ITEM
1. BUSINESS
Overview
We
are a newly organized blank check company incorporated as a Delaware corporation formed for the purpose of effecting a merger,
share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses,
which we refer to throughout this Report as our initial business combination or our business combination. We consummated our initial
public offering on January 22, 2021.
To
date, our efforts have been limited to organizational activities as well as activities related to our initial public offering.
We have not selected any specific business combination target and we have not, nor has anyone on our behalf, initiated any substantive
discussions, directly or indirectly, with any business combination target. We have generated no operating revenues to date and
we may not generate operating revenues even after we consummate our initial business combination.
While
we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we intend to focus on industries
that complement our management team’s background, and to capitalize on the ability of our management team to identify and
acquire a business, focusing on early stage companies in the biotechnology and/or telemedicine sector of the healthcare industry
in North America. In particular, we intend to look at companies in the life sciences and pharmaceutical services sectors where
our management team has extensive experience. Additionally, certain members of our board have extensive experience in the technology
industry and we intend to also look at companies that fit in the technology industry.
Our
Board of Directors, led by our founder, Robb Knie, has combined decades of experience in growing and developing areas of the healthcare
industry. The team consists of Robb Knie, who is also our Chairman, Chief Executive Officer, and Chief Financial Officer, along
with Michael Reavey, Jeff Pavell, Jonathan Hale Zippin and Sundeep Agrawal as directors. Mr. Knie and Mr. Reavey also have extensive
experience in the technology industry, with Mr. Reavey having worked at Microsoft and Electronic Arts. We believe that the strong
scientific and technology backgrounds of our management and directors, combined with their financial and entrepreneurial expertise,
will propel the company to identify a valuable acquisition target that can thrive in a public-listing environment.
Our
Management Team and Directors
Our
founder, Robb Knie, has served as President, Chief Executive Officer and as Chairman of Hoth Therapeutics, Inc. (Nasdaq:
HOTH), a biopharmaceuticals company, since May 2017. From 2002 to 2010, Mr. Knie was a Semiconductor Analyst for PAW Partners.
From 1993 until 1995, Mr. Knie served as Northeast Regional Manager of American Express Financial Advisors, a financial services
company. He has been featured on Bloomberg, The Wall Street Journal and Forbes Magazine as an Independent Equity Analyst. Mr.
Knie has over 20 years of equity markets experience. Mr. Knie has been a member of the American Chemical Society, Institute of
Electrical and Electronics Engineers, as well as The National Alliance for Youth Sports.
Michael
Reavey, our director, is an established security executive with over 20 years-experience in security leadership spanning product
engineering, incident response, security assurance, and risk management. At Electronic Arts (EA), a gaming company, where he is
the Vice President-Enterprise Security since October 2017, he is responsible for the security of EA’s global enterprise.
Since February 2020, he also serves as a technical advisor to Change Healthcare, Inc., a provider of revenue and payment cycle
management and clinical information exchange solutions, connecting payers, providers, and patients in the United States healthcare
system. Prior to joining EA, Mr. Reavey was a Partner at Microsoft (where he worked from 2003 to October 2017) and head of Program
Management for Microsoft Azure’s core security services. He was in charge of developing, building and running services that
provided Azure’s authorization, authentication, encryption, data protection and systems security. During this time, Mr.
Reavey also brought several advanced security products to market as part of Office 365 and Azure Security offerings, which have
saved countless customers from zero-day attacks. Before joining the Cloud and Enterprise division Mr. Reavey was a General Manager
in the Trustworthy Computing Group at Microsoft Corporation. Most notably he led Microsoft’s response as to sophisticated
cyber events such as the Snowden revelations, cyber-attacks like Flame and Stuxnet and developed new ways to help Microsoft’s
enterprise customers get secure and stay secure with mature programs built around a predictable product servicing and data protection.
Prior to joining Microsoft, Mr. Reavey served as a Captain in the U.S. Air Force, where he led mobile technical teams that secured
and optimized Air Force networks at installations world-wide, and launched red-team efforts to validate Air Force cyber defenses
as part of the 92nd Information Warfare Squadron at Kelly Air Base, TX.
Jeff
Pavell, M.D., our director, has over twenty years’ medical experience. Presently, Dr. Pavell acts as an off-campus site
proctor for Rusk Institute residents training for Rehabilitation Medicine. He is board certified in physical medicine and rehabilitation,
pain medicine, and sports medicine, as well as acupuncture, which he uses as complementary care for his patients. Dr. Pavell is
currently the Chief of Rehabilitation Medicine at Englewood Hospital and Medical Center. Dr. Pavell acts as Race Director &
President of the Haworth 5K (since 2009) as well as President of the Vikings travel soccer & football clubs (since 2011).
He also teaches students and residents at Columbia University, where he is on the teaching staff. He has, along with two colleagues,
co-authored a chapter, “History and Past Medical History,” in The Low Back Pain Handbooks First and Second Editions,
both well-received texts for primary care practitioners. Dr. Pavell graduated from the New York College of Osteopathic Medicine
with honors, and went on to do his residency and Chief Residency at the New York University Medical Center’s Rusk Institute
of Rehabilitation and the Bellevue Hospital. He then completed a fellowship in Buffalo in the use of fluoroscopic injections for
management of pain and immobility.
Jonathan
Hale Zippin M.D., Ph.D., our director, is an Associate Professor of Dermatology and Pharmacology and an Associate Attending
Dermatologist at Weill Medical College of Cornell University since 2010, where he is the current Vice Chair of Research in the
Department of Dermatology and is the Director of the Contact, Occupational, and Photo Dermatitis Unit. Following completion of
his post-doctoral studies in 2010, Dr. Zippin joined the faculty of the Department of Dermatology at Weill Cornell Medical College.
Dr. Zippin founded and is the Director of the Contact, Occupational, and Photodermatitis Service which provides comprehensive
dermatologic allergy care for hundreds of patients a year. Dr. Zippin also serves as the Director of the dermatology course for
the medical school. Over the past ten years, he has served on the general faculty council, which is responsible for approving
medical college policy and promotions. Dr. Zippin is a fellow of the American Academy of Dermatology and member of the Society
for Investigative Dermatology and the American Contact Dermatitis Society. He has served on the Board of Directors for the American
Contact Dermatitis Society and multiple committees within the organization. He is currently on the Council for the Pan-American
Society for Pigment Cell Research. For the past 18 years, he has helped to establish the role of distinct cAMP microdomains in
mammalian cell biology and revealed new mechanisms in insulin release and cancer. Dr. Zippin has published numerous peer-reviewed
papers, been awarded multiple patents, and written book chapters. He serves as a reviewer for multiple journals such as Cell Reports
Medicine, Dermatitis, Journal of American Academy of Dermatology, Pigment Cell and Melanoma Research, and Molecular Carcinogenesis.
Zippin has served as a consultant for numerous pharmaceutical companies including Pfizer and Cellgene. He is also the founder
of CEP Biotech that is developing antibody based diagnostics for cancer. Finally, Dr. Zippin has been involved in the design and/or
execution of multiple clinical trials testing both devices and pharmaceutical interventions.
Sundeep
Agrawal, M.D., our director, is currently a Managing Director at Colt Ventures, a family office focused on investing in private
and public life science companies since 2019. He has experience across venture capital and public equity, healthcare investment
banking, clinical medicine and research. Previously, he was a Vice President at Longitude Capital from 2017 to 2019, an approximately
$2.0 billion healthcare investment firm focused on public and private investments in life sciences. Dr. Agrawal has served as
a Board Observer at Recode Therapeutics since March 2020 and served as a Board Observer at Axonics Modulation Tech (Nasdaq: AXNX)
from April 2018 to December 2018 and as a Board Observer at Venus Concept (Nasdaq: VERO) from July 2017 to December 2018. Prior
to Longitude Capital, he was an Executive Director in Healthcare Investment Banking at Oppenheimer & Co. from 2010-2017 where
he worked on public and private capital markets transactions in healthcare. Dr. Agrawal completed clinical training at Lenox Hill
Hospital from 2013 to 2014. He has clinical and basic science research experience with publications in leading journals and has
been the recipient of several national research awards and grants. Dr. Agrawal currently sits on the advisory board of APN Health
(since 2016), a medical device company, and on the board of IndoUSrare, an independent non-profit organization focused on helping
patients of Indian origin with rare diseases in the USA, India, and globally, since 2020. Dr. Agrawal holds an M.D. from the George
Washington School of Medicine and a B.A. in Biology from George Washington University.
