Item
1. Business.
Overview
Z-Work
Acquisition Corp. is a newly formed blank check company incorporated as a Delaware corporation for the purpose of creating a business
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
will not be limited to any particular industry, sector or geographic region in our identification and acquisition of a business combination
target. Nevertheless, we were created to take advantage of transformative macro and micro trends occurring domestically and internationally,
driven by the impact of technology on how work is executed, facilitated and enhanced. We believe that this focus will allow us to identify
many high growth-potential, tech-driven and tech-enabled targets for a desirable business combination. Our officers, directors and strategic
advisors have decades of critical operational experience and expertise, with both public and private companies, which we believe gives
us a compelling advantage in terms of sourcing robust opportunities and leveraging those opportunities into high-performing ventures.
We
are committed to bringing our operational experience to bear as an important additive catalyst for growth, in order to accelerate the
foundational success of our target’s management team. In a time when financial support is becoming more commoditized, we feel strongly
that proven operational success, demonstrable experience and a track record of growth will be important differentiators that will afford
us a competitive advantage in sourcing and partnering with growth companies.
Focusing
on the Transformation of Work
Although
technology has become commonplace in nearly every sector of the economy, it is our belief that some sectors are experiencing technological
disruption and transformation more rapidly. Work, in all its forms, is being fundamentally disrupted and transformed as companies both
big and small recognize the power of technology to improve worker productivity, satisfaction and, ultimately, their bottom lines. The
most visible aspect of this trend is the emergence of marketplaces facilitating new and more efficient modes of interaction between employers
and workers. But we believe the landscape of opportunities is broader, including critical products and services that support small and
medium-sized businesses and enterprise companies on the one side, and workers (including gig workers, independent contractors,
temps and others) on the other. We plan to target high growth, technology-based and technology-enhanced companies that provide such products
and services. Because technology is disrupting core components of how work is done across sectors, industries and geographies, and at
an accelerating pace, we believe there is a large and fruitful range of targets that fit our focus and can benefit from our leadership
team’s experience.
Our
focus is not dependent on the impact of the COVID-19 virus, although the pandemic has accelerated existing secular trends and highlighted
the potential impact of these structural changes in such diverse areas as video meetings and telemedicine. Despite the disruption to
the global economy, many companies focused on the transformation of work through technology have experienced phenomenal growth over the
last year. There are a broad range of private companies which are also benefiting from this transformation, and we believe they form
a large set of potentially attractive target companies.
The
Value Proposition We Offer to Target Companies
The
Z-Work management team, directors and strategic advisors bring a set of operational skills and transaction experience that we believe
will be highly valued by target companies:
| ● | Operating
Experience and Skills |
Z-Work’s
officers, directors and strategic advisors have extensive experience serving in senior positions in organizations across the corporate
life cycle, from start-ups to multi-billion-dollar public companies. The Z-Work team understands the important issues entrepreneurs and
senior executives need to get right when building high-growth enterprises. The Z-work team possesses a wide array skills across key functional
areas that can add significant value to target companies.
| ● | Marketplace
Building and Data Monetization |
Most
marketplaces fail, but when they succeed, they are often powerful business. Our Executive Co-Chairmen, Doug Atkin and Mr. Terrill, understand
the ingredients necessary to build successful ones. Our Executive Co-Chairman Doug Atkin was one of the key architects who built Instinet
into the largest electronic marketplace for equity trading. At its peak and while Doug Atkin was CEO, Instinet traded ~30% of all Nasdaq
volume. Mr. Terrill has developed leading marketplaces in on-line dating (Match.com) and the gig economy (HomeAdvisor/Angie’s List).
Mr. Roston was a senior executive at IAC which owns and has owned numerous successful digital marketplaces including Match Group and
ANGI Homeservices. Doug Atkin also has extensive experience in data monetization. He was CEO of Majestic, an early data-driven research
firm servicing the world’s largest fund managers.
| ● | Marketing
and Branding Expertise |
Mr.
Terrill has proven success in developing successful online and off-line marketing strategies, including at Match.com and HomeAdvisor.
Our Chief Community Advisor and Director Douglas Atkin is the author of The Culting of Brands, an analysis of the process of branding
that offers insights into how companies can cultivate near-fanatical customer loyalty, attract and retain consumer population segments
and foster loyal employees.
Our
Chief Community Advisor and Director Douglas Atkin is one of the foremost experts in “community building.” In an increasingly
competitive business environment, where consumers can easily hop from one online service to another, building online and off-line communities
is critically important, and a strong community keeps customers connected, lowering churn and increasing overall satisfaction. At Airbnb,
Douglas Atkin developed the company’s and community’s Purpose, led all community initiatives and was Architect of the company’s
and community’s values and culture. As Partner and Chief Community Officer at Meet-Up, Douglas Atkin helped build the world’s
largest network of communities. Similarly, Mr. Terrill oversaw strong communities at both Match.com and HomeAdvisor/Angie’s List.
Mr. Roston oversaw the hyper growth of communities of hourly workers at both Bluecrew (blue collar work) and NurseFly (nursing).
| ● | Transactions:
IPOs, M&A and Deal Flow |
Z-Work’s
team has deep experience taking companies public and executing M&A transactions. Doug Atkin led Instinet’s $464 million IPO
and Mr. Terrill led HomeAdvisor’s $700 million reverse merger with Angie’s List.
While
at HomeAdvisor, Mr. Terrill led the acquisitions of CraftJack, MHelpDesk, Felix, Techstars, WerkSpot and Handy. Mr. Roston has over 15
years of M&A experience and has completed over 50 M&A transactions with a combined value of over $75 billion. On a combined basis,
our management team members, directors and strategic advisors have made over 150 private company investments, including a number of investments
alongside leading private equity and venture funds. Z-Work’s management team members, directors and strategic advisors have extensive
networks, which provide them with access to deal flow from corporations, private equity funds and others. Given Z-Work team members’
operating experience and reputations, CEOs often approach them for advice, and many of those approaches have led to investment opportunities.
Acquisition
Criteria
In
identifying acquisition targets, we will prioritize several important attributes that we believe are critical for future success:
| ● | Demonstrated,
sustainable growth potential |
We
believe that demonstrated, sustainable growth potential is a key determinant in identifying a strong target business and is one of the
best indicators of future success. Our collective experience, knowledge and skills as seasoned operators in high growth environments
provides a distinct advantage to our team in terms of identifying and selecting strong business combination targets and assessing the
sustainability of past performance and the potential for strong growth in the future.
| ● | Management
that can drive innovation |
It
can be easy to misidentify the core drivers of management success, mistaking charismatic zeal or technological wizardry for substantive
success. Our deep experience as operators of high growth, tech-enabled companies, as well our collective experience with mergers and
acquisitions, venture investments and portfolio company analysis, create a strong foundation for identifying management teams that can
drive the innovations necessary to succeed in a complex technology environment.
| ● | Companies
that are scalable, with a large addressable market |
As
seasoned operators of companies and marketplaces with proven scale and large addressable markets, we understand how to analyze a company’s
market opportunity, near-term and long-term. Without tested operational knowledge and skills, it is easy to overestimate or underestimate
the true addressable market of a company, as well as the likelihood of it successfully scaling its business. We believe that our experience
gives us an advantage in evaluating targets’ addressable markets and probability of successfully scaling over time.
| ● | Strong,
clear value proposition |
We
will look for target businesses with strong and resonant value propositions. How does a company’s value proposition give them advantages
over their competition? How are products and services built and refined in relation to the value proposition? Is the value proposition
strong enough to scale and take market share in a large addressable market? With decades of experience growing and scaling leading brands
and companies with unique value propositions, we can identify companies best positioned to exploit strong value propositions.
| ● | Quantitative
rigor and discipline |
The
most successful high growth, tech-driven and tech-enabled companies use data and data analysis with rigor, which allows them to scale
quickly and take market share in large addressable markets. We believe that our deep operating experience will allow us to understand,
analyze and assess the core metrics of a target company in order to comprehend its drivers and its potential.
| ● | Engagement
with demographic trends |
We
consider demographic trends to be of critical importance in today’s rapidly evolving technology environment, and we believe the
best target companies are those that can tap into these trends. Our operating track records demonstrate our ability to understand demographic
trends and leverage them successfully, creating long term sustainable growth. We will seek the same ability in our target businesses.
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be
based, to the extent relevant, on these general guidelines as well as other considerations and factors that our management team may deem
relevant. In the event that we decide to enter into our initial business combination with a target business that does not meet the above
criteria, we will disclose that the target business does not meet the above criteria in our stockholder communications related to our
initial business combination, which, as discussed in this Form 10-K, would be in the form of proxy solicitation materials or tender offer
documents that we would file with the SEC.
Our
sponsor may form, and our officers and directors may become an officer or director of, one or more other special purpose acquisition
companies, each with a class of securities intended to be registered under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, prior to the completion of our initial business combination.
Initial
Business Combination
Nasdaq
rules require that we must consummate an initial business combination with one or more operating businesses or assets with a fair market
value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes,
if any, and excluding the amount of deferred underwriting discounts held in trust and taxes payable on the income earned on the trust
account). Our board of directors will make the determination as to the fair market value of our initial business combination. 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. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent
directors.
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 for the post-acquisition company to meet certain objectives of the target management team or stockholders or for other reasons,
but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires an interest in the target or assets sufficient for it not to be required to register as
an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction
company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the
initial business combination. 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 initial 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 the purposes of a tender offer or for seeking
stockholder approval, as applicable.
The
net proceeds of our initial public offering and the sale of the private placement warrants released to us from the trust account upon
the closing of our initial business combination may be used as consideration to pay the sellers of a target business with which we complete
our initial business combination. 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 redemption of our public shares, we may use the balance of the cash released to us from the trust account following the closing
for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the payment
of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies
or for working capital. In addition, we may be required to obtain additional financing in connection with the closing of our initial
business combination to be used following the closing for general corporate purposes as described above. There is no limitation on our
ability to raise funds through the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in
connection with our initial business combination, including pursuant to forward purchase agreements or backstop agreements we may enter
into following consummation of our initial public offering. Subject to compliance with applicable securities laws, we would only complete
such financing simultaneously with the completion of our initial business combination. At this time, we are not a party to any arrangement
or understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise. None
of our sponsor, officers, directors or stockholders is required to provide any financing to us in connection with or after our initial
business combination. We may also obtain financing prior to the closing of our initial business combination to fund our working capital
needs and transaction costs in connection with our search for and completion of our initial business combination. Our amended and restated
certificate of incorporation provides that, following our initial public offering and prior to the consummation of our initial business
combination, we will be prohibited from issuing additional securities that would entitle the holders thereof to (i) receive funds from
the trust account or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment
to our amended and restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond 24
months from the closing of our initial public offering or (y) amend the foregoing provisions, unless (in connection with any such amendment
to our amended and restated certificate of incorporation) we offer our public stockholders the opportunity to redeem their public shares.
