, leading to a higher than usual degree of uncertainty
as to the outcome of any litigation. Any such jurisdictions may not favor outsiders or could be corrupt. As a result, the inability
to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business and business opportunities.