Industry
Opportunity
While
we may acquire a business in any industry, our focus will be on the early stage North American companies in the biotechnology
and/or telemedicine sector of the healthcare industry and in the technology industry, as our management team has investment and
operational experience in these industries.
Biotechnology
We
believe the healthcare industry, particularly the life sciences and medical technology sectors, represents an attractive target
market with a large number of potential acquisition opportunities. We intend to focus on companies have excellent management teams,
strong growth potential, and that would benefit from access to capital to fund acquisitions or working capital for clinical development
and/or organic growth.
We
anticipate that we will draw significantly from our team’s experience in the healthcare and healthcare related industries
in the United States. We believe the healthcare industry, particularly the life sciences and pharmaceutical services sectors,
are attractive for a number of reasons:
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Supportive
macro dynamics The healthcare industry consists of sectors within the economic system providing curative therapeutics,
preventive, rehabilitative, and palliative care for patients. The industry includes organizations providing those goods and
services, as well as the doctors, nurses, and other healthcare employees. According to a CMS report released in December 2019,
total healthcare spending in the United States grew 4.6 percent in 2018, reaching $3.6 trillion or $11,172 per person. The
CMS report further found that national health spending accounted for 17.7 percent of the US Gross Domestic Product and is
expected to grow at an average annual rate of 5.4 percent for 2019-28 and to reach $6.2 trillion by 2028. The healthcare market
globally mirrors a similar trend in the United States of an increased contribution to the economy, due to the aging of the
global population and other durable macro dynamics. As a disproportionate amount of overall healthcare spending is associated
with diseases of aging, the aging of the global population will continue to drive increased healthcare consumption. In addition,
less developed countries have gone through an unprecedented period of healthcare insurance and infrastructure expansion that
has led the countries to have significantly higher contributions to the global healthcare marketplace.
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Broad
universe of potential targets The target universe of healthcare opportunities is extensive, considering healthcare’s
overall contribution to the economy. A factor that further broadens the universe is the high amount of innovation occurring
within healthcare. In the wake of the genomics revolution, the pace of innovation is accelerating. With the streamlining of
the externalization of breakthrough science from academic institutions, particularly in the United States, as mandates shifted
from protecting intellectual property to externalizing it, increasing numbers of potentially disruptive healthcare innovations
exist that may be underappreciated or underfunded. Early-stage companies need capital and advisory services to reach their
commercial potential.
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Overall
healthcare spending. According to the Centers for Medicare and Medicaid Services, in 2019, spending on healthcare reached
17.7% of the total GDP in the United States, and is expected to rise. With increased spending comes increased opportunities
for competition and increased value in new innovations. We believe the current trajectories of healthcare spending will expose
groundbreaking technologies and valuable opportunities for growth in the healthcare space.
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Increased
attention to pipeline products. According to the U.S. National Library of Medicine, in 2000, there were about 2,100 registered
clinical trials. By the end of 2019, that number had increased to over 325,000. While many clinical trials are performed outside
the United States, increased spending and attention on life science innovation are key drivers for future US growth. We believe
that this increase in pipeline attention will draw investors and businesses into the healthcare industry in the coming months
and years.
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Increased
risk of infectious diseases. The Coronavirus (COVID-19) pandemic, the swine flu (H1N1) pandemic of 2009, SARS outbreak
of 2002, and yearly influenza seasons are only a few examples of devastating diseases that have come to the world’s
attention over the last 20 years. The COVID-19 pandemic alone has taken over 220,000 lives in the United States alone as of
October 2020 and it is estimated that it will cost the United States at least $8 trillion over the next 10 years.
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Increased
attention to precision-based medicine. In 2015, President Obama launched the Precision Medicine Initiative; one
where personalized medicine dominates, and treatment is individualized to each patient, dedicating $130 million in funding
to the initiative opened the space for advances, and the demand for such approaches has only increased since its 2015 inception.
Providing hope for both the rare disease and oncology spaces, precision medicine has the potential to significantly increase
positive patient outcomes and treatment experiences.
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Shift
from volume-based care to value-based care. In traditional volume-based care, or fee-for-service, healthcare providers
are reimbursed for the number of services ordered. In these models, neither quality of care nor necessity of individual services
(tests, procedures, etc.) are considered. The recent shift to performance-based care, or a more holistic approach to treatment,
maximizes cost efficiency while holding providers accountable for the quality of services they offer. This change will significantly
alter the dynamics of the US healthcare system and will undoubtedly create opportunities for businesses to enter the healthcare
space and make a difference in patient care.
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Technological
advances and spread of social media. Recent years have seen great advances in electronic healthcare services (e.g. electronic
medical records, telehealth, awareness of mental health on social media, etc.). Combined with shifts in the methods of healthcare
delivery in the United States (e.g. value-based care), there are attractive opportunities for development of flagship products
or services.
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Technology
Additionally,
we believe that in recent years, a wide range of technological breakthroughs have accelerated and transformed industries and businesses
across the world. Some of these breakthroughs include breakthroughs in cloud computing, artificial intelligence, machine learning,
data analytics and cybersecurity, which have upended industries both large and small.
We
also believe that the current COVID-19 pandemic has accelerated digitalization. The world has been forced to adapt to a new normal
where technology has become essential for communication and for both personal and business activities on a daily basis. Our management
team believes that there is demand from public market investors to locate and invest in high growth technology companies, and
we plan to look at a number of technology companies in addition to the biotechnology companies noted above.
Acquisition
Strategy
Although
our management team has extensive experience in the healthcare and technology industries, we will not restrict our proposition
search to these fields. Over the course of their careers, the members of our management team and board of directors have developed
a broad network of contacts and corporate relationships that we believe will be useful for sourcing investment opportunities.
Our management team intends to seek an acquisition target with strong management and a strong business track record, to match
that of our own executives. We intend to be involved with the acquisition target’s existing executives following the business
combination, supporting the company’s success and growth with the help of our Management and Board of Directors. We intend
to focus on target businesses with valuations of $80 to $200 million or more. We may use other criteria as well. Any evaluation
relating to the merits of a particular initial business combination may be based on these general criteria as well as other considerations,
factors and criteria that our management may deem relevant.
Acquisition
Criteria
We
believe the majority of the transactions and targets we will review and consider will fall into the following categories, although
we may decide to enter into a business combination with a target that falls outside of these categories:
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Will benefit from a public currency. Access to the public equity markets could allow the target company to utilize an additional
form of capital, enhancing its ability to pursue accretive acquisitions, high-return capital projects, and/or strengthen its balance
sheet;
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Has a healthy growing platform. We will seek to invest in companies that we believe possess attractive business models
that will provide a growing platform for equity investors;
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Has a management team and/or a strong sponsor that desires a significant equity stake in the post-business combination company.
We will seek to partner with a management team and/or seller who is well-incentivized and aligned in an effort to create stockholder
value;
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Can be acquired at an attractive valuation for public market investors. We will seek to be a disciplined steward of capital
that will invest on terms that we believe provide attractive risk-adjusted returns;
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Will be resilient to economic cycles. We will focus on recession-resilient business models; and
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Will benefit from our long-term sponsorship as it looks to accelerate its growth in the public markets. We intend to acquire
a company which we believe will benefit from our differentiated industry network, brand and proprietary value-creation capabilities
to improve financial performance and business planning.in acquisition searches and compare qualities of considered businesses.
However, we may choose to engage a target business that does not meet these criteria or guidelines.
In
evaluating a prospective acquisition candidate, we expect to conduct a thorough due diligence review which will encompass, among
other things, meetings with incumbent management, investors and employees, document reviews, inspection of facilities, as well
as a review of scientific, regulatory, operational, financial, legal and other information which will be made available to us.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers
or directors and their respective affiliates. In the event we seek to complete our initial business combination with a company
that is affiliated with our sponsor, officers or directors and their respective affiliates, we, or a committee of independent
directors, will obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory
Authority, or FINRA, or a qualified independent accounting firm that our initial business combination is fair to our company from
a financial point of view.