Business
Combination Process
In
evaluating prospective business combinations, we expect to conduct a thorough due diligence review process that will encompass, among
other things, a review of historical and projected financial and operating data, meetings with management and their advisors (if applicable),
on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate.
We will also utilize the expertise of our management team in analyzing potential target companies and evaluating operating projections,
financial projections and determining the appropriate return expectations given the risk profile of the target business.
We
are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated with
our sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared ownership
with our sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial business combination
target that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion
from an independent investment banking firm or another independent entity that commonly renders valuation opinions that such an initial
business combination is fair to our company from a financial point of view.
Each
or our initial stockholders, officers and directors has or may in the future have fiduciary or contractual obligations to other entities
pursuant to which they are or will be required to present a business combination opportunity. Accordingly, if any of them becomes aware
of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary or contractual obligations
to present the opportunity, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such
entity. We believe, however, that these fiduciary duties or contractual obligations will not materially affect our ability to complete
our initial business combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any
corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or
her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake
and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity
to us without violating another legal obligation.
Corporate
Information
Our
executive offices are located at 575 Fifth Avenue, 15th Floor, New York NY 10017, and our telephone number is 626-867-7295. The information
contained on or accessible through our corporate website or any other website that we may maintain is not part of this Form 10-K.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities
Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval
of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may
be a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates
exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated
with it in the JOBS Act.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held
by non-affiliates exceeds $250 million as of the prior June 30th, or (2) our annual revenues exceed $100 million during such completed
fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.
Financial
Position
With
funds available for an initial business combination initially in the amount of $221,950,000, after payment of $8,050,000 of deferred
underwriting fees, in each case before fees and expenses associated with our initial business combination, we offer a target business
a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its
operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial business
combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we
have not taken any steps to secure third-party financing and there can be no assurance it will be available to us.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time following our initial public
offering. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the
private placement of the private placement warrants, the proceeds of the sale of our shares in connection with our initial business combination
(pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of our initial public offering
or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination
of the foregoing. 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 redemption of our public shares,
we may use the balance of the cash released to us from the trust account following the closing 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
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial
business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the
amounts held in the trust account. In addition, we intend to target businesses with enterprise values that are greater than we could
acquire with the net proceeds of our initial public offering and the sale of the private placement warrants, and, as a result, if the
cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemptions
by public stockholders, we may be required to seek additional financing to complete such proposed initial business combination. Subject
to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of
our initial business combination. In the case of an initial business combination funded with assets other than the trust account assets,
our proxy materials or tender offer documents disclosing the initial business combination would disclose the terms of the financing and,
only if required by law, we would seek stockholder approval of such financing. There is no limitation on our ability to raise funds through
the issuance of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial business
combination, including pursuant to forward purchase agreements or backstop agreements we may enter into following consummation of our
initial public offering. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising
any additional funds through the sale of securities or otherwise. None of our sponsor, officers, directors or stockholders is required
to provide any financing to us in connection with or after our initial business combination. Our amended and restated certificate of
incorporation provides that, following our initial public offering and prior to the consummation of our initial business combination,
we will be prohibited from issuing additional securities that would entitle the holders thereof to (i) receive funds from the trust account
or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended
and restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond 24 months from the
closing of our initial public offering or (y) amend the foregoing provisions, unless (in connection with any such amendment to our amended
and restated certificate of incorporation) we offer our public stockholders the opportunity to redeem their public shares.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers
and investment professionals. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us by 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 Form 10-K and know what types of businesses we are targeting. Our officers and
directors, as well as our sponsor and its affiliates, may also bring to our attention target business candidates that they become aware
of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade
shows, conferences or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise
necessarily be available to us as a result of the business relationships of our officers and directors and our sponsor and their respective
industry and business contacts as well as their affiliates. 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, advisory 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 finder’s fees 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 our sponsor or officers
are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation
by the Company prior to, or in connection with any services rendered 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). Although 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 initial business combination, we do not have a policy
that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement
of out-of-pocket expenses by a target business. We have agreed to pay our sponsor $12,500 per month, equal to $150,000 per year, $100,000
of which will be paid to Mr. Roston as an annual cash salary and $50,000 of which will be paid for additional support services sourced
from Communitas Capital, a venture firm of which our Executive Co-Chairman Doug Atkin is Managing Partner. Some of our officers and directors
may enter into employment or consulting agreements with the post-transaction company following our initial business combination. The
presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an initial business
combination candidate.
We
are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated with
our sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared ownership
with our sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial business combination
target that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion
from an independent investment banking firm or another independent entity that commonly renders valuation opinions that such an initial
business combination is fair to our company from a financial point of view.
As
more fully discussed in the section of this Form 10-K entitled “Management — Conflicts of Interest,” if any of our
officers or directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity
to which he or she has then-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. Our officers and directors currently have
certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Potential
target companies with whom we may engage in discussions after the closing of the offering may have had prior discussions with other blank
check companies, bankers in the industry and/or other professional advisors, including blank check companies with which our executive
officers or board of directors were affiliated.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must consummate an initial business combination with one or more operating businesses or assets with a fair market
value equal to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes,
if any, and excluding the amount of deferred underwriting discounts held in trust and taxes payable on the income earned on the trust
account). 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 (including with the
assistance of financial advisors), 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 will have virtually unrestricted
flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our
initial business combination with another blank check company or a similar company with nominal operations. Additionally, pursuant to
Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.
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% of net assets test. There is no basis for investors in our initial public offering
to evaluate the possible merits or risks of any target business with which we may complete our initial business combination.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective business target, we expect to conduct a due diligence review, which may encompass, among other things, meetings
with incumbent ownership, management and employees, document reviews, interviews of customers and suppliers, inspection of facilities,
as well as a review of financial and other information that will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of, 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.
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:
| ● | subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular
industry in which we operate after our initial business combination, and |
| ● | cause
us to depend on the marketing and sale of a single product or limited number of products or services. |
Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial
business combination with that business, our assessment of the target business’ 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
our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval
if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal
reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether
stockholder approval is currently required under Delaware law for each such transaction.
Type
of Transaction | |
| Whether
Stockholder Approval is Required | |
Purchase of assets | |
| No | |
Purchase of stock of target not involving a merger with the company | |
| No | |
Merger of target into a subsidiary of the company | |
| No | |
Merger of the company with a target | |
| Yes | |
Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
| ● | we
issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then
outstanding; |
| ● | 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 shares or voting power of 5% or more; or |
| ● | the
issuance or potential issuance of common stock will result in our undergoing a change of control. |
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, initial stockholders, directors, officers, advisors or their affiliates
may purchase public shares or public warrants in privately-negotiated transactions or in the open market either prior to or following
the completion of our initial business combination. There is no limit on the number of shares or warrants our initial stockholders, directors,
officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules.
However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for any such transactions. 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. 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.
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. None of the funds held in the trust account will be used to purchase shares or public warrants in such
transactions prior to completion of our initial business combination.
Subsequent
to the consummation of our initial public offering, we adopted an insider trading policy which will require insiders to: (i) refrain
from purchasing our securities during certain blackout periods when they are in possession of any material non-public information and
(ii) clear all trades of company securities with a compliance officer prior to execution. We cannot currently determine whether our insiders
will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to,
the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule
10b5-1 plan or determine that such a plan is not necessary.
The
purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase
the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce
the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection
with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination
that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our shares of Class
A common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult
to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or any of 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 tendered by stockholders following our mailing of proxy materials in connection with our initial
business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase,
they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro
rata share of the trust account or vote against our initial business combination, whether or not such stockholder has already submitted
a proxy with respect to our initial business combination. Such persons would select the stockholders from whom to acquire shares based
on the number of shares available, the negotiated price per share and such other factors as any such person may deem relevant at the
time of purchase. The price per share paid in any such transaction may be different than the amount per share a public stockholder would
receive if it elected to redeem its shares in connection with our initial business combination. Our sponsor, officers, directors, advisors
or their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal
securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange
Act will be made only to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability
for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be
complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates
will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Any such purchases
will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such reporting
requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of 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. The amount in the trust account is initially anticipated to be approximately $10.00
per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by deferred
underwriting commissions we will pay to the underwriters. Our sponsor, officers and directors have entered into a letter agreement with
us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any public shares held
by them in connection with the completion of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our
initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or
(ii) without a stockholder vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed
initial 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 requirements.
Asset
acquisitions and stock purchases would not typically require stockholder approval while direct mergers with our company where we do not
survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate
of incorporation would require stockholder approval. So long as we obtain and maintain a listing for our securities on Nasdaq, we will
be required to comply with Nasdaq’s stockholder approval rules.
The
requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed
above will be contained in provisions of our amended and restated certificate of incorporation and will apply whether or not we maintain
our registration under the Exchange Act or our listing on Nasdaq. Such provisions may be amended if approved by holders of 65% of our
common stock entitled to vote thereon.
If
we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
| ● | conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules, and |
| ● | file
proxy materials with the SEC. |
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common
stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in
person or by proxy of shares of outstanding capital stock of the Company representing a majority of the voting power of all outstanding
shares of capital stock of the Company entitled to vote at such meeting. Our initial stockholders will count towards this quorum and,
pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares and any public shares
purchased during or after our initial public offering (including in open market and privately-negotiated transactions) in favor of our
initial business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes
will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial
stockholders’ founder shares, we would need only 8,625,001, or 37.5%, of the 23,000,000 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). In addition, following PSAM’s purchase of 2,000,000 of our units in the offering, representing
8.7% of the outstanding units sold in our initial public offering, which includes 2,000,000 public shares. If PSAM votes those public
shares in favor of our initial business combination, then we would need only 6,624,001 public shares in addition to the PSAM public shares,
or 28.8% of the 23,000,000 public shares sold in our initial public offering, to be voted in favor of our initial business combination
in order to have our initial business combination approved (assuming all outstanding shares are voted). We intend to give not less than
10 days’ nor more than 60 days’ prior written notice of any such meeting, if required, at which a vote shall be taken to
approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders,
may make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public
shares irrespective of whether they vote for or against the proposed transaction or whether they were a stockholder on the record date
for the stockholder meeting held to approve the proposed transaction.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will:
| ● | conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
| ● | file
tender offer documents with the SEC prior to completing our initial business combination, which contain substantially the same financial
and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies. |
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until
the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more
than a specified number of public shares, which number will be based on the requirement that we will only redeem our public shares so
long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation
of our initial business combination and after payment of deferred underwriters’ fees and commissions (so that we are not subject
to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement that may be contained in the
agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we
will withdraw the tender offer and not complete the initial business combination.
