Item 1. Business.
Overview
We are a blank check company incorporated as a
Delaware corporation whose business purpose is to effect an initial business combination.
We target an initial business combination that
will provide our investors with an attractive return profile. Our efforts are not be limited to a specific industry or geographic region,
but we focus on entities that have the following characteristics:
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global emerging growth and lower-to-middle market companies with aggregate enterprise values of approximately $300 million to $1.5 billion;
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strong platforms within niche market segments that and would benefit from access to the public markets; and
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management teams that have showcased industry leading operational expertise and a track record of providing returns to investors.
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We seek to capitalize on the significant experience
of our sponsor and its affiliates as well as our management team to consummate an initial business combination with the goal of pursuing
attractive returns for our stockholders.
With respect to the foregoing descriptions, past
performance of Maxim (and its affiliates), Hudson Bay and our management team 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 identify a suitable candidate for our initial business
combination. You should not rely on the historical performance record of Maxim (and its affiliates), Hudson Bay or our management team
as indicative of our future performance. In addition, our officers may have conflicts of interest with other entities to which they owe
fiduciary or contractual obligations with respect to initial business combination opportunities. For a list of our officers and entities
for which a conflict of interest may or does exist between such officers and the company, as well as the priority and preference that
such entity has with respect to performance of obligations and presentation of business opportunities to us, please refer to the table
and subsequent explanatory paragraph under “Directors, Executive Officers and Corporate Governance – Conflicts of Interest.”
Initial Public Offering
On February 2, 2021, we consummated our initial
public offering of 17,250,000 units, which includes the full exercise by the underwriter of its over-allotment option in the amount of
2,250,000 units. Each unit consists of one share of Class A common stock of the Company, par value $0.0001 per share (“Class A Common
Stock”), and one-half of one redeemable warrant of the Company, with each whole warrant entitling the holder thereof to purchase
one share of Class A Common Stock for $11.50 per share, subject to adjustment. The units were sold at a price of $10.00 per unit, generating
gross proceeds to the Company $172,500,000.
Simultaneously with the closing of the initial public
offering, we completed the private sale of an aggregate of 5,175,000 warrants (each, a “Private Placement Warrant” and, collectively,
the “Private Placement Warrants”) to our sponsor, Nautilus, and HB Strategies, at a purchase price of $1.00 per Private Placement
Warrant, generating gross proceeds of $5,175,000. The issuance of the Private Placement Warrants was made pursuant to the exemption from
registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
A total of $172,500,000, comprised
of $168,337,625 of the proceeds from the initial public offering and $4,162,375 of the proceeds of the sale of the private placement warrants
was placed in the trust account maintained by Continental, acting as trustee.
We must complete our initial
business combination by August 2, 2022. If our initial business combination is not consummated by August 2, 2022, then our existence will
terminate, and we will distribute all amounts in the trust account.
Management
Team
Prokopios (Akis) Tsirigakis and George Syllantavos,
our co-Chief Executive Officers, have been the founders, officers and directors of three blank check companies that consummated business
combinations, Stellar Acquisition III Inc., which we refer to as Stellar, Nautilus Marine Acquisition Corp., which we refer to as Nautilus
Marine, and Star Maritime Acquisition Corp., which we refer to as Star Maritime. Stellar conducted an initial public offering in August 2016
having raised $69.0 million and consummated a business combination in December 2018 and trades on the Nasdaq Stock Market as Phunware
Inc. (Nasdaq: PHUN). Nautilus Marine conducted an initial public offering in June 2011 having raised $48.0 million, consummated a
business combination in February 2013, was taken private as Nautilus Offshore Services Inc. in October 2013, and in November 2015
was acquired by DryShips, Inc. (Nasdaq: DRYS). Star Maritime conducted an initial public offering in June 2005 having raised
$188.8 million, consummated a business combination in November 2007, and trades on the Nasdaq Stock Market as Star Bulk Carriers
Corp. (Nasdaq: SBLK). Mr. Tsirigakis and Mr. Syllantavos played leading roles throughout the business combination transactions for
Stellar, Nautilus Marine and Star Maritime, including identifying suitable acquisition candidates including the ultimate targets, and
the consummation of such acquisitions. During their tenures at Stellar, Nautilus Marine and Star Maritime, Mr. Tsirigakis and Mr.