In
evaluating a prospective acquisition candidate, we expect to conduct a thorough due diligence review which will encompass, among
other things, meetings with incumbent management, investors and employees, document reviews, inspection of facilities, as well
as a review of scientific, regulatory, operational, financial, legal and other information which will be made available to us.
We are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers
or directors and their respective affiliates. In the event we seek to complete our initial business combination with a company
that is affiliated with our sponsor, officers or directors and their respective affiliates, we, or a committee of independent
directors, will obtain an opinion from an independent investment banking firm which is a member of the Financial Industry Regulatory
Authority, or FINRA, or a qualified independent accounting firm that our initial business combination is fair to our company from
a financial point of view.
Initial
Business Combination
Our
initial business combination must occur with one or more target businesses that together have an aggregate fair market value of
at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable) at the
time of the agreement to enter into the initial business combination. If our board is not able to independently determine the
fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm
that is a member of FINRA, or an independent accounting firm with respect to the satisfaction of such criteria. Our stockholders
may not be provided with a copy of such opinion, nor will they be able to rely on such opinion.
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 sponsors, 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 12 months from the closing of our initial public offering (or up to 18
months from the consummation of our initial public offering if we extend the period of time to consummate a business combination)
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.
Our
Acquisition Process
We
believe that conducting comprehensive due diligence on prospective investments is particularly important within the healthcare
and technology industries. We will utilize the diligence, rigor, and expertise of our managements’ respective platforms
to evaluate potential targets’ strengths, weaknesses, and opportunities to identify the relative risk and return profile
of any potential target for our initial business combination. Given our management team’s extensive tenure investing in
the healthcare and technology industries, we will often be familiar with a prospective target’s end-market, competitive
landscape and business model.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity.
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an
entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or
contractual obligations to present such opportunity to such entity. Our management team is continuously made aware of potential
investment opportunities, one or more of which we may desire to pursue for a 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.
Our
officers have agreed not to become an officer or director of any other special purpose acquisition company with a class of securities
registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, until we have entered into a definitive
agreement regarding our initial business combination or we have failed to complete our initial business combination within 12
months after the closing of our initial public offering (or up to 18 months from the consummation of our initial public offering
if we extend the period of time to consummate a business combination).
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination.
In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of
our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs
of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses
will find this method a more certain and cost effective method to becoming a public company than the typical initial public offering.
In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts
that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent
with stockholders’ interests. It can offer further benefits by augmenting a company’s profile among potential new
customers and vendors and aid in attracting talented employees.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by 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, 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.
Financial
Position
With
funds in the trust account available for a business combination initially in the amount of $56,062,500 (after payment of
$2,012,500 of deferred underwriting commissions), 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 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 complete our initial business combination using cash from the proceeds of our initial public offering
and the private placement of the private placement warrants, our capital stock, debt or a combination of these as the consideration
to be paid in our initial business combination. We may seek to complete our initial business combination with a company or business
that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks
inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt instruments, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our business combination or used for redemptions of our Class
A common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including
for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness
incurred in completing our initial business combination, to fund the purchase of other assets, 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 complete our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would expect to complete
such financing only simultaneously with the completion of our business combination. In the case of an initial business combination
funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business
combination would disclose the terms of the financing and, only if required by 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 12 months from
the closing of our initial public offering (or up to 18 months from the consummation of our initial public offering if we extend
the period of time to consummate a business combination) 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.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our 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.
Sources
of Target Businesses
We
expect to receive a number of proprietary transaction opportunities to originate as a result of the business relationships, direct
outreach, and deal sourcing activities of our management team. In addition to the proprietary deal flow, we anticipate that target
business candidates will be brought to our attention from various unaffiliated sources, including investment banking firms, consultants,
accounting firms, private equity groups, large business enterprises, and other market participants. 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 Report and know what types of businesses we are targeting. Our management team and our sponsor, as well as 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 or conventions. 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 acquisition candidate. In no event will our sponsor or any of our existing officers or directors, or any entity with which
they are affiliated, be paid any finder’s fee, consulting fee, advisory fee or other compensation prior to, or for any services
they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction
that it is) although we may consider cash or other compensation to officers or advisors we may hire subsequent to our initial
public offering to be paid either prior to or in connection with our initial business combination. We have agreed to reimburse
our sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination.
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our
sponsor, officers or directors or making the acquisition through a joint venture or other form of shared ownership with our officers
or directors. In the event we seek to complete our initial business combination with a 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 which is a member of FINRA or an independent accounting firm that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context. As
more fully discussed in the section of this Report entitled “Directors, Executive Officers and Corporate Governance —
Conflicts of Interest,” if any of our officers or directors becomes aware of a business combination opportunity that falls
within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she
may be required to present such business combination opportunity to such entity prior to presenting such business combination
opportunity to us.
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. In addition, we intend to focus our search for an initial business
combination in a single industry. By completing our business combination with only a single entity, our lack of diversification
may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact
on the particular industry in which we operate after our initial business combination, and
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cause
us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our 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 or of our board, if any, in the target business cannot presently
be stated with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with
us following our business combination, it is presently unknown if any of them will devote their full efforts to our affairs subsequent
to our 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. The determination as to whether any members of our
board of directors will remain with the combined company will be made at the time of our initial business combination.
Following
a business combination, to the extent that we deem it necessary, we may seek to recruit additional managers to supplement the
incumbent management team 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
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Whether
Stockholder
Approval is
Required
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Purchase
of assets
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No
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Purchase
of stock of target not involving a merger with the company
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No
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Merger
of target into a subsidiary of the company
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No
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Merger
of the company with a target
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Yes
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Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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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 common stock
then outstanding;
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any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such
persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired
or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common shares
or voting power of 5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change of control.
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The
decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder
approval is not required by applicable law or stock exchange listing requirements will be made by us, solely in our discretion,
and will be based on business and legal reasons, which include a variety of factors, including, but not limited to: (i) the timing
of the transaction, including in the event we determine stockholder approval would require additional time and there is either
not enough time to seek stockholder approval or doing so would place the company at a disadvantage in the transaction or result
in other additional burdens on the company; (ii) the expected cost of holding a stockholder vote; (iii) the risk that the stockholders
would fail to approve the proposed business combination; (iv) other time and budget constraints of the company; and (v) additional
legal complexities of a proposed business combination that would be time-consuming and burdensome to present to stockholders.
Permitted
Purchases of our Securities
In
the event we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, officers or their affiliates may purchase shares in privately
negotiated transactions or in the open market either prior to or following the completion of our initial business combination.
However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms
or conditions for any such transactions.
None
of the funds in the trust account will be used to purchase shares in such transactions. 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. 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 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. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules.
The
purpose of such purchases would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it
appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may
not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our common stock may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor,
officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly
or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors 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 the business combination. Our sponsor, officers, directors 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 only be made 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.
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 $10.10 per public share. The per-share amount we will distribute to investors who properly redeem their shares
will not be reduced by the deferred underwriting commissions we 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 business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business
combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under
the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder
approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our
outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval.
If we structure a business combination transaction with a target company in a manner that requires stockholder approval, we will
not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We intend to conduct
redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by
law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons. So long
as we obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with such rules.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will,
pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same
financial and other information about the initial business combination and the redemption rights as is required under Regulation
14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon
the public announcement of our business combination, 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 if we elect to redeem our public shares through
a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event that 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 are not purchased by our sponsor, 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 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.
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.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the
solicitation of proxies, and not pursuant to the tender offer rules, and
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file
proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the business combination. 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 sponsor, officers, directors and initial
stockholders will count toward this quorum and have agreed to vote their founder shares and any public shares purchased during
or after our initial public offering 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 the founder shares owned by our sponsor, officers, directors and initial
stockholders, we would need 2,185,000, or 38.0% of the 5,750,000 public shares sold in our initial public offering to be voted
in favor of a transaction (assuming all outstanding shares are voted) in order to have our initial business combination approved.
We intend to give approximately 30 days (but 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 sponsor, officers and directors, 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.
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 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 business combination may require: (i) cash consideration to be paid to the target or its
owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention
of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate
cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate
amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A
common stock submitted for redemption will be returned to the holders thereof.