Upon
the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we
or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the
open market, in order to comply with Rule 14e-5 under the Exchange Act.
We
intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent
or deliver their shares to our transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials,
this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition,
if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its
public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the
name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will furnish
to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders
to satisfy such delivery requirements. We believe that this will allow our transfer agent to efficiently process any redemptions without
the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional
administrative cost. If the proposed initial business combination is not approved and we continue to search for a target company, we
will promptly return any certificates or shares delivered by public stockholders who elected to redeem their shares.
Our
amended and restated certificate of incorporation provides that we will only redeem our public shares so long as (after such redemption)
our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination
and after payment of deferred underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. For example, the proposed initial 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 initial 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 initial business combination exceed the aggregate amount of
cash available to us, we will not complete the initial business combination or redeem any shares, and all shares of Class A common stock
submitted for redemption will be returned to the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that
a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert
or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with
respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.”
Such restriction shall also be applicable to our affiliates. 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
initial 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 our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased
by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’
ability to redeem no more than 15% of the shares sold in our 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 an initial 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.
Delivering
Stock Certificates in Connection with the Exercise of Redemption Rights
As
described above, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer
agent or deliver their shares to our transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy
materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In
addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption
of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which
the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will
furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public
stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have up to two business days prior to the
vote on the initial business combination if we distribute proxy materials, or from the time we send out our tender offer materials until
the close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise its redemption rights.
In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials,
as applicable, its shares may not be redeemed. Given the relatively short exercise period, it is advisable for stockholders to use electronic
delivery of their public shares.
There
is a nominal cost associated with the above-referenced process and the act of certificating the shares or delivering them through the
DWAC system. The transfer agent will typically charge the broker submitting or tendering shares 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 submit or 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.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials or tender offer
documents, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption
rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that
the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders
of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed initial business combination is not completed, we may continue to try to complete an initial business combination
with a different target until 24 months from the closing of our initial public offering.
Redemption
of Public Shares and Liquidation if No Initial Business Combination
Our
amended and restated certificate of incorporation provides that we have only 24 months from the closing of our initial public offering
to complete our initial business combination. If we are unable to complete our initial business combination within such 24-month period,
we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10
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 earned on the funds held in the trust account and not previously released to us to pay our taxes
(less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), and (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 each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect
to our warrants, which will expire worthless if we fail to complete our initial business combination within the 24-month time period.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating
distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination
within 24 months from the closing of our initial public offering. However, if our sponsor, officers or directors 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 complete our initial business combination within the allotted 24-month time period.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our
amended and restated certificate of incorporation to (A) modify the substance or timing of our obligation to provide for the redemption
of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete
our initial business combination within 24 months from the closing of our initial public offering or (B) 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 of Class A common stock upon approval of any such amendment at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account including interest 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. However, we will
only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of deferred underwriters’ fees and commissions
(so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with
respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we
would not proceed with the amendment or the related redemption of our public shares at such time.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be
funded from amounts remaining out of the approximately $1,285,000 of proceeds held outside the trust account, although we cannot assure
you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in
the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses associated
with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to pay
taxes on interest income earned on the trust account balance, 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 our initial public offering and the sale of the private placement warrants, other than the
proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share
redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account
could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders.
We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00.
Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision
for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make
any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that
we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, such parties may not execute such agreements or even if they execute such agreements, they may not be prevented
from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with
respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to enter into an agreement
waiving such claims to the monies held in the trust account, our management will consider whether competitive alternatives are reasonably
available to the Company, and will only enter into an agreement with such third party if our management believes that such third party’s
engagement would be in the best interests of the Company under the circumstances. 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. WithumSmith+Brown, PC, our independent registered
public accounting firm, and the underwriters of the offering 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. Upon redemption
of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise
of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors
that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount
received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of such creditors.
Pursuant to a letter agreement, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party
for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent,
confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the
lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation
of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable; provided
that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all
rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our
indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether
our sponsor has sufficient funds to satisfy their indemnity obligations, and 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. As a result, if any such
claims were successfully made against the trust account, the funds available for our initial business combination and redemptions could
be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and
you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors
will indemnify us for claims by third parties, including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets,
in each case net of the amount of interest which may be withdrawn to pay taxes, and 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 if, for example, the
cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent
directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations
and we cannot assure you that our sponsor would be able to satisfy those obligations, and believe that our sponsor’s only assets
are securities of our company. 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 public share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not
be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. We will have access to up to approximately $1,285,000 from the proceeds of our initial public offering
with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated
to be no more than approximately $100,000).
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination within 24 months from the closing of our initial public offering
may be considered a liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section
280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during
which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims
brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 24 months from the closing of our initial public offering, is not considered
a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition
of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of
the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead
of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination within 24
months from the closing of our initial public offering, we will: (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than 10 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 earned on the funds held in the trust
account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by
the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), and (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 each
case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly,
it is our intention to redeem our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend
to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be
limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as
lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our
underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust
account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any
claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent
necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount
per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the
trust assets, in each case net of the amount of interest released to us to pay taxes and will not be liable as to any claims under our
indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to
the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover 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, 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 upon the earlier to occur of: (i) the completion of
our initial business combination, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to
amend any provisions of our amended and restated certificate of incorporation to (A) modify the substance or timing of our obligation
to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public
shares if we do not complete our initial business combination within 24 months from the closing of our initial public offering or (B)
with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, and
(iii) the redemption of all of our public shares if we are unable to complete our business combination within 24 months from the closing
of our initial public offering, subject to applicable law. In no other circumstances will a stockholder have any right or interest of
any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a
stockholder’s voting in connection with the initial 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
as described above. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and
restated certificate of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter 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 and operating businesses seeking strategic business combinations. 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 we do. Our ability to acquire larger target businesses
will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial business
combination of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their
redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the
future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place
us at a competitive disadvantage in successfully negotiating an initial business combination.
Facilities
Our
executive offices are located at 575 Fifth Avenue, 15th Floor, New York NY 10017, and our telephone number is 626-867-7295. Our executive
offices are provided to us by our sponsor. Pursuant to an administrative support agreement with our sponsor, dated as of January 28,
2021, as amended, we agreed to pay our sponsor a total of $12,500 per month, for up to 24 months, or $150,000 per year, $100,000 of which
will be paid to Mr. Roston as an annual cash salary and $50,000 of which will be paid for additional support services expected to be
sourced from Communitas Capital, a venture firm of which our Executive Co-Chairman Doug Atkin is Managing Partner. Upon completion of
our initial business combination or our liquidation, we will cease paying these monthly fees.
Employees
We
currently have three officers and no employees. Our officers 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 initial business combination process we are in.
Periodic
Reporting and Financial Information
We
have registered our Units, Class A Common shares and warrants under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual
reports will contain financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation materials
or tender offer documents sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements
will need to be prepared in accordance with, or reconciled to, GAAP or IFRS, depending on the circumstances, and the historical financial
statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements may limit
the pool of potential targets we may conduct an initial business combination with 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 complete our initial business combination
within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination
candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare
its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we
may not be able to acquire the proposed target business. While this may limit the pool of potential business combination candidates,
we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Following the effectiveness of our initial public offering, subject to the rules and regulations promulgated under the Exchange Act.
We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent
to the consummation of our initial business combination.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates
exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
during the prior three-year period.
ITEM
1A. Risk Factors.
Summary
of Risk Factors
An
investment in our securities involves a high degree of risk. Below is a summary of the principal risk factors that make an investment
in our securities speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks
summarized in this summary of risk factors, and other risks that we face, can be founded below in “Risk Factors” and should
be carefully considered, together with other information in this Annual Report on Form 10-K. Our principal risks and uncertainties include,
but are not limited to, the following risks, uncertainties and other factors:
| ● | We
are a recently incorporated company with no operating history and no revenues, and you have
no basis on which to evaluate our ability to achieve our business objective. |
| ● | Past
performance by our management team or their respective affiliates may not be indicative of
future performance of an investment in us. |
| ● | Our
stockholders may not be afforded an opportunity to vote on our proposed initial business
combination, which means we may complete our initial business combination even though a majority
of our stockholders do not support such a 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. |
| ● | If
we seek stockholder approval of our initial business combination, our initial stockholders
have agreed to vote in favor of such initial business combination, regardless of how our
public stockholders vote. |
| ● | The
ability of our public stockholders to redeem their shares for cash may make our financial
condition unattractive to potential business combination targets, which may make it difficult
for us to enter into a business combination with a target. |
| ● | The
ability of our public stockholders to exercise redemption rights with respect to a large
number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure. |
| ● | The
requirement that we consummate an initial business combination within 24 months (or such later date as approved by our stockholders)
after the closing of the offering may give potential target businesses leverage over us in negotiating a business combination and may
limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our
dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value
for our stockholders. |
| ● | Our
search for and ability to complete a business combination, and any target business with which we ultimately complete a business combination,
may be adversely affected by general market conditions, political considerations, pandemics, volatility in the capital and debt markets
and other social and geopolitical events. |
| ● | If
we seek stockholder approval of our initial business combination, our initial stockholders, directors, executive officers, advisors and
their affiliates may elect to purchase public shares or warrants, which may influence a vote on a proposed business combination and reduce
the public “float” of our shares of Class A common stock or public warrants. |
| ● | If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed. |
| ● | You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate
your investment, you may be forced to sell your public shares or warrants, potentially at a loss. |
| ● | Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions. |
| ● | You
will not be entitled to protections normally afforded to investors of many other blank check companies. |
| ● | Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we have not consummated our initial business combination within the required time period, our public
stockholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust
account and our warrants will expire worthless. |
| ● | If
the net proceeds of the initial public offering and the sale of the private placement warrants not being held in the trust account are
insufficient to allow us to operate for the 24 months following the closing of the offering, it could limit the amount available to fund
our search for a target business or businesses and our ability to complete our initial business combination, and we will depend on loans
from our sponsor, its affiliates or members of our management team to fund our search and to complete our initial business combination. |
| ● | Past
performance by our management team and their affiliates may not be indicative of future performance of an investment in the Company,
and we may seek business combinations opportunities in industries that may not be in our management’s area of expertise. |
| ● | There
are risks relating to our securities, including that the securities in which we invest the funds held in the trust account could bear
a negative rate of interest, we are not registering the shares of Class A common stock issuable upon the exercise of warrants and risk
related to the issuance of the warrants. |
| ● | Our
Warrants are accounted for as liabilities and the changes in value of our Warrants could have a material effect on our financial results. |
| ● | We
have identified a material weakness in our internal control over financial reporting as of December 31, 2021 due to a material weakness
in internal control over financial reporting related to our accounting for complex financial instruments. If we are unable to develop
and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and
operating results. |
| ● | There
have been and may in the future be changes to current accounting practices for SPACs, which could result in further changes to our financial
statements and disclosures, and which could have a material adverse impact. |
Risks
Relating to our Search for, Consummation of, or Inability to Consummate,
a business combination and Post-business combination Risks
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote,
holders of our founder shares will participate in such vote, which means we may complete our initial business combination even though
a majority of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination unless the initial business combination would require
stockholder approval under applicable law or stock exchange listing requirements. In such case, the decision as to whether we will seek
stockholder approval of a proposed initial business combination or will allow stockholders to sell their shares to us in a tender offer
will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether
the terms of the transaction would otherwise require us to seek stockholder approval. Even if we seek stockholder approval, the holders
of our founder shares will participate in the vote on such approval. Accordingly, we may complete our initial business combination even
if holders of a majority of our outstanding public shares do not approve of the initial business combination we complete. Please see
the section of this Form 10-K entitled “Proposed Business — Stockholders May Not Have the Ability to Approve Our Initial
business combination” for additional information.