Syllantavos sourced and evaluated an aggregate of over 120 possible acquisition targets.
Alliance with Maxim
Our management team has a long and extensive working
relationship with Maxim stemming back to 2005. Maxim was the lead underwriter in all three blank check company initial public offerings
that our management team completed and played an important role in the consummation of all three business combinations. This long standing
business relationship has played a key role in the formation and partnership of our management team and Maxim for Growth Capital’s
initial public offering.
Our sponsor, Growth Capital Sponsor LLC, is an affiliate
of Maxim. Maxim is a leading closely-held diversified global investment bank and private wealth management firm with approximately 250
professionals. Maxim focuses on serving the financial and strategic needs of its global emerging growth and lower-to-middle market corporate
clients that are typically sub-$1 billion enterprise value businesses across a range of industries, including healthcare, industrials,
energy, technology, media, telecommunications, software, consumer, financial services, fintech, cleantech and a host of other industries.
Maxim provides its corporate clients financial solutions including capital raising services during their most important and formative
stages of development through its unique distribution channels, and strategic advice on their critical corporate actions such as mergers
and acquisitions. In addition, Maxim provides a wide range of value-added services including sales & trading, equity research,
wealth management & corporate services, to serve all aspects of clients’ capital markets/financial needs.
Maxim was formed in October of 2002 as a result
of a management led acquisition of the multi-billion-dollar market capitalization and LSE listed global financial services firm Investec
PLC’s U.S. platform, Investec & Co. As a result of this management lead acquisition and rebranding, Maxim has grown
from a regional wealth management and brokerage firm with approximately 125 employees in 2002 to a diversified global investment banking
firm with currently approximately 250 employees globally. Since inception, Maxim has had consistent profitability along with prudent risk
management, a diversified revenue base with multiple strategic growth engines and significant inherent operating leverage, well capitalized
to meet its objectives and has no debt.
As a leading diversified global
investment banking firm targeting the emerging growth and lower-to-middle market with a focus on sub-$1 billion enterprise value
companies, Maxim has completed over 800 financings and M&A transactions, aggregating over $50 billion dollars, having acted as
book runner, co-manager or financial advisor since 2013. In addition to providing capital raising services, Maxim has a large and
developed strategic advisory and M&A practice having completed over 50 M&A and strategic advisory transactions aggregating
over $5.0 billion dollars since 2002. Maxim’s capital markets and institutional trading platforms service over 2,000
institutions in over 30 countries and provides sales trading advice on traditional derivatives and financial instruments,
institutional coverage in several different fixed income instruments, is a market maker in over 7,500 listed and OTC listed stocks
and prime brokerage services. With a focus on small-cap, mid-cap, and emerging growth companies with a market capitalization below
$1 billion, Maxim also has approximately 200 companies in 20 sectors of the global economy under research coverage. Finally, Maxim
also provides wealth management and corporate services and has approximately $4.4 billion in client assets under management.
Maxim is also a leader in the special purpose acquisition
company (“SPAC”) market, having been involved as a book runner, co-manager, underwriter or selling group member in over 30%
of the SPAC initial public offerings that have come to market since 2002. In addition to being a leader in SPAC initial public offerings,
Maxim has also had significant merger and acquisition and advisory experience, having been involved in numerous mergers or similar transactions
representing the initial business combinations of SPACs (“de-SPACings”). In addition to working with SPACs during their de-SPACing
process, Maxim has also advised and raised capital for numerous de-SPACed companies once they have transformed into operating companies
following their initial business combinations.
In addition to Maxim’s SPAC experience, Maxim
has also been involved in other complex transactions that facilitate the “going public” process for our corporate clients.
Maxim has significant experience in sourcing and structuring capital markets transactions that enable companies to access the public markets.