Limitation
on Redemption upon Completion of 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 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 20% of the shares sold in our initial public offering, which we refer to as the
“Excess Shares.” We believe this restriction will discourage stockholders from accumulating large blocks of shares,
and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business combination
as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or
on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 20% 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 20% of the shares sold in our initial public offering, we believe we will limit the ability of
a small group of stockholders to unreasonably attempt to block our ability to complete our business combination, particularly
in connection with a business combination with a target that requires as a closing condition that we have a minimum net worth
or a certain amount of cash. However, our amended and restated certificate of incorporation does not restrict our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in
the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the
business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically
using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The tender
offer or proxy materials, 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 from the time we send out our tender offer materials until the close of the tender offer period, or up
to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares
if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders
to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $100.00 and it would be up to the
broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether
or not we require holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement
of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection
with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote
on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on
the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was
approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership.
As a result, the stockholder then had an “option window” after the completion of the business combination during which
he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he
or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation.
As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would
become “option” rights surviving past the completion of the business combination until the redeeming holder delivered
its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials
or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share
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 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 business combination is not completed, we may continue to try to complete a business combination with a different
target until 12 months from the closing of our initial public offering (or up to 18 months from the consummation of our initial
public offering if we extend the period of time to consummate a business combination).
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 12 months from the closing of our initial public
offering (or up to 18 months from the consummation of our initial public offering if we extend the period of time to consummate
a business combination) to complete our initial business combination. If we are unable to complete our business combination within
such 12-month (or up to 18 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 ten business days thereafter, redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the
trust account and not previously released to us to pay our taxes (less up to $50,000 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), subject to applicable law,
and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to our warrants, which will expire worthless if we fail to complete our business combination within the 12-month
time period (or up to 18 month time period if we extend the period of time to consummate a business combination).
Our
sponsor, officers and directors 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 12 months from the closing of our initial
public offering (or up to 18 months from the consummation of our initial public offering if we extend the period of time to consummate
a business combination). 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 12-month (or up to 18 month) time period.
Our
sponsor, officers and directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (i) that would modify the substance or timing of our obligation to allow
redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our
initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the consummation
of our initial public offering if we extend the period of time to consummate a business combination), or (ii) with respect to
any other material provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide
our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account 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 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.
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 $575,000 of proceeds held outside the trust account, although we
cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the
costs and expenses associated with implementing our plan of dissolution, 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 $50,000 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 $10.10. 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 $10.10. 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 (except the Company's Independent Registered Public Accounting Firm),
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest and claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there
is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from
bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes
that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
WithumSmith+Brown, PC, our independent registered public accounting firm 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. 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 discussed entering into a transaction agreement,
reduce the amount of funds in the trust account to below (i) $10.10 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, except as to any claims by a third party who executed
a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that
an executed waiver is deemed to be unenforceable against a third party, then our sponsor will not be responsible to the extent
of any liability for such third party claims We have not independently verified whether our sponsor has sufficient funds to satisfy
its indemnity obligations and believe that our sponsor’s only assets are securities of our company. We have not asked our
sponsor to reserve for such indemnification obligations. 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 $10.10 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 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) $10.10 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. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be less than $10.10 per public share.
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 (except the Company's Independent Registered Public Accounting Firm), prospective
target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or
claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity
of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act.
We will have access to up to approximately $575,000 from the proceeds of our initial public offering with which to pay any such
potential claims. In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities
is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors. In the event
that our offering expenses exceed our estimate of $500,000, we may fund such excess with funds from the funds not to be held in
the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding
amount. Conversely, in the event that the offering expenses are less than our estimate of $500,000, the amount of funds we intend
to be held outside the trust account would increase by a corresponding amount.
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 business combination within 12 months from the closing of our initial
public offering (or up to 18 months from the consummation of our initial public offering if we extend the period of time to consummate
a business combination) 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 business combination within 12 months from the closing of our initial public offering (or up
to 18 months from the consummation of our initial public offering if we extend the period of time to consummate a business combination),
is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful
redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete our
business combination within 12 months from the closing of our initial public offering (or up to 18 months from the consummation
of our initial public offering if we extend the period of time to consummate a business combination), we will: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem 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
$50,000 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), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under
Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention
to redeem our public shares as soon as reasonably possible following our 12th month (or up to 18th 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 (except the Company's Independent Registered
Public Accounting Firm), prospective target businesses or other entities with which we do business execute agreements with
us waiving any right, title, interest or claim of any kind in or to 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) $10.10 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 withdrawn 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 $10.10 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover 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 (i) in the event of the redemption of our public
shares if we do not complete our business combination within 12 months from the closing of our initial public offering (or up
to 18 months from the consummation of our initial public offering if we extend the period of time to consummate a business combination),
subject to applicable law, (ii) (a) in connection with a stockholder vote to approve an amendment to our amended and restated
certificate of incorporation to modify the substance or timing of our obligation to allow redemption in connection with our initial
business combination or to redeem 100% of our public shares if we have not consummated an initial business combination within
12 months from the closing of our initial public offering (or up to 18 months from the consummation of our initial public offering
if we extend the period of time to consummate a business combination) or (b) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity or (iii) our completion of an initial business combination, and then only
in connection with those public shares that such stockholder properly elected to redeem, subject to the limitations described
in this Report. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.
In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in
connection with the business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable
pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described above.
Competition
In
identifying, evaluating and selecting a target business for our business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than 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 acquisition
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 1 Rockefeller Plaza, Suite 1039, New York, NY 10020. The cost for our use of this space is included
in the $10,000 per month fee we will pay to our sponsor for office space, administrative and support services. We consider our
current office space adequate for our current operations.
Employees
and Human Capital Resources
We
currently have one individual, Robb Knie, who serves as both our Chief Executive Officer and Chief Financial Officer. Mr. Knie
is not obligated to devote any specific number of hours to our matters but he intends to devote as much of his time as he deems
necessary to our affairs until we have completed our initial business combination. The amount of time Mr. Knie 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. We do not intend to have any full time employees prior to the completion
of our initial business combination.
Periodic
Reporting and Financial Information
We
have registered our units, Class A common stock 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
have filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange
Act. As a result, we will be 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 business combination.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials 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 GAAP. We cannot assure you that any particular target business
selected by us as a potential acquisition 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 GAAP. To the extent that this requirement
cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition
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 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 acquisition.
ITEM
1A. RISK FACTORS
An
investment in our securities involves a high degree of risk. You should carefully consider the following risk factors and the
other information in this Annual Report on Form 10-K before investing in our securities. Our business and results of operations
could be seriously harmed by any of the following risks. The risks set out below are not the only risks we face. Additional risks
and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our
business, financial condition and/or operating results. If any of the following events occur, our business, financial condition
and results of operations could be materially adversely affected. In such case, the value and trading price of our securities
could decline, and you may lose all or part of your investment.
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 business combination, which means we may complete
our initial business combination even though a majority of our public stockholders do not support such a combination.
We
may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder
approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or
other legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval of a proposed business
combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion,
and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would
otherwise require us to seek stockholder approval. Accordingly, we may complete our initial business combination even if holders
of a majority of our public shares do not approve of the business combination we complete.
If
we seek stockholder approval of our initial business combination, our sponsor, officers and directors have agreed to vote in favor
of such initial business combination, regardless of how our public stockholders vote.
Unlike
many other blank check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority
of the votes cast by the public stockholders in connection with an initial business combination, our sponsor, officers, directors
and initial stockholders have agreed to vote their founder shares, as well as any public shares purchased during or after our
initial public offering, in favor of our initial business combination. 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, it is more likely that the necessary stockholder approval will
be received than would be the case if our sponsor, officers and directors agreed to vote their founder shares in accordance with
the majority of the votes cast by our public stockholders.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.
Since
our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have
the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, if we do not
seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination
may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth
in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
Furthermore, 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 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. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon completion
of our initial business combination 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 a business combination
transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares 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 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 our redemption
until we liquidate or you are able to sell your stock in the open market.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (COVID-19) outbreak and the status of debt and equity markets, as well
as protectionist legislation in our target markets.