If
we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial
business combination, regardless of how our public stockholders vote.
Pursuant
to a letter agreement, our sponsor, officers and directors have agreed to vote their founder shares, as well as any public shares purchased
during or after our initial public offering (including in open market and privately-negotiated transactions), in favor of our initial
business combination. As a result, in addition to our initial stockholders’ founder shares, we would need only 8,625,001, or 37.5%,
of the 23,000,000 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). In addition, PSAM acquired 2,000,000 public
units, which include 2,000,000 public shares. If PSAM votes those public shares in favor of our initial business combination, then we
would need only 6,624,001 public shares in addition to PSAM public shares, or 28.8% of the 23,000,000 public shares sold in our initial
public offering, to be voted in favor of our initial business combination in order to have our initial business combination approved
(assuming all outstanding shares are voted). Our initial stockholders owned shares representing 20% of our outstanding shares of common
stock immediately following the completion of our initial public offering. Accordingly, if we seek stockholder approval of our initial
business combination, the agreement by our initial stockholders to vote in favor of our initial business combination will increase the
likelihood that we will receive the requisite stockholder approval for such initial business combination.
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 an agreement for an initial business combination with a target.
We
may seek to enter into an initial business combination agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not
be able to meet such closing condition and, as a result, would not be able to proceed with the initial business combination. Furthermore,
we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 as described
above upon consummation of our initial business combination and after payment of deferred underwriters’ fees and commissions (so
that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement that
may be contained in the agreement relating to our initial business combination. 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,
each as described above, we would not proceed with such redemption and the related business combination and may instead search for an
alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into an initial
business combination agreement with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption
rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the
purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust
account to meet such requirements, or arrange for third-party financing. In addition, if a larger number of shares are submitted
for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the
trust account or arrange for third-party financing. Raising additional third-party financing may involve dilutive equity issuances
or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision
of the Class B common stock results in the issuance of Class A shares on a greater than one-to-one basis upon conversion
of the Class B common stock at the time of our business combination. The above considerations may limit our ability to complete
the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions
payable to the underwriters is not required to be adjusted for any shares that are redeemed in connection with an initial business combination.
The per-share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by deferred
underwriting commissions and after such redemptions, the per-share value of shares held by non-redeeming stockholders will
reflect our obligation to pay the deferred underwriting commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the
trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in
the open market; however, at such time, our stock may trade at a discount to the pro rata amount per share in the trust
account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with
your exercise of redemption rights until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination
targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination
on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning an initial business combination will be aware that we must
complete our initial business combination within 24 months from the closing of our initial public offering. Consequently, such target
business may have leverage over us in negotiating an 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 complete our initial business combination within the prescribed time frame, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may receive
only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
amended and restated certificate of incorporation provides that we must complete our initial business combination within 24 months
from the closing of our initial public offering. We may not be able to find a suitable target business and complete our initial business
combination within such time period. Our ability to complete our initial business combination may be negatively impacted by general market
conditions, political considerations, volatility in the capital and debt markets and the other risks described herein. If we have not
completed our initial business combination within such time period, we will: (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but not more than 10 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 earned
on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), and (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 each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. In such case, our public stockholders may receive only $10.00 per share, and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share on the redemption of their shares. See “— If third parties
bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by
stockholders may be less than $10.00 per share” and other risk factors below.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates may
elect to purchase shares or warrants from public holders, which may influence a vote on a proposed initial business combination and reduce
the public “float” of our Class A common stock or public warrants.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares or
public warrants or a combination thereof, in privately-negotiated transactions or in the open market, either prior to or following
the completion of our initial business combination, although they are under no obligation to do so. However, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of
the funds in the trust account will be used to purchase shares or public warrants in such transactions. See “Proposed Business —
Permitted Purchases of Our Securities” for a description of how our sponsor, initial stockholders, directors, officers, advisors
or any of their affiliates will select which stockholders to purchase securities from in any private transaction.
Such
a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no longer
the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, officers,
advisors or their affiliates purchase shares in privately-negotiated transactions from public stockholders who have already elected
to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares.
The price per share paid in any such transactions may be different than the amount per share a public stockholder would receive if such
public stockholder elected to redeem its shares in connection with our initial business combination. The purpose of such purchases could
be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval
of the initial business combination, or to satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would
otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding
or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been
possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”) to the extent such purchasers are subject to such reporting requirements. In addition, if
such purchases are made, the public “float” of our Class A common stock or public warrants and the number of beneficial
holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our
securities on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or
fails to comply with the procedures for submitting or tendering its shares, such shares may not be redeemed.
We
will comply with the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business
combination. Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender
offer documents, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination
will describe the various procedures that must be complied with in order to validly tender or submit public shares for redemption. For
example, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or
hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer
agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender offer
documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal
to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend
to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer
agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. In the event that a stockholder
fails to comply with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not
be redeemed. See the section of this Form 10-K entitled “Proposed Business — Submitting Stock Certificates in Connection
with Redemption Rights.”
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion
of an initial business combination, and then only in connection with those shares of Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation to (A) modify the substance
or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or
to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of
our initial public offering or (B) with respect to any other material provisions relating to stockholders’ rights or pre-initial business
combination activity, and (iii) the redemption of our public shares if we are unable to complete an initial business combination
within 24 months from the closing of our initial public offering, subject to applicable law and as further described herein. In
addition, if our plan to redeem our public shares if we are unable to complete an initial business combination within 24 months
from the closing of our initial public offering is not completed for any reason, compliance with Delaware law may require that we submit
a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in our trust
account. In that case, public stockholders may be forced to wait beyond 24 months from the closing of our initial public offering
before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any
kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the
warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our
units, Class A common stock and warrants are listed on Nasdaq. We cannot guarantee that our securities will be, or will continue to be,
listed on Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior
to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain
a minimum amount in stockholders’ equity ($2,500,000) and a minimum number of holders of our securities (generally 300 public holders).
Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with Nasdaq’s
initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain
the listing of our securities on Nasdaq. For instance, our stock price would generally be required to be at least $4 per share, our stockholders’
equity would generally be required to be at least $5,000,000 and we would be required to have 300 round lot holders (with at least 50%
of such holders holding securities with a market value of at least $2,500). We cannot assure you that we will be able to meet those initial
listing requirements at that time. If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities
on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to
occur, we could face significant material adverse consequences, including:
| ● | a
limited availability of market quotations for our securities; |
| ● | reduced
liquidity for our securities; |
| ● | a
determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A
common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market
for our securities; |
| ● | a
limited amount of news and analyst coverage; and |
| ● | a
decreased ability to issue additional securities or obtain additional financing in the future. |
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Our units, Class A common stock and warrants
are covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow
the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states
can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to
prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of
securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our initial
business combination.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete an
initial business combination with a target business that has not been identified, we may be deemed to be a “blank check”
company under the U.S. securities laws. However, because we have net tangible assets in excess of $5,000,000 following completion of
our initial public offering and the sale of the private placement warrants and filed a Current Report on Form 8-K, including an
audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies,
such as Rule 419. Accordingly, investors are not afforded the benefits or protections of those rules. Among other things, this means
our units were immediately tradable and we have a longer period of time to complete our initial business combination than companies subject
to Rule 419. Moreover, if our initial public offering had been subject to Rule 419, that rule would have prohibited the release
of any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in
connection with our completion of an initial business combination. For a more detailed comparison of our initial public offering to offerings
that comply with Rule 419.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose
the ability to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an
aggregate of 15% of the shares sold in our initial public offering without our prior consent, which we refer to as the “Excess
Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability
to complete our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares
in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete
our initial business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose
of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our
warrants will expire worthless.
We
expect to encounter competition from other entities having a business objective similar to ours, including private investors (which may
be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing for
the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess similar or greater technical, human and other resources to ours, and our financial resources will be
relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we
could potentially acquire with the net proceeds of our initial public offering and the sale of the private placement warrants, our ability
to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources.
This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore,
because we are obligated to pay cash for the shares of Class A common stock which our public stockholders redeem in connection with
our initial business combination, target companies will be aware that this may reduce the resources available to us for our initial business
combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating an initial business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share
on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may
receive less than $10.00 per share upon our liquidation. See “— If third parties bring claims against us, the proceeds held
in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share”
and other risk factors below.
If
the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account are
insufficient to allow us to operate for at least 24 months, we may be unable to complete our initial business combination, in which case
our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire
worthless.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least 24 months following
the closing of our initial public offering, assuming that our initial business combination is not completed during that time. We believe
that the funds available to us outside of the trust account are sufficient to allow us to operate for at least 24 months following
the initial public offering; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use
a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use
a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements
designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more
favorable to such target businesses) with respect to a particular proposed initial business combination, although we do not have any
current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. Of the net proceeds
of our initial public offering and the sale of the private placement warrants, only approximately $1,285,000 is available to us initially
outside the trust account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow
funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. None of our sponsor, or any
affiliate of our sponsor or any of our officers and directors is under any obligation to advance funds to us in such circumstances. Any
such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial
business combination. Up to $1,500,000 of such loans may be convertible into private placement-equivalent warrants at a price of
$1.50 per warrant at the option of the lender. Prior to the completion of our initial business combination, we do not expect to seek
advances or loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing
to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we are unable to
obtain these loans, we may be unable to complete our initial business combination. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our
warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation.