The
outbreak of COVID-19 has resulted in a widespread health crisis that has and may continue to adversely affect the economies and
financial markets worldwide, and the business of any potential target business with which we may consummate a business combination
could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns
relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s
personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. In addition,
countries or supranational organizations in our target markets may develop and implement legislation that makes it more difficult
or impossible for entities outside such countries or target markets to acquire or otherwise invest in companies or businesses
deemed essential or otherwise vital. The extent to which COVID-19 impacts our search for and ability to consummate a business
combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information
which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If
the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, and result in protectionist
sentiments and legislation in our target markets, our ability to consummate a business combination, or the operations of a target
business with which we ultimately consummate a business combination, may be materially adversely affected. In addition, our ability
to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19
and other events.
If
we complete our initial business combination with a company with 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 complete our initial business combination with a company with 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:
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higher
costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal
requirements of overseas markets;
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rules
and regulations regarding currency redemption;
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complex
corporate withholding taxes on individuals;
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laws
governing the manner in which future business combinations may be effected;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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longer
payment cycles and challenges in collecting accounts receivable;
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tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls;
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rates
of inflation;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration
of political relations with the United States; and
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government
appropriations of assets.
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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.
If
we acquire an operating company or business in the healthcare industry, our future operations may be subject to risks associated
with this sector.
While
we may pursue an initial business combination target in any business or industry, we expect to focus our search on acquiring an
operating company or business in the healthcare industry. Because we have not yet identified or approached any specific target
business, we cannot provide specific risks of any business combination. However, risks inherent in investments in this sector
may include, but are not limited to, the following:
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Competition
could reduce profit margins.
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Our
inability to comply with governmental regulations affecting the healthcare industry could negatively affect our operations.
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An
inability to license or enforce intellectual property rights on which our business may depend.
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The
success of our planned business following consummation of our initial business combination may depend on maintaining a well-secured
business and technology infrastructure.
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If
we are required to obtain governmental approval of our products, the production of our products could be delayed and we could
be required to engage in a lengthy and expensive approval process that may not ultimately be successful.
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Continuing
government and private efforts to contain healthcare costs, including through the implementation of legal and regulatory changes,
may reduce our future revenue and our profitability following such business combination.
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Changes
in the healthcare related wellness industry and markets for such products affecting our customers or retailing practices could
negatively impact customer relationships and our results of operations.
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The
healthcare industry is susceptible to significant liability exposure. If liability claims are brought against us following
a business combination, it could materially adversely affect our operations.
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Dependence
of our operations upon third-party suppliers, manufacturers or contractors whose failure to perform adequately could disrupt
our business.
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The
Affordable Care Act, possible changes to it or its repeal, and how it is implemented could negatively impact our business.
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A
disruption in supply could adversely impact our business.
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Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to the healthcare industry. Accordingly, if we acquire a target business in
another industry, these risks will likely not affect us and we will be subject to other risks attendant with the specific industry
in which we operate or target business which we acquire, none of which can be presently ascertained.
There
are risks related to the technology industry to which we may be subject.
Business
combinations with companies with operations in the technology industry entail special considerations and risks. If we are successful
in completing a business combination with a target business with operations in the technology industry, we will be subject to,
and possibly adversely affected by, the following risks, including but not limited to:
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if
we do not develop successful new products or improve existing ones, our business will suffer;
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we
may invest in new lines of business that could fail to attract or retain users or generate revenue;
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we
will face significant competition and if we are not able to maintain or improve our market share, our business could suffer;
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disruption
or failure of our networks, systems, platform or technology that frustrate or thwart our users’ ability to access our
products and services, may cause our users, advertisers, and partners to cut back on or stop using our products and services
altogether, which could seriously harm our business;
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mobile
malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products could seriously harm
our business and reputation;
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if
we are unable to successfully grow our user base and further monetize our products, our business will suffer;
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if
we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished,
and our business may be seriously harmed;
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we
may be subject to regulatory investigations and proceedings in the future, which could cause us to incur substantial costs
or require us to change our business practices in a way that could seriously harm our business; and
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components
used in our products may fail as a result of a manufacturing, design, or other defect over which we have no control, and render
our devices inoperable.
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Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to the technology industry. Accordingly, if we acquire a target business in
another industry, these risks will likely not affect us and we will be subject to other risks attendant with the specific industry
in which we operate or target business which we acquire, none of which can be presently ascertained.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses
leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business
combination targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination
on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the
consummation of our initial public offering if we extend the period of time to consummate a business combination). Consequently,
such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our
initial business combination with that particular target business, we may be unable to complete our initial business combination
with any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have
limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected
upon a more comprehensive investigation.
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 only receive $10.10 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 12 months
from the closing of our initial public offering (or up to 18 months from the consummation of our initial public offering if we
extend the period of time to consummate a business combination). We may not be able to find a suitable target business and complete
our initial business combination within such time period. Our ability to complete our initial business combination may be negatively
impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. For example,
the outbreak of COVID-19 in the U.S. and globally may grow or resurge and while the extent of the impact of the outbreak on us
will depend on future developments, it could limit our ability to complete our initial business combination, including as a result
of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to
us or at all. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict
travel, limit the ability to have meeting 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. Additionally, the outbreak of COVID-19
may negatively impact businesses we may seek to acquire. If we have not completed our initial business combination within such
time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but
not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously
released to us to pay our taxes (less up to $50,000 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), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. In such case, our public stockholders may only receive $10.10 per share or less in certain circumstances, and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 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 $10.10 per share” and other risk factors
in this section.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers and their affiliates may elect
to purchase shares or warrants from public stockholders, which may influence a vote on a proposed business combination and reduce
the public “float” of our Class A common stock or warrants.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, officers 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. 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 or
their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise
their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The
purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining stockholder approval of the business combination, or to satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it
appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may
not otherwise have been possible.
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.
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 $10.10 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 intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international,
competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have
extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry
knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors.
While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our initial public
offering 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. This may place us at a competitive disadvantage in successfully negotiating a business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 per
share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.10 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 $10.10 per share” and other risk factors in this section.
If
the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account
are insufficient to allow us to operate for at least the next 12 months, we may be unable to complete our initial business combination,
in which case our public stockholders may only receive $10.10 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 the next 12 months
(or up to 18 months from the consummation of our initial public offering if we extend the period of time to consummate a business
combination), assuming that our initial business combination is not completed during that time. We believe that, upon the closing
of our initial public offering, the funds available to us outside of the trust account will be sufficient to allow us to operate
for at least the next 12 months (or up to 18 months from the consummation of our initial public offering if we extend the period
of time to consummate a business combination); 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 on terms more favorable to such target businesses) with respect to a particular proposed business combination,
although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid
for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a
result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with
respect to, a target business. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.10 per share or less in certain circumstances on the liquidation of our trust account and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 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 $10.10 per share” and other risk factors in this section.
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, it could limit the amount available to fund our search for a target business or businesses and complete our
initial business combination and we will depend on loans from our sponsor or management team to fund our search for a business
combination, to pay our taxes and to complete our initial business combination. If we are unable to obtain these loans, we may
be unable to complete our initial business combination.
Of
the net proceeds of our initial public offering and the sale of the private placement warrants, only $575,000, was available to
us initially outside the trust account to fund our working capital requirements. In the event that our offering expenses exceed
our estimate of $500,000, we may fund such excess with funds not to be held in the trust account. In such case, the amount of
funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the
offering expenses are less than our estimate of $500,000, the amount of funds we intend to be held outside the trust account would
increase by a corresponding amount. If we are required to seek additional capital, we would need to borrow funds from our sponsor,
management team or other third parties to operate, or we may be forced to liquidate. None of our sponsor, members of our management
team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would
be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial business
combination. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe
third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our
trust account. 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 because we do not have sufficient funds available to us, we will be forced
to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive approximately $10.10
per share on our redemption of our public shares, and our warrants will expire worthless. In certain circumstances, our public
stockholders may receive less than $10.10 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 $10.10 per share” and other risk factors in this section.
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, 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
surface all material issues that may be present inside a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.10 per share.
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 (except the Company's Independent Registered Public Accounting Firm), prospective target
businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim
of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute
such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account,
including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims
challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets,
including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies
held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into
an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. Making such a request of potential target businesses may make
our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver,
it may limit the field of potential target businesses that we might pursue. WithumSmith+Brown, PC, our independent registered
public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we are unable to complete our business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our business combination, we will be required to provide
for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption.
Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.10 per share initially
held in the trust account, due to claims of such creditors. Our sponsor has agreed that it will be liable to us if and to the
extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have
discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below (i) $10.10 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 the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes. This
liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access
to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against
certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed
to be unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third
party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations
and believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such
indemnification obligations. 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 $10.10 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 will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective
target businesses.
Our
independent 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) $10.10 per public share or (ii) such lesser
amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value
of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, 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 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. If our independent directors choose not to enforce
these indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders
may be reduced below $10.10 per share.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and 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.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt following our initial public offering, we may choose to incur substantial debt to complete our 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:
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default
and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our
debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain
such financing while the debt security is outstanding;
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our
inability to pay dividends on our common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund
other general corporate purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and
execution of our strategy; and
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other
disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our 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. This lack of diversification may negatively impact our operations and profitability.
Of
the net proceeds from our initial public offering and the sale of the private placement warrants, as of the date of this annual
report, up to $58,075,000 was available to complete our business combination and pay related fees and expenses (which includes
up to $2,012,500 for the payment of deferred underwriting commissions).
We
may complete our 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 complete our 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. In addition, we intend
to focus our search for an initial business combination in a single industry. Accordingly, the prospects for our success may be:
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solely
dependent upon the performance of a single business, property or asset, or
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to complete our initial business combination with a privately held company. Very
little public information generally exists about private companies, and we could be required to make our decision on whether to
pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide
assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We
may structure a 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
an interest in the target sufficient for the post-transaction company not to be required to register as an investment company
under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction
company owns 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively
own a minority interest in the post business combination company, depending on valuations ascribed to the target and us in the
business combination transaction. 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 the company’s stock than we initially acquired. Accordingly, this may make it more likely
that our management will not be able to maintain our control of the target business. We 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 a 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 underwriters’ fees and commissions
(such that we are not subject to the SEC’s “penny stock” rules). As a result, we may be able to complete our
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 business combination pursuant to the tender offer rules, have entered into privately negotiated agreements
to sell their shares to our sponsor, officers, directors 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 business combination exceed the aggregate amount of cash available
to us, we will not complete the business combination or redeem any shares, all shares of Class A common stock submitted for redemption
will be returned to the holders thereof, and we instead may search for an alternate business combination.
Because
we are not limited to a particular industry, sector or any specific target businesses with which to pursue our initial business
combination, you will be unable to ascertain the merits or risks of any particular target business’ operations.
Although
we expect to focus our search for a target business in the healthcare or technology industries, we may seek to complete a business
combination with an operating company in any industry or sector. However, we are not, under our amended and restated certificate
of incorporation, permitted to complete our business combination with another blank check company or similar company with nominal
operations. Because we have not yet selected or approached any specific target business with respect to a business combination,
there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations,
cash flows, liquidity, financial condition or prospects. To the extent we complete our 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 revenues 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 the significant
risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of
our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct
investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders who choose to
remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
We
may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of
expertise.
We
will consider a business combination outside of our management’s area of expertise if a business combination candidate is
presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company. 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 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 an opportunity were available, in a business combination candidate. In the event we elect to pursue an acquisition 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 Report 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 adequately
ascertain or assess all the significant risk factors. Accordingly, any stockholders who choose to remain stockholders following
our 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.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these criteria and guidelines, such combination
may not be as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition,
if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater
number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition
with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval
of the transaction is required by law, or we decide to obtain stockholder approval for business or other legal reasons, it may
be more difficult for us to attain stockholder approval of our initial business combination if the target business does not meet
our general criteria and guidelines. If we are unable to complete our initial business combination, our public stockholders may
receive only approximately $10.10 per share, or less in certain circumstances, on the liquidation of our trust account and our
warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 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 $10.10 per share” and other
risk factors in this section.
We
may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established
record of revenue or earnings, which could subject us to volatile revenues or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with an early stage company such as a pre-revenue entity with a limited
operating history, 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 and with limited historical financial data, a lack of revenues or earnings 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 the significant risk factors and we may not
have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with
no ability to control or reduce the chances that those risks will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and
consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our
company from a financial point of view.
Unless
we complete our business combination with an affiliated entity or our board cannot independently determine the fair market value
of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm that
is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our company from a financial
point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will
determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to complete our initial business combination, require
substantial financial and management resources, and increase the time and costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or
an accelerated filer 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
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 acquisition.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.10 per share, or less than such amount in certain circumstances, on the liquidation
of our trust account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.10 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 $10.10 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 $10.10 per share” and other risk factors in this
section.
Our
ability to successfully complete our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of members of our management team, some of whom may join us following our initial business combination. The loss of
such people could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully complete our business combination is dependent upon the efforts of members of our management team. The
role of members of our management team in the target business, however, cannot presently be ascertained. Although some members
of our management team may remain with the target business in senior management or advisory positions following our 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 acquisition candidate may resign upon completion of our initial business combination.
The departure of a business combination target’s key personnel could negatively impact the operations and profitability
of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial
business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition candidate following our initial business combination, it is possible
that members of the management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
In
order to complete our initial business combination, we may seek to amend our amended and restated certificate of incorporation
or other governing instruments, including our warrant agreement, in a manner that will make it easier for us to complete our initial
business combination but that our stockholders or warrant holders may not support.
In
order to complete a business combination, blank check companies have, in the recent past, amended various provisions of their
charters and governing instruments, including their warrant agreement. For example, blank check companies have amended the definition
of business combination, increased redemption thresholds, changed industry focus and, with respect to their warrants, amended
their warrant agreements to require the warrants to be exchanged for cash and/or other securities. We cannot assure you that we
will not seek to amend our charter or other governing instruments or change our industry focus in order to complete our initial
business combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and
corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the approval
of holders of 65% of our common stock, which is a lower amendment threshold than that of some other 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.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s
stockholders. In those companies, amendment of these provisions requires approval by between 90% and 100% of the company’s
public stockholders. Our amended and restated certificate of incorporation provides that any of its provisions related to pre-business
combination activity (including the requirement to deposit proceeds of our 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) 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 or in our initial business combination. Our initial stockholders,
who collectively beneficially own up to 20% of our common stock upon the closing 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-business combination behavior more easily than some other blank check companies, and this
may increase our ability to complete a business combination with which you do not agree. Our stockholders may pursue remedies
against us for any breach of our amended and restated certificate of incorporation.
Our
sponsor, officers and directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (i) that would modify the substance or timing of our obligation to allow
redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our
initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the consummation
of our initial public offering if we extend the period of time to consummate a business combination), or (ii) with respect to
any other material provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide
our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest
(which interest shall be net of taxes payable), 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.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement warrants will be sufficient
to allow us to complete our initial business combination, because we have not yet selected any prospective target business we
cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our initial public offering and
the sale of the private placement warrants prove to be insufficient, either because of the size of our initial business combination,
the depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant
number of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated
transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing
or to abandon the proposed business combination. 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. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.10 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 business combination, we may require such financing to fund the operations
or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued
development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing
to us in connection with or after our initial business combination. If we are unable to complete our initial business combination,
our public stockholders may only receive approximately $10.10 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 $10.10 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 $10.10 per share” and other risk factors
in this section.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include target historical and/or 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, or GAAP, or international financial reporting standards as issued by the International
Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to
be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These
financial statement requirements may limit the pool of potential target businesses we may acquire because some targets may be
unable to provide such financial statements in time for us to disclose such financial statements in accordance with federal proxy
rules and complete our initial business combination within the prescribed time frame.
Risks
Relating to our Securities
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt
about our ability to continue as a “going concern.”
As
of December 31, 2020, we had approximately $3,000 in cash and a working capital deficiency of approximately $131,000 (not taking
into account tax obligations of approximately $1,000 that may be paid using investment income earned in trust account). Further,
we have incurred, expect to continue to incur, significant costs in pursuit of our acquisition plans. Management’s plans
to address this need for capital are discussed under “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.” Our plans to raise capital and to consummate our initial business combination, including the
Proposed Business Combination, may not be successful. These factors, among others, raise substantial doubt about our ability to
continue as a going concern. The financial statements contained elsewhere in this report do not include any adjustments that might
result from our inability to continue as a going concern.
The
securities in which we invest the proceeds held in the trust account could bear a negative rate of interest, which could reduce
the interest income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption
amount received by public stockholders may be less than $10.10 per share.
The
net proceeds of our initial public offering and certain proceeds from the sale of the private placement warrants, in the amount of $58,075,000,
will be held in an interest-bearing trust account. The proceeds held in the trust account may only be invested in direct U.S. government
securities with a maturity of 185 days or less, or in certain money market funds which invest only in direct U.S. 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 of very low or negative yields, the amount of interest income (which we may withdraw to pay income taxes) would be reduced.
In the event that we are unable to complete our initial business combination, our public stockholders are entitled to receive their share
of the proceeds held in the trust account, plus any interest income. If the balance of the trust account is reduced below $50,500,000
as a result of negative interest rates, the amount of funds in the trust account available for distribution to our public stockholders
may be reduced below $10.10 per share.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business
combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as
applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents
or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date
set forth in the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to
approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent
electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed.
You
do 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 are 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 public shares 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 (A) to modify the substance or timing of
our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination within 12 months from the closing of our initial public offering (or up
to 18 months from the consummation of our initial public offering if we extend the period of time to consummate a business combination)
or (B) with respect to any other provision 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 12 months from
the closing of our initial public offering (or up to 18 months from the consummation of our initial public offering if we extend
the period of time to consummate a business combination), subject to applicable law and as further described herein. In addition,
if we are unable to complete an initial business combination within 12 months from the closing of our initial public offering
(or up to 18 months from the consummation of our initial public offering if we extend the period of time to consummate a business
combination) 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 12 months from the closing of our initial public offering (or up to 18 months from the consummation
of our initial public offering if we extend the period of time to consummate a business combination) before they receive funds
from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust
account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a
loss.
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. Although after giving effect to our initial public offering we
expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the Nasdaq listing standards, we cannot
assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to our initial business
combination. In order to continue listing our securities on Nasdaq prior to our initial business combination, we must maintain
certain financial, distribution and stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity
(generally $2,500,000) and a minimum number of holders of our securities (generally 300 public holders, with at least 50% of such
round lot holders holding securities with a market value of at least $2,500). Additionally, in connection with our initial business
combination, we will be required to demonstrate compliance with Nasdaq’s initial listing requirements, which are more rigorous
than Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq.
For instance, our stock price would generally be required to be at least $4.00 per share and our stockholders’ equity would
generally be required to be at least $5.0 million and we would be required to have a minimum of 300 round lot holders of our securities.
We cannot assure you that we will be able to meet those initial listing requirements at that time.
If
Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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limited availability of market quotations for our securities;
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reduced
liquidity for our securities;
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a
determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class
A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary
trading market for our securities;
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limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and
eventually our Class A common stock and warrants will be listed on Nasdaq, our units, Class A common stock and warrants will be
covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow
the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then
the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state 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.
You
are 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
our initial business combination with a target business that has not been identified, we may be deemed to be a “blank check”
company under the United States securities laws. However, because we had net tangible assets in excess of $5,000,000 upon the
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 became immediately tradable and we have a longer period of time to complete our initial
business combination than do companies subject to Rule 419. Moreover, being subject to Rule 419 would prohibit the release of
any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to
us in connection with the completion of our initial business combination.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our 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, which we refer to as the
“Excess Shares.” However, our amended and restated certificate of incorporation does not restrict our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our business combination. Your inability to redeem
the Excess Shares will reduce your influence over our ability to complete our 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 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.
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 business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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on the nature of our investments; and
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restrictions
on the issuance of securities, each of which may make it difficult for us to complete our business combination.
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addition, we may have imposed upon us burdensome requirements, including:
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registration
as an investment company;
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of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
will be to identify and complete a business combination and thereafter to operate the post-transaction business or assets for
the long 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 United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act 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. Our initial public offering
is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust
account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our primary business
objective, which is a 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 modify (A) the substance or timing of our obligation to
allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete
our initial business combination within 12 months from the closing of our initial public offering (or up to 18 months from the
consummation of our initial public offering if we extend the period of time to consummate a business combination) or (B) with
respect to any other provision relating to stockholders’ rights or pre-initial business combination activity; or (iii) absent
a business combination, our return of the funds held in the trust account to our public stockholders as part of our redemption
of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company
Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would
require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 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 $10.10 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 $10.10 per share” and other risk factors in this section.
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 12 months from the closing of our
initial public offering (or up to 18 months from the consummation of our initial public offering if we extend the period of time
to consummate a business combination) 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 12th month from the closing of our initial public offering (or the
18th month from the consummation of our initial public offering if we extend the period of time to consummate a business
combination) in the event we do not complete our 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 12 months from the
closing of our initial public offering (or up to 18 months from the consummation of our initial public offering if we extend the
period of time to consummate a business combination) is not considered a liquidating distribution under Delaware law and such
redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims
of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating
distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect directors.
In
accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one
year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required
to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election
is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors
prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the
DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation
of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court
of Chancery in accordance with Section 211(c) of the DGCL.
We
are not 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 and potentially causing such warrants
to expire worthless.
We
are not 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 reasonable
best efforts to file, and within 60 business days following our initial business combination to have declared effective, a registration
statement under the Securities Act covering such shares and maintain a current prospectus relating to the Class A common stock
issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant
agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental
change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated
by reference therein are not current 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 above,
if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that
it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option,
require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section
3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration
statement, but we will be required to use our best efforts to register or qualify the shares under applicable blue sky laws to
the extent an exemption is not available. In no event will we be required to net cash settle any warrant. If the issuance of the
shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder
of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such
event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for
the shares of Class A common stock included in the units. If and when the warrants become redeemable by us, we may exercise our
redemption right even if we are unable to register or qualify the underlying shares of Class A common stock for sale under all
applicable state securities laws. We will use our best efforts to register or qualify such shares of Class A common stock under
the blue sky laws of the state of residence in those states in which the warrants were offered by us in our initial public offering.
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 their founder shares, after those shares convert
to our Class A common stock at the closing of our initial business combination. In addition, holders of our private placement
warrants and their permitted transferees can demand that we register the private placement warrants and the Class A common stock
issuable upon exercise of the private placement warrants, and holders of warrants that may be issued upon conversion of working
capital loans or extension loans may demand that we register 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 common stock owned by our initial stockholders, holders of our private placement warrants or holders of our working capital
loans or extension loans their respective permitted transferees are registered.
We
may issue additional 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 closing 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 50,000,000 shares of Class A common stock,
par value $0.0001 per share, 2,000,000 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 44,250,000 and 562,500 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 any 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 common 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 securities that can vote with common stockholders 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 closing 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 12 months from the closing
of our initial public offering (or up to 18 months from the consummation of our initial public offering if we extend the period
of time to consummate a business combination) or (B) with respect to any other material provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem
their shares of 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:
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significantly dilute the equity interest of investors in our initial public offering;
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may
subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common
stock;
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could
cause a change 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
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may
adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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The
exercise price for the public warrants is higher than in some similar blank check company offerings in the past, and, accordingly,
the warrants are more likely to expire worthless.
The
exercise price of the public warrants is higher than some similar blank check companies in the past. Historically, the exercise
price of a warrant was generally a fraction of the purchase price of the units in the initial public offering. The exercise price
for our public warrants is $11.50 per share. As a result, the warrants are less likely to ever be in the money and more likely
to expire worthless.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders
of at least 50% of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased,
the 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 were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then
outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants.
Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then
outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the
consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments
to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten the exercise period
or decrease the number of shares of our Class A common stock purchasable upon exercise of a warrant.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District
of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our
warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating
in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State
of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to
such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any
objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created
by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and
exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to
have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which
is within the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New
York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of
any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal
courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions
(an “enforcement action”), and (y) having service of process made upon such warrant holder in any such enforcement
action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our
warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings,
we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely
affect our business, financial condition and results of operations and result in a diversion of the time and resources of our
management and board of directors.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a
price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per
share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption
and provided certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a
time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might
otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants
are called for redemption, is likely to be substantially less than the market value of your warrants.
Our
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 complete our business combination.