See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” and other risk factors below.
Subsequent
to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price,
and which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify
all material issues that may be present within a particular target business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later
arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations or
incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain
risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.
Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges
of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause
us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target
business or by virtue of our obtaining debt financing to partially finance the initial business combination or thereafter. Accordingly,
any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received
by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have
all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims
against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim
against our assets, including the funds held in the trust account. If any third party refuses to enter into an agreement waiving such
claims to the monies held in the trust account, our management will consider whether competitive alternatives are reasonably available
to us, and will only enter into an agreement with such third party if our management believes that such third party’s engagement
would be in our best interests under the circumstances. WithumSmith+Brown, PC, our independent registered public accounting firm, and
the underwriters of the offering, did not execute agreements with us waiving such claims to the monies held in the trust account.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would
agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption
of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise
of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors
that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption
amount received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of
such creditors. Pursuant to a letter agreement, our sponsor has agreed that it will be liable to us if and to the extent any claims by
a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written
letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account
to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the
date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less
taxes payable; provided that such liability will not apply to any claims by a third party or prospective target business who executed
a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply
to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations, and believe that our sponsor’s only assets
are securities of our company. As a result, if any such claims were successfully made against the trust account, the funds available
for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not
be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption
of your public shares. 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.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in
the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount
per 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 net of the interest, which may be withdrawn to pay taxes, and our sponsor asserts that
it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors, in exercising their business judgment and subject to their fiduciary
duties, may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not
likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust account
available for distribution to our public stockholders may be reduced below $10.00 per share.
Members
of our management team and board of directors have significant experience as founders, board members, officers or executives of other
companies. As a result, certain of those persons have been, may be, or may become, involved in proceedings, investigations and litigation
relating to the business affairs of the companies with which they were, are, or may in the future be, affiliated. This may have an adverse
effect on us, which may impede our ability to consummate an initial business combination.
During
the course of their careers, members of our management team and board of directors have had significant experience as founders, board
members, officers or executives of other companies. As a result of their involvement and positions in these companies, certain persons
were, are now, or may in the future become, involved in litigation, investigations or other proceedings relating to the business affairs
of such companies or transactions entered into by such companies. Any such litigation, investigations or other proceedings may divert
our management team’s and board’s attention and resources away from identifying and selecting a target business or businesses
for our initial business combination and may negatively affect our reputation, which may impede our ability to complete an initial business
combination.
We
may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have
agreed to waive (and any other persons who may become an officer or director prior to the initial business combination will also be required
to waive) any right, title, interest or claim of any kind in or to any monies in the trust account and not to seek recourse against the
trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we
have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify
our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their
fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and
directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s
investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors
pursuant to these indemnification provisions.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be
exposed to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached
its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by
paying public stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our
stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be
reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 24 months from the closing of our initial
public offering may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set
forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice
period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders,
any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after
the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following
the 24th month from the closing of our initial public offering in the event we do not complete our initial business combination
and, therefore, we do not intend to comply with the foregoing procedures.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to
us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with
Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of
such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability
of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly
assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to
the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary
of such date.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination within 24 months from the closing of our initial public
offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially
due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant
to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the
opportunity for our stockholders to elect directors.
We
may not hold an annual meeting of stockholders until after we consummate a business combination (unless required by Nasdaq), and thus
may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes
of electing directors in accordance with a company’s bylaws unless such election is made by written consent in lieu of such a meeting.
Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business combination, they may attempt
to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the
DGCL.
Because
we are neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses
with which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s
operations.
We
will seek to complete an initial business combination with companies in a variety of industries, except that we will not, under our amended
and restated certificate of incorporation, be permitted to effectuate our initial business combination with another blank check company
or similar company with nominal operations. Because we have not yet selected any specific target business with respect to a business
combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results
of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination, we
may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control
and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot
assure you that an investment in our securities will ultimately prove to be more favorable to investors than a direct investment, if
such opportunity were available, in a business combination target. Accordingly, any stockholders who choose to remain stockholders following
our initial business combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a
remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target
business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria
and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial
business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a
combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business
combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their
redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a
minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval of our initial
business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial
business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances as described
herein, on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share on the redemption of their shares. See “— If third parties bring claims against us,
the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less
than $10.00 per share” and other risk factors herein.
We
may seek business combination opportunities with a financially unstable business or an entity lacking an established record of revenue,
cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity lacking
an established record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which
we combine. These risks include investing in a business without a proven business model or with limited historic financial data, volatile
revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all
of the relevant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside
of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders
valuation opinions, and consequently, you may have no assurance from an independent source that the price we are paying for the target(s)
of our initial business combination is fair to our company from a financial point of view.
Unless
we complete our initial business combination with an affiliated entity or our board of directors cannot independently determine the fair
market value of the target business or businesses (including with the assistance of financial advisors), we are not required to obtain
an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that the
price we are paying is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying
on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial
community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial
business combination.
Resources
could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account
and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up to that
point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons, including those beyond our control. Any
such event will result in a loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to
locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares. See “— If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and other risk factors herein.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business
combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company,
which could, in turn, negatively impact the value of our stockholders’ investment in us.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the
target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who
choose to remain stockholders following the initial business combination could suffer a reduction in the value of their shares. Such
stockholders are unlikely to have a remedy for such reduction in value.
We
may engage in an initial 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 that 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, including,
without limitation, those described under the section of this Form 10-K entitled “Management — Conflicts of Interest.”
Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware
of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and
there have been no substantive discussions concerning an initial 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 an initial business combination as set forth in the section of this Form
10-K entitled “Proposed Business — Selection of a Target Business and Structuring of our Initial business combination”
and such transaction was approved by a majority of our disinterested directors.
Despite
our agreement to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions, regarding the fairness to the Company and our stockholders from a financial point of view of an initial 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 initial business combination may not be as advantageous to our public
stockholders as they would be absent any conflicts of interest. These risks may become more acute as the 24-month deadline for the
completion of our initial business combination.
Since
our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed (except
with respect to any public shares they may hold), a conflict of interest may arise in determining whether a particular business combination
target is appropriate for our initial business combination.
In December 2020, our sponsor paid $25,000
in consideration of 5,750,000 founder shares. The number of founder shares issued was determined based on the expectation that such founder
shares would represent 20% of the outstanding shares after our initial public offering. The founder shares will be worthless if we do
not complete an initial business combination. Holders of founder shares have agreed (A) to vote any shares owned by them in favor
of any proposed initial business combination and (B) not to redeem any founder shares in connection with a stockholder vote to approve
a proposed initial business combination or in connection with a stockholder vote to approve an amendment to our amended and restated certificate
of incorporation. In addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director. 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.
We
may be able to complete only one business combination with the proceeds of our initial public offering and the sale of the private placement
warrants, which will cause us to be solely dependent on a single business, which may have a limited number of products or services and
limited operating activities. This lack of diversification may negatively impact our operating results and profitability.
Of
the net proceeds from our initial public offering and the sale of the private placement warrants, $230,000,000 will be available to complete
our initial business combination and pay related fees and expenses (which includes up to $8,050,000 for the payment of deferred underwriting
commissions being held in the trust account).
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or within
a short period of time. However, we may not be able to effectuate our initial business combination with more than one target business
because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if they
had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack of diversification
may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete
several business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success
may be:
| ● | solely
dependent upon the performance of a single business, property or asset, or |
| ● | dependent
upon the development or market acceptance of a single or limited number of products, processes or services. |
This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial
adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete
our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us, and delay our ability, to complete our initial business combination. We do not, however, intend to purchase
multiple businesses in unrelated industries in conjunction with our initial business combination. With multiple business combinations,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which may
result in an initial business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our initial business combination strategy, we may seek to effectuate our initial business combination with a privately-held company.
Very little public information generally exists about private companies, and we could be required to make our decision on whether to
pursue a potential initial business combination on the basis of limited information, which may result in an initial business combination
with a company that is not as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination.
We
may structure an initial business combination so that the post-transaction company in which our public stockholders own shares will
own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a
controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment Company
Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more
of the voting securities of the target, our stockholders prior to the initial business combination may collectively own a minority interest
in the post business combination company, depending on valuations ascribed to the target and us in the initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result
of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own
less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders
may subsequently combine their holdings resulting in a single person or group obtaining a larger share of our stock than we initially
acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target business.
We cannot provide assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or
abilities necessary to profitably operate such business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
an initial business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that we will only
redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior
to or upon consummation of our initial business combination and after payment of deferred underwriters’ fees and commissions (such
that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement that
may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our initial business
combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares
or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, have entered into privately-negotiated agreements to sell their shares to our
sponsor, officers, directors, advisors or 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 initial business combination exceed the aggregate amount of cash available to us, we will not complete
the initial business combination or redeem any shares, all shares of Class A common stock submitted for redemption will be returned
to the holders thereof, and we instead may search for an alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their
charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our
amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our
initial business combination that our stockholders may not support.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their
charters and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the
definition of business combination, increased redemption thresholds, changed industry focus and extended the time to consummate an initial
business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for
cash and/or other securities. Amending our amended and restated certificate of incorporation will require the approval of holders of
65% of our common stock, and amending our warrant agreement will require a vote of holders of at least a majority of the public warrants
and, solely with respect to any amendment to the terms of the private placement warrants or any provision of our warrant agreement with
respect to the private placement warrants, a majority of the number of the then outstanding private placement warrants. In addition,
our amended and restated certificate of incorporation will require us to provide our public stockholders with the opportunity to redeem
their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation to (A) modify the
substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination
or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing
of our initial public offering or (B) with respect to any other material provisions relating to stockholders’ rights or pre-initial business
combination activity. To the extent any such amendments would be deemed to fundamentally change the nature of any of our securities we
would register, or seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend
our charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial
business combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding
provisions of the agreement governing the release of funds from our trust account), including an amendment to permit us to withdraw funds
from the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced
or eliminated, may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that
of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation
and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our
amended and restated certificate of incorporation provides that any of its provisions related to pre-initial business combination
activity (including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the
trust account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders
as described herein and including to permit us to withdraw funds from the trust account such that the per share amount investors will
receive upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our
common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our trust
account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our amended
and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon,
subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional securities that can vote
on amendments to our amended and restated certificate of incorporation. Our initial stockholders, who collectively beneficially own approximately
20% of our common stock as of the completion of our initial public offering, will participate in any vote to amend our amended and restated
certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may
be able to amend the provisions of our amended and restated certificate of incorporation, which govern our pre-initial business
combination behavior more easily than some other blank check companies, and this may increase our ability to complete an initial business
combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate
of incorporation.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our
amended and restated certificate of incorporation to (A) modify the substance or timing of our obligation to provide for the redemption
of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete
our initial business combination within 24 months from the closing of our initial public offering or (B) 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 of Class A common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account (including interest, net
of taxes), divided by the number of then outstanding public shares. These agreements are contained in a letter agreement that we have
entered into with our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries of, these
agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any breach of
these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject
to applicable law.