We
issued warrants to purchase 2,800,000 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 2,800,000 shares of Class A common stock at $11.50 per share. Our initial stockholders currently own 1,437,500 founder
shares. The founder shares are automatically convertible into shares of Class A common stock at the closing of our initial business
combination on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor makes any working capital
loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.00 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 complete a 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 acquisition 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 business combination.
Therefore, our warrants and founder shares may make it more difficult to complete a business combination or increase the cost
of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that,
so long as they are held by our sponsor or its 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 the completion of our initial business combination and (iii) they may be exercised by at
the option of the holders thereof on a cashless basis.
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
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(i)
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we
issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with
the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share;
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(ii)
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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
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(iii)
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the
Market Value is below $9.20 per share,
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then
the exercise price of the warrants will be adjusted to be equal to 115% of the greater of the Market Value and the Newly Issued
Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the greater
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.
The
determination of the offering price of our units and the size of our initial public offering is 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 reflects the value of such units than you would have in a typical offering of an
operating company.
Prior
to our initial public offering there has 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 the underwriters 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, include:
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history and prospects of companies whose principal business is the acquisition of other companies;
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prior
offerings of those companies;
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our
prospects for acquiring an operating business;
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a
review of debt to equity ratios in leveraged transactions;
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our
capital structure;
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an
assessment of our management and their experience in identifying operating companies;
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general
conditions of the securities markets at the time of our initial public offering; and
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other
factors as were deemed relevant.
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Although
these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities of an
operating company in a particular industry since we have no historical operations or financial results.
There
is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity
and price of our securities.
There
is currently no market for our securities. Stockholders therefore have no access to information about prior market history on
which to base their investment decision. Following our initial public offering, 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. You may be unable to sell your 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 other similar
actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder
bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel, 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 other similar
actions may be brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder
bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel 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, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action
arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware
shall have concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital
stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect
to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the
rules and regulations thereunder. 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. 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.
Risks
Relating to our Sponsor and Management Team
Members
of our management team may negotiate employment or consulting agreements with a target business in connection with a particular
business combination. These agreements may provide for them to receive compensation following our business combination and as
a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Members
of our management team may be able to remain with the company after the completion of our business combination only if they are
able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take
place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target
business. However, we believe the ability of such individuals to remain with us after the completion of our business combination
will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any members of our management team will remain with us after the completion of our business
combination. We cannot assure you that any members of our management team will remain in senior management or advisory positions
with us. The determination as to whether any members of our management team will remain with us will be made at the time of our
initial business combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may complete 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 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.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure
of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot
be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team
will remain associated with the acquisition candidate following our initial business combination, it is possible that members
of the management of an acquisition candidate will not wish to remain in place.
Our
officers and directors may 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 have fiduciary responsibility to dedicate substantially all their business time to their respective affairs
and their respective portfolio companies. However, this responsibility does not require any of our officers or directors to commit
his or her full time to our affairs in particular, which may result in a conflict of interest in allocating their time between
our operations and our search for a business combination and their other businesses, including other business endeavors for which
he or she may be entitled to substantial compensation. We do not intend to have any full-time employees prior to the completion
of our initial business combination. In addition, each of our officers and certain of our directors are employed by or affiliated
with our sponsor, which makes investments in securities or other interests of or relating to companies in industries we may target
for our initial business combination. Our independent directors also serve as officers or board members for other entities. If
our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs
in excess of their current commitment levels, it could limit their ability to devote time to our affairs, which may have a negative
impact on our ability to complete our initial business combination.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business
activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their
time and determining to which entity a particular business opportunity should be presented.
Following
the completion of our initial public offering and until we consummate our initial business combination, we intend to engage in
the business of identifying and combining with one or more businesses. Our officers and directors are, and may in the future become,
affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the
other entities in the future to which they owe certain fiduciary or contractual duties, including our sponsor’s affiliates.
Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its
presentation to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her
capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake
and would otherwise be reasonable for us to pursue.
Our
sponsor, 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. We do not have a policy that expressly prohibits any such persons from engaging for their
own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between
their interests and ours.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our sponsor, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our officers and directors with other entities, we may decide to acquire one or more businesses affiliated
with our sponsor, officers or directors. Our directors also serve as officers and board members for other entities. Such entities
may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware of any
specific opportunities for us to complete our business combination with any entities with which they are affiliated, and there
have been no preliminary discussions concerning a business combination with any such entity or entities. Although we will not
be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if
we determined that such affiliated entity met our criteria for a business combination and such transaction was approved by a majority
of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm that is
a member of FINRA, or from an independent accounting firm, regarding the fairness to our company from a financial point of view
of a business combination with one or more domestic or international businesses affiliated with our sponsor, officers, directors
or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination may
not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since
our sponsor, officers and directors will lose their entire investment in us if our business combination is not completed, a conflict
of interest may arise in determining whether a particular business combination target is appropriate for our initial business
combination.
On
October 15, 2020, our sponsor acquired 1,437,500 founder shares for an aggregate purchase price of $25,000. Prior to the initial
investment in the company of $25,000 by our sponsor, the company had no assets, tangible or intangible. The number of founder
shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding shares after
our initial public offering (excluding the representative shares). The founder shares will be worthless if we do not complete
an initial business combination. In addition, our sponsor purchased at the time of our initial public offering an aggregate of
2,800,000 private placement warrants, each exercisable for one share of our Class A common stock at $11.50 per share, for a purchase
price of approximately $2,800,000, or $1.00 per warrant, that will also be worthless if we do not complete a business combination.
Holders of founder shares have agreed (A) to vote any shares owned by them in favor of any proposed business combination and (B)
not to redeem any founder shares in connection with a stockholder vote to approve a proposed initial business combination. In
addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director. 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.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you
do not support.
Upon
the closing of our initial public offering, our initial stockholders will own shares representing 20% of our issued and outstanding
shares of common stock (assuming they do not purchase any units in our initial public offering and excluding the representative’s
shares). 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 units in our initial public offering or 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 certain of our initial stockholders,
is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of
directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion
of our business combination, in which case all of the current directors will continue in office until at least the completion
of the business combination. If there is an annual meeting, 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. In addition, the founder shares, all of which are held by our
initial stockholders, will entitle the initial stockholders to elect all of our directors prior to our initial business combination.
Holders of our public shares will have no right to vote on the election of directors during such time. These provisions of our
amended and restated certificate of incorporation may only be amended by the vote of at least 90% of our issued and outstanding
common stock entitled to vote thereon. As a result, you will not have any influence over the election of directors prior to our
initial business combination. Accordingly, our initial stockholders will continue to exert control at least until the completion
of our business combination.
Our
sponsor paid an aggregate of $25,000 for the founder shares, or approximately $0.017 per founder share. As a result of this low
initial price, our sponsor, its affiliates and our management team stands to make a substantial profit even if an initial business
combination subsequently declines in value or is unprofitable for our public stockholders.
As
a result of the low acquisition cost of our founder shares, our sponsor, its affiliates and our management team could make a substantial
profit even if we select and consummate an initial business combination with an acquisition target that subsequently declines
in value or is unprofitable for our public stockholders. Thus, such parties may have more of an economic incentive for us to enter
into an initial business combination with a riskier, weaker-performing or financially unstable business, or an entity lacking
an established record of revenues or earnings, than would be the case if such parties had paid the full offering price for their
founder shares.
General
Risk Factors
We
are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to
achieve our business objective.
We
are a newly formed company with no operating results, and we will not commence operations until obtaining funding through our
initial public offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve
our business objective of completing our initial business combination with one or more target businesses. We have no plans, arrangements
or understandings with any prospective target business concerning a business combination and may be unable to complete our business
combination. If we fail to complete our business combination, we will never generate any operating revenues.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and
results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to
comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may
be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from
time to time and those changes could have a material adverse effect on our business, investments and results of operations. In
addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect
on our business, investments and results of operations.
Past
performance by our management team and our sponsor may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with our management team and our sponsor and its affiliates is presented for
informational purposes only. Past performance by our management team and our 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. Our officers and directors have not had management experience with special purpose acquisition corporations
in the past. You should not rely on the historical record of our management team’s or our sponsor’s respective performance
as indicative of our future performance of an investment in us or the returns we will, or are likely to, generate going forward.
Furthermore, an investment in us is not an investment in our sponsor or its affiliates.
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.