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
the cash portion of the purchase price of any business combination exceeds the amount available from the trust account, net of amounts
needed to satisfy any redemption by public stockholders, we may be required to seek additional financing to complete such proposed initial
business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure
the transaction or abandon that particular business combination and seek an alternative target business candidate. Further, we may be
required to obtain additional financing in connection with the closing of our initial business combination for general corporate purposes,
including for maintenance or expansion of operations of the post-transaction businesses, the payment of principal or interest due
on indebtedness incurred in completing our initial business combination, or to fund the purchase of other companies. If we are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share plus any pro
rata interest earned on the funds held in the trust account and not previously released to us to pay our taxes on the liquidation
of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our
initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure
additional financing could have a material adverse effect on the continued development or growth of the target business. None of our
sponsor, officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business
combination. If we are unable to complete our initial business combination, our public stockholders may only receive approximately $10.00
per share on the liquidation of our trust account, and our warrants will expire worthless. Furthermore, as described in the risk factor
entitled “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share,” under certain circumstances our public stockholders may receive
less than $10.00 per share upon the liquidation of the trust account.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not
support.
Our
initial stockholders owned shares representing 20% of our issued and outstanding shares of common stock as of the completion of our initial
public offering. Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner
that you do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate
transactions. If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately-negotiated transactions,
this would increase their control. Factors that would be considered in making such additional purchases would include consideration of
the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our initial
stockholders, is divided into three classes, each of which will generally serve for a term of three years with only one class of directors
being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial
business combination, in which case all of the current directors will continue in office until at least the completion of the initial
business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority
of the board of directors will be considered for election and our initial stockholders, because of their ownership position, will have
considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least until the
completion of our initial business combination.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike
most blank check companies, if (i) we issue additional Class A common stock or equity-linked securities, excluding the
forward purchase securities, for capital raising purposes in connection with the closing of our initial business combination at a Newly
Issued Price of less than $9.20 per share, (ii) the aggregate gross proceeds from such issuances represent more than 60% of the
total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation
of our initial business combination (net of redemptions), and (iii) the Market Value is below $9.20 per share, then the exercise
price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00
per share redemption trigger prices described in the prospectus for our initial public offering under “Description of Securities —
Warrants — Public Stockholders’ Warrants — Redemption of warrants when the price per Class A common
share equals or exceeds $18.00” and “Redemption of warrants when the price per Class A common share equals
or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and
the Newly Issued Price, and the $10.00 per share redemption trigger price described below under “Description of Securities —
Warrants — Public Stockholders’ Warrants — Redemption of warrants when the price per Class A common
share equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the Market Value
and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target business.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that the proxy statement with respect to the vote on an initial business combination include historical and
pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer
documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in
accordance with, or be reconciled to, accounting principles generally accepted in the United States of America (“GAAP”)
or international financial reporting standards as issued by the International Accounting Standards Board (“IFRS”) depending
on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the pool
of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for us
to disclose such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed
time frame.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial
financial and management resources, and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act
requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the
year ended December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer
qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation
requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not
be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial
reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly
burdensome on us as compared to other public companies because a target company with which we seek to complete our initial business combination
may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development
of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such business combination.
Our
search for and ability to complete a business combination, and any target business with which we ultimately complete a business combination,
may be adversely affected by general market conditions, political considerations, pandemics, volatility in the capital and debt markets
and other social and geopolitical events.
Our
search for and ability to complete a business combination is subject to macroeconomic and geopolitical risks, including the emergence
or continuation of widespread health emergencies or pandemics, cyberattacks or campaigns, the current or anticipated impact of climate
change, extreme weather events or natural disasters, military conflict, civil unrest, terrorism or other similar events, which could
adversely affect business and economic conditions in the U.S. and abroad. For example, the ongoing COVID-19 outbreak has resulted in
widespread adverse impacts on the global economy and financial markets worldwide. The business of any potential target business with
which we consummate a business combination could be materially and adversely affected by COVID-19 and its variants. Furthermore, we may
be unable to complete a business combination if continued concerns relating to COVID-19, and its variants, continue to restrict travel,
limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are
unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19, and its variants, 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 its variants, and the actions to contain COVID-19, and its variants,
or treat its impact, among others. In addition, Russia’s recent invasion of Ukraine and related escalating conflicts could result
in regional instability and adversely impact commodity and other financial markets as well as economic conditions, especially in Europe.
These events could magnify inflationary pressure resulting from the COVID-19 pandemic and extend any prolonged period of higher inflation,
all of which could negatively impact our ability to complete a business combination or otherwise affect target businesses. If the disruptions
posed by COVID-19 and its variants, the conflict in Ukraine and 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.
Additionally,
our ability to complete a transaction may be dependent on the ability to raise equity and debt financing and any of these events could
adversely impact our or the targets ability to do so due to, among other things, increased market volatility, decreased market liquidity
and third-party financing being unavailable on terms acceptable to us or at all.
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and
complete an initial business combination.
In
recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed in ways
adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the
premiums charged for such policies have generally increased and the terms of such policies have generally become less favorable. These
trends may continue into the future.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive
for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage
as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less
favorable terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact
on the post-business combination’s ability to attract and retain qualified officers and directors.
In
addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential
liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order
to protect our directors and officers, the post-business combination entity may need to purchase additional insurance with respect
to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business combination
entity, and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
The
impact of recent developments in Ukraine
In
February 2022, as a result of the invasion of Ukraine by Russia, economic sanctions were imposed by the U.S., the European Union, and
certain other countries on Russian financial institutions and businesses. While it is difficult to estimate the impact of current or
future sanctions on the Company’s business and financial position, these sanctions could adversely impact the Company’s operations
and prospects for a business combination.
Risks
Relating to our Sponsor and Management Team
Past
performance by our management team and their affiliates may not be indicative of future performance of an investment in the Company.
Information
regarding performance by, or businesses associated with, our management team, is presented for informational purposes only. Past performance
by our management team or businesses associated with sponsor is not a guarantee either (i) of success with respect to any business
combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination.
You should not rely on the historical record of the performance of our management team or businesses associated with them as indicative
of our future performance of an investment in the Company or the returns the Company will, or is likely to, generate going forward.
We
may seek business combination opportunities in industries or sectors that may or may not be outside of our management’s area of
expertise.
Although
our management team has expertise across a variety of industries and sectors, we will consider an initial business combination outside
of our management’s area of expertise if an initial business combination candidate is presented to us and we determine that such
candidate offers an attractive business combination opportunity for our company or we are unable to identify a suitable candidate in
a sector or industry in which a member of our management team has expertise after having expanded a reasonable amount of time and effort
in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate,
we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that
an investment in our units will not ultimately prove to be less favorable to investors in our initial public offering than a direct investment,
if such an opportunity were available, in an initial business combination candidate. In the event we elect to pursue a business combination
outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation
or operation, and the information contained in this Form 10-K regarding the areas of our management’s expertise would not be relevant
to an understanding of the business that we elect to acquire. As a result, our management may not be able to ascertain or assess adequately
all of the relevant risk factors. Accordingly, any stockholders who choose to remain stockholders following our initial business combination
could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts
of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target
business in senior management or advisory positions following our initial business combination, it is likely that some or all of the
management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial
business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be
unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources
helping them become familiar with such requirements. In addition, the officers and directors of an initial business combination candidate
may resign upon completion of our initial business combination. The departure of an initial business combination target’s key personnel
could negatively impact the operations and profitability of our post-combination business. The role of an initial business combination
candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although
we contemplate that certain members of an initial business combination candidate’s management team will remain associated with
the initial business combination candidate following our initial business combination, it is possible that members of the management
of an initial business combination candidate will not wish to remain in place. The loss of key personnel could negatively impact the
operations and profitability of our post-combination business.
We
are dependent upon our officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our officers and directors. We believe that
our success depends on the continued service of our executive officers and directors, at least until we have completed our initial business
combination. In addition, our officers and directors are not required to commit any specified amount of time to our affairs and, accordingly,
will have conflicts of interest in allocating management time among various other business activities, including identifying potential
business combinations and monitoring the related due diligence, negotiations and other activities. We do not have an employment agreement
with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more
of our directors or officers could have a detrimental effect on us.
Our
key personnel may negotiate employment or consulting agreements as well as reimbursement of out-of-pocket expenses, if any, with a target
business in connection with a particular business combination. These agreements may provide for them to receive compensation or reimbursement
for out-of-pocket expenses, if any, following our initial business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the combined company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the initial business combination. Additionally, they may negotiate
reimbursement of any out-of-pocket expenses incurred on our behalf prior to the consummation of our initial business combination,
should they choose to do so. Such negotiations would take place simultaneously with the negotiation of the initial 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 initial business combination, or as reimbursement for such out-of-pocket expenses. 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 initial business combination will not be the
determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty,
however, that any of our key personnel will remain with us after the completion of our initial business combination. We cannot assure
you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any
of our key personnel will remain with us will be made at the time of our initial business combination.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to
how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial
business combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for an initial business combination and their other businesses. Each of
our officers is engaged in other business endeavors for which he may be entitled to substantial compensation and our officers are not
obligated to contribute any specific number of hours per week to our affairs. Our independent directors may also serve as officers or
board members for other entities. If our officers’ and directors’ other business affairs require them to devote substantial
amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs
which may have a negative impact on our ability to complete our initial business combination. For a complete discussion of our officers’
and directors’ other business affairs, please see the section of this Form 10-K entitled “Management — Directors
and Officers.”
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.
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 sponsor may form, and our officers and directors may become an officer or director
of, another special purpose acquisition company with a class of securities intended to be registered under the Exchange Act prior to
the completion of our initial business combination.
Our
officers and directors also may become aware of business opportunities that may be appropriate for presentation to us and the other entities
to which they owe certain fiduciary or contractual duties.
Accordingly,
they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts
may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us.
Our amended and restated certificate of incorporation 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.
For
a complete discussion of our officers’ and directors’ business conflict of interests and the potential conflicts of interest
that you should be aware of, please see the sections of this Form 10-K entitled “Management — Officers, Directors and
Directors,” “Management — Conflicts of Interest” and “Certain Relationships and Related Party Transactions.”
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our
interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or
have an interest. In fact, we may enter into an initial business combination with a target business that is affiliated with our sponsor,
our directors or officers. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
The
personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target
business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and
selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of
a particular business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be a
breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such individuals
for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may make against them
for such reason.
Our
letter agreement with our sponsor, directors, and officers may be amended without stockholder approval.
Our
letter agreement with our sponsor, directors, and officers contains provisions relating to transfer restrictions of our founder shares
and sponsor warrants, indemnification of the trust account, waiver of redemption rights and participation in liquidation distributions
from the trust account. This letter agreement may be amended without stockholder approval. An amendment to the letter agreement was previously
entered into in order to permit the Sponsor to issue profits interests in the Sponsor to Foresight Consulting Group LLC (“Foresight”)
in exchange for Foresight’s agreement to perform certain consulting services for the Sponsor. While we do not expect our board
to approve an amendment to this agreement prior to our initial business combination, it may be possible that our board, in exercising
its business judgment and subject to its fiduciary duties, chooses to approve one or more further amendments to this agreement. Any such
amendments to the letter agreement would not require approval from our stockholders and may have an adverse effect on the value of an
investment in our securities.
Risks
Relating to Our Securities
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value
of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00 per share.
The
proceeds held in the trust account are and will be invested only in U.S. government treasury obligations with a maturity of 185 days
or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest
only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive
rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest
rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may
in the future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination
or make certain amendments to our amended and restated memorandum and articles of association, our public stockholders are entitled to
receive their pro-rata share of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable (less,
in the case we are unable to complete our initial business combination, $100,000 of interest). Negative interest rates could reduce the
value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00
per share.
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. |
In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must
ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities
do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete
an initial business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan
to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or
to be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held
in the trust account may only be invested in U.S. “government securities,” within the meaning of Section 2(a)(16) of
the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act, which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement,
the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments,
and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses
in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within
the meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest to occur of:
(i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted in connection
with a stockholder vote to amend our amended and restated certificate of incorporation to (A) modify the substance or timing of
our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100%
of our public shares if we do not complete our initial business combination within 24 months from the closing of our initial public
offering or (B) with respect to any other material provisions relating to stockholders’ rights or pre-initial business
combination activity; or (iii) absent an initial business combination within 24 months from the closing of our initial public
offering, our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares.
If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed
to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for
which we have not allotted funds and may hinder our ability to complete an initial business combination or may result in our liquidation.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances described herein, on the liquidation of our trust account and our warrants will expire worthless.
We
have not and will not be registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities
Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants,
thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon
exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be
entitled to exercise such warrant and such warrant may have no value and expire worthless.
We
have not and will not be registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities
Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable,
but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file
with the SEC a registration statement for the registration under the Securities Act of the shares of Class A common stock issuable
upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within 60 business days
following our initial business combination and to maintain a current prospectus relating to the Class A common stock issuable upon
exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot
assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information
set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not
current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the
Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable
for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless
the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder,
or an exemption from registration is available. Notwithstanding the foregoing, if a registration statement covering the Class A
common stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our initial
business combination, warrantholders may, until such time as there is an effective registration statement and during any period when
we shall have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” pursuant to
the exemption provided by Section 3(a)(9) of the Securities Act; provided that such exemption is available. If that exemption, or
another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. In no event will we be
required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we
are unable to register or qualify the shares underlying the warrants under applicable state securities laws and there is no exemption
available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration
or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire
worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price
solely for the shares of Class A common stock included in the units. If and when the warrants become redeemable by us, we may not
exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration
or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our
best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in
which the warrants were initially offered by us in our initial public offering. However, there may be instances in which holders of our
public warrants may be unable to exercise such public warrants but holders of our private warrants may be able to exercise such private
warrants.
If
you exercise your public warrants on a “cashless basis,” you will receive fewer shares of Class A common stock from
such exercise than if you were to exercise such warrants for cash.
Under
the following circumstances, the exercise of the public warrants may be required or permitted to be made on a cashless basis: (i) if
a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by
the 60th business day after the closing of our initial business combination, warrantholders may, until such time as there
is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement,
exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption;
(ii) if our common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies
the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require
holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9)
of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement;
and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to
the extent an exemption is not available; and (iii) if we call the public warrants for redemption, our management will have the
option to require all holders that wish to exercise warrants to do so on a cashless basis. In the event of an exercise on a cashless
basis, a holder would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock
equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants
multiplied by the excess of the “fair market value” (as defined in the next sentence) over the exercise price of the warrants
by (y) the fair market value. The “fair market value” is the average reported closing price of the Class A common
stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant
agent or the volume weighted average price of the Class A common stock during the 10 trading days immediately following the date
on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, you would receive fewer shares of Class A
common stock from such exercise than if you were to exercise such warrants for cash.
The
grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination, and
the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant
to an agreement to be entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial
stockholders and their permitted transferees can demand that we register the resale of private placement warrants, the shares of Class A
common stock issuable upon exercise of the founder shares and the private placement warrants held, or to be held, by them and holders
of warrants that may be issued upon conversion of working capital loans may demand that we register the resale of such warrants or the
Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market
price of our Class A common stock. In addition, the existence of the registration rights may make our initial business combination
more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek
in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common
stock that is expected when the securities owned by our initial stockholders or holders of working capital loans or their respective
permitted transferees are registered for resale.
We
may issue additional shares of Class A common stock or preferred stock to complete our initial business combination or under an
employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock upon
the conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as
a result of the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would
dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation
authorizes the issuance of up to 300,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares
of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share.
Immediately after our initial public offering, there were 277,000,000 and 14,250,000 authorized but unissued shares of Class A common stock and Class B common stock,
respectively, available for issuance, which amount does not take into account the shares of Class A common stock reserved for issuance
upon exercise of outstanding warrants or the shares of Class A common stock issuable upon conversion of Class B common stock.
Immediately after the consummation of our initial public offering, there will be no shares of preferred stock issued and outstanding.
Shares of Class B common stock are convertible into shares of our Class A common stock initially at a one-for-one ratio
but subject to adjustment as set forth herein, including in certain circumstances in which we issue Class A common stock or equity-linked securities
related to our initial business combination.
We
may issue a substantial number of additional shares of Class A common stock or preferred stock to complete our initial business
combination or under an employee incentive plan after completion of our initial business combination (although our amended and restated
certificate of incorporation provides that we may not issue additional shares of capital stock that would entitle the holders thereof
to receive funds from the trust account or vote on any initial business combination or on matters related to our pre-initial business
combination activity). We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio
greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained
in our amended and restated certificate of incorporation. However, our amended and restated certificate of incorporation provides, among
other things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle
the holders thereof to (i) receive funds from the trust account, (ii) vote on any initial business combination or (iii) vote
on matters related to our pre-initial business combination activity. These provisions of our amended and restated certificate of
incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with the approval of our
stockholders. However, our executive officers and directors have agreed, pursuant to a written agreement with us, that they will not
propose any amendment to our amended and restated certificate of incorporation to (A) modify the substance or timing of our obligation
to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public
shares if we do not complete our initial business combination within 24 months from the closing of our initial public offering or
(B) 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 of common stock upon approval of any
such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
The
issuance of additional shares of common or preferred stock:
| ● | may
significantly dilute the equity interest of investors in our initial public offering; |
| ● | may
subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; |
| ● | could
cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers
and directors; and |
| ● | may
adversely affect prevailing market prices for our units, Class A common stock and/or warrants. |
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete an initial business combination, which may
adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of March 29, 2022 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. We have agreed that we will not incur any
indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies
held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from the
trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
| ● | default
and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
| ● | acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
| ● | our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing
while the debt security is outstanding; |
| ● | our
inability to pay dividends on our common stock; |
| ● | using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund 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; |
| ● | limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution
of our strategy; and |
| ● | other
disadvantages compared to our competitors who have less debt. |
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of
at least a majority of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the
exercise period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could
be decreased, all without your approval.
Our
warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as
warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least a majority of the then
outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly,
we may amend the terms of the public warrants in a manner adverse to a holder of public warrants if holders of at least a majority of
the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the
consent of at least a majority of the then outstanding public warrants is unlimited, examples of such amendments could be amendments
to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise period
or decrease the number of shares of our Class A common stock purchasable upon exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their expiration, at
a price of $0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00
per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described
under the heading “Description of Securities — Warrants — Public Stockholders’ Warrants —
Anti-dilution Adjustments”) for any 20 trading days within a 30 trading-day period ending on the third trading
day prior to proper notice of such redemption and provided that certain other conditions are met. If and when the warrants
become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities
for sale under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the holders are
otherwise unable to exercise the warrants. Redemption of the outstanding warrants could force you to (i) exercise your warrants
and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market
price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding
warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
In
addition, we have the ability to redeem the outstanding public warrants at any time after they become exercisable and prior to their
expiration, at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that
the closing price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant as described under the heading “Description of Securities —
Warrants — Public Stockholders’ Warrants — Anti-dilution Adjustments”) for any 20 trading
days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption and provided that
certain other conditions are met, including that holders will be able to exercise their warrants prior to redemption for a number of
Class A common stock determined based on the redemption date and the fair market value of our Class A common stock. Please
see “Description of Securities — Warrants — Public Stockholders’ Warrants — Redemption of
warrants when the price per Class A common share equals or exceeds $10.00.” The value received upon exercise of
the warrants (1) may be less than the value the holders would have received if they had exercised their warrants at a later time
where the underlying share price is higher and (2) may not compensate the holders.
None
of the private placement warrants will be redeemable by us so long as they are held by our sponsor, Jefferies or their respective permitted
transferees.
Our
warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult
to effectuate our initial business combination.
We
issued warrants to purchase 7,666,667 shares of our Class A common stock as part of the units offered in our initial public
offering and, simultaneously with the closing of our initial public offering, we issued in a private placement warrants to purchase an
aggregate of 4,733,333 shares of Class A common stock at $11.50 per share. Our initial stockholders own an aggregate of 5,750,000
founder shares. The founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment
as set forth herein. In addition, if our sponsor or an affiliate of our sponsor or certain of our officers and directors make any working
capital loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.50 per warrant at the option of the
lender. Such warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise
period.
To
the extent we issue shares of Class A common stock to effectuate an initial business combination, the potential for the issuance
of a substantial number of additional shares of Class A common stock upon exercise of these warrants and conversion rights could
make us a less attractive business combination vehicle to a target business.
Any
such issuance will increase the number of issued and outstanding shares of our Class A common stock and reduce the value of the
shares of Class A common stock issued to complete the initial business combination. Therefore, our warrants and founder shares may
make it more difficult to effectuate an initial business combination or increase the cost of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that, so long
as they are held by our sponsor, Jefferies or their respective permitted transferees, (i) they will not be redeemable by us, (ii) they
(including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be
transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination, (iii) they
may be exercised by the holders on a cashless basis and (iv) the holders thereof (including with respect to shares of Class A
common stock issuable upon exercise of such warrants) are entitled to registration rights.
Because
each unit contains one-third of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than
units of other blank check companies.
Each
unit contains one-third of one redeemable warrant. No fractional warrants will be issued upon separation of the units and only whole
warrants will trade. Accordingly, unless you purchase at least three units, you will not be able to receive or trade a whole warrant.
This is different from other offerings similar to ours whose units include one share of common stock and one warrant to purchase one
share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion
of an initial business combination since the warrants will be exercisable in the aggregate for one-third of the number of shares
compared to units that each contain a warrant to purchase one share, thus making us, we believe, a more attractive business combination
partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if they included a warrant
to purchase one share.
The
determination of the offering price of our units, the size of our initial public offering and terms of the units was more arbitrary than
the pricing of securities and size of an offering of an operating company in a particular industry. You may have less assurance, therefore,
that the offering price of our units properly reflected the value of such units than you would have in a typical offering of an operating
company.
Prior
to our initial public offering there had been no public market for any of our securities. The public offering price of the units and
the terms of the warrants were negotiated between us and the underwriters. In determining the size of our initial public offering, management
held customary organizational meetings with representatives of the underwriters, both prior to our inception and thereafter, with respect
to the state of capital markets, generally, and the amount the underwriters believed they reasonably could raise on our behalf. Factors
considered in determining the size of our initial public offering, prices and terms of the units, including the Class A common stock
and warrants underlying the units, included:
| ● | the
history and prospects of companies whose principal business is the acquisition of other companies; |
| ● | prior
offerings of those companies; |
| ● | our
prospects for acquiring an operating business; |
| ● | a
review of debt to equity ratios in leveraged transactions; |
| ● | an
assessment of our management and their experience in identifying operating companies; |
| ● | general
conditions of the securities markets at the time of our initial public offering; and |
| ● | other
factors as were deemed relevant. |
Although
these factors were considered, the determination of our initial public offering size, price and terms of the units was more arbitrary
than the pricing of securities of an operating company in a particular industry since we have no historical operations or financial results.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District
of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our
warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating
in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York
or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such
jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to
such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by
the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and
to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope of
the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States
District Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants,
such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State
of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”),
and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s
counsel in the foreign action as agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant
agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional
costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial
condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
An
active market for our securities may not develop, which would adversely affect the liquidity and price of our securities
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic conditions.
Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained. Securityholders
may be unable to sell their securities unless a market can be established and sustained.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage
transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these
provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of
a premium over prevailing market prices for our securities.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in
our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions
may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the
suit will, subject to certain exceptions, be deemed to have consented to service of process on such stockholder’s counsel, which
may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in
our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and certain other actions
may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the
suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which
the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the
Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days
following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery
or (C) for which the Court of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring
any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and
restated certificate of incorporation. This choice of forum provision may limit or make more costly a stockholder’s ability to
bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or
stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision
contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional
costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our
amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent
permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction
over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result,
the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other
claim for which the federal courts have exclusive jurisdiction. In addition, our amended and restated certificate of incorporation provides
that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of
America shall, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of
action arising under the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder. We note, however, that
there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities
laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal
courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Our
Warrants are accounted for as liabilities and the changes in value of our Warrants could have a material effect on our financial results.
On
April 12, 2021, the staff of the Securities and Exchange Commission (the “SEC Staff”) issued a public statement entitled
“Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)”
(the “SEC Staff Statement”), wherein the SEC Staff expressed its view that certain terms and conditions common to SPAC warrants
may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to being treated as equity. Specifically,
the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination,
which terms are similar to those contained in the warrant agreement governing our Warrants. As a result of the SEC Staff Statement, we
reevaluated the accounting treatment of our Warrants and pursuant to the guidance in ASC 815, Derivatives and Hedging (“ASC 815”),
determined the Warrants should be classified as derivative liabilities measured at fair value on our balance sheet, with any changes
in fair value to be reported each period in earnings on our statement of operations.
As
a result of the recurring fair value measurement of our Warrants and any subsequent changes in fair value from a prior period, our results
of operations in our financial statements may fluctuate quarterly based on factors which are outside of our control. Due to this recurring
fair value measurement, we expect that we will recognize non-cash gains or losses on our Warrants each reporting period and that the
amount of such gains or losses could be material.
We
have identified a material weakness in our internal control over financial reporting as of December 31, 2021 due to a material weakness
in internal control over financial reporting related to our accounting for complex financial instruments. If we are unable to develop
and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and
operating results.
In
the quarterly report for the period ended September 30, 2021 we identified a material weakness in our internal control over financial
reporting related to the Company’s accounting and reporting of complex financial instruments, including application of ASC 480-10-S99-3A
to its accounting classification of public shares. As a result of this material weakness, our management has concluded that our disclosure
controls and procedures were not effective as of December 31, 2021. We have taken a number of measures to remediate the material weaknesses
described herein. However, if we are unable to remediate our material weaknesses in a timely manner or we identify additional material
weaknesses, we may be unable to provide required financial information in a timely and reliable manner and we may incorrectly report
financial information. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations
by the stock exchange on which our ordinary shares are listed, the SEC or other regulatory authorities. The existence of material weaknesses
in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a
negative effect on the trading price of our shares. We can give no assurance that the measures we have taken and plan to take in the
future will remediate the material weakness identified or that any additional material weaknesses or restatements of financial results
will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention
of these controls. Even if we are successful in strengthening our controls and procedures, in the future those controls and procedures
may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is
a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected
and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
We expect to take steps to remediate the material weakness, but there is no assurance that any remediation efforts will ultimately have
the intended effects.
If
we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent
or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial
statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic
reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our
stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the
future, will be sufficient to avoid potential future material weaknesses.
There
have been and may in the future be changes to current accounting practices for SPACs, which could result in further changes to our financial
statements and disclosures, and which could have a material adverse impact.
Recently,
there have been changes to the accepted accounting for SPACs. For example, on April 12, 2021, the staff of the SEC issued the SEC Staff
Statement, which resulted in the warrants and other related instruments issued by many SPACs, including us, being classified as liabilities
rather than equity. Further changes in the accepted accounting treatment of features related to SPACs may occur in the future. Changes
or differing interpretations in the accepted accounting practices related to SPACs could result in the recognition of additional accounting
errors in previously issued financial statements, further restatements of previously issued audited financial statements, the filing
of notices that previously issued financial statements may not be relied upon, and additional findings of material weaknesses and significant
deficiencies in internal controls over financial reporting, all or any of which could have a material adverse impact on us.
General
Risk Factors
We
are a blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve
our business objective.
We
are a blank check company with no operating results. Because of our limited 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. If we
fail to complete our initial business combination, we will never generate any operating revenues.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability
to negotiate and complete our initial business combination and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply with
certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time
consuming and costly.
Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations,
as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our
initial business combination and results of operations.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of
certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make
our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may
deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status
earlier, including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any
June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict
whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities
less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise
would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of
such extended transition period, which means that when a standard is issued or revised and it has different application dates for public
or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the
new or revised standard. This may make comparison of our financial statements with another public company, which is neither an emerging
growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because
of the potential differences in accountant standards used.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual
revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds
$700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may
also make comparison of our financial statements with other public companies difficult or impossible.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of
third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or
to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of
them, could have adverse consequences on our business and lead to financial loss.
If
we effect our initial business combination with a company with locations or operations or opportunities outside of the United States,
we would be subject to a variety of additional risks that may negatively impact our operations.
If
we effect our initial business combination with a company with locations or operations or opportunities outside of the United States,
we would be subject to any special considerations or risks associated with companies operating in an international setting, including
any of the following:
| ● | higher
costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements
of overseas markets; |
| ● | rules
and regulations regarding currency redemption; |
| ● | complex
corporate withholding taxes on individuals; |
| ● | laws
governing the manner in which future business combinations may be effected; |
| ● | tariffs
and trade barriers; |
| ● | regulations
related to customs and import/export matters; |
| ● | longer
payment cycles and challenges in collecting accounts receivable; |
| ● | tax
issues, including, but not limited to, tax law changes and variations in tax laws as compared to the United States; |
| ● | currency
fluctuations and exchange controls; |
| ● | cultural
and language differences; |
| ● | changes
in industry, regulatory or environmental standards within the jurisdictions where we operate; |
| ● | crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; |
| ● | deterioration
of political relations with the United States; and |
| ● | government
appropriations of assets. |
We
may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely
impact our results of operations and financial condition.
Investments
in post-restructured equities are subject to various risks.
Business
combinations with post-restructured entities entail special considerations and risks. If we are successful in completing a business
combination with such a target business, we may be subject to, and possibly adversely affected by, the following risks:
| ● | investments
in such companies are speculative, prices are volatile, and market movements are difficult to predict; |
| ● | supply
and demand for distressed securities change rapidly and are affected by a variety of market factors over which we have no control and
which may reduce the pool of profitable investment opportunities; |
| ● | our
ability to identify undervalued investment opportunities that fit our business strategy involves a high degree of uncertainty, and no
assurance can be given that we will be able to identify such opportunities; |
| ● | such
investments may take a substantial period of time before realizing their anticipated value and returns generated from such investments
may not adequately compensate for the business and financial risks assumed; and |
| ● | there
is no guarantee that we will be able to achieve our investment objectives or provide any return on invested capital. |
Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to post-restructured entities. Accordingly, if we acquire a target business that
is not a post-restructured entity, it is possible that these specific risks would not affect us in the same manner, but we would
be subject to other risks attendant with the specific industry in which we operate or target business that we acquire, none of which
can be presently ascertained.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may
be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in
our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an initial business combination, and there are still many special
purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration.
As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify
a suitable target and to consummate an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available
targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause target
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions including between the U.S. and China and between Russia and Ukraine, or increases in the cost
of additional capital needed to close business combinations or operate targets post-business combination. This could increase the
cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and may result
in our inability to consummate an initial business combination on terms favorable to our investors altogether.
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about
our ability to continue as a “going concern.”
In
connection with the Company’s assessment of going concern considerations accordance with FASB’s Accounting Standards Update
(“ASU”) 2014-15, we have determined that if the Company is unable to complete a business combination by February 2, 2023,
then the Company will cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution
raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements contained elsewhere
in this report do not include any adjustments that might result from our inability to continue as a going concern.