We believe that our prior experience with reverse mergers, public roll-ups, small cap IPOs, private-to-public as well as public-to-public
M&A transactions will provide us with a unique skill set to effectuate and source a potential initial business combination. We believe
these attributes coupled with the combination of our sponsor’s, Maxim’s, as well as our management team’s capital markets
and SPAC transaction expertise and a proven ability to grow businesses organically and through acquisitions makes us uniquely qualified
to pursue an initial business combination.
Past performance of Maxim (and its affiliates),
Hudson Bay and our management team 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 identify a suitable candidate for our initial business combination. You should not rely on the historical
performance record of Maxim (and its affiliates), Hudson Bay or our management team as indicative of our future performance. In addition,
our officers may have conflicts of interest with other entities to which they owe fiduciary or contractual obligations with respect to
initial business combination opportunities. For a list of our officers and entities for which a conflict of interest may or does exist
between such officers and the company, as well as the priority and preference that such entity has with respect to performance of obligations
and presentation of business opportunities to us, please refer to the table and subsequent explanatory paragraph under “Directors,
Executive Officers and Corporate Governance – Conflicts of Interest.”
Competitive Strengths
We believe that the background and experience of
our management team and Maxim lay the foundation for our competitive strengths as a blank check company. Over time, our sponsor (and its
affiliates) has developed long-term relationships with a wide range of global private and public companies primarily under $1 billion
in enterprise value. We seek to capitalize on the substantial resources and their network and relationships will provide us with exposure
to a broad selection of potential acquisition targets. However, there is no formal agreement between us and Maxim with respect to the
provision of any services to us by Maxim and its employees. Consequently, while we expect Maxim and its employees to provide us services
so that we can capitalize on the substantial resources and global infrastructure of Maxim and leverage Maxim’s relationships, there
is no guarantee that Maxim or its employees will provide any services to us or that we will be able to do so.
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Experience with SPACs and the broader capital markets. Our management team has significant experience having completed three previous SPAC transactions in the sourcing, evaluation and negotiation of transactions with blank check company targets. Maxim (together with its affiliates) has experience in the capital markets, M&A and advisory transactions and expertise as a leader in the SPAC market which we believe will enable us to navigate the complexity of the initial business combination process. As such, we believe this will enable us to drive the target sourcing process in a very prompt and efficient manner as well as navigate through all required procedures and complexities of the SPAC transaction process.
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Experience in sourcing and structuring complex transactions that facilitate the “going public” process. We have significant experience in sourcing and structuring capital markets transactions that enable companies to access the public markets. We believe that our prior experience with reverse mergers, public roll-ups, small cap IPOs, private-to-public as well as public-to-public M&A transactions will provide us with a unique skill set to effectuate and source a potential business combination.
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Deep global network to facilitate sourcing of a potential initial business combination. We leverage the global network of contacts of our management team and Maxim and its officers and directors, which contacts include management teams of public and private companies, investment bankers, private equity sponsors, venture capital investors, hedge funds, alternative asset managers, family offices, advisers, attorneys and accountants that we believe should provide us with a number of initial business combination opportunities.
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Significant merger, acquisition and integration experience. Maxim (together with its affiliates) has a strong track record of completing M&A transactions in challenging market environments. Maxim was created in 2002, post “dot-com tech/internet bubble”, as a result of its predecessor retrenching back to its local market. Additionally, our officers and directors have substantial experience completing M&A transactions in multiple markets on a global basis for both private and public companies.
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Maxim is a leading diversified global financial services firm focused on the global emerging growth and lower-to-middle market sectors. We believe that Maxim (together with its affiliates) experience as a leading financial services firm with a wide range of global experience working with private and public companies primarily under $1 billion in enterprise value will enable us to navigate, source and execute a potential initial business combination.
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Investment/Acquisition Criteria
While we may pursue an acquisition opportunity
in any business, industry, sector or geographical location, since our initial public offering, we have focused our search on industries
that complement our management team’s background, and seek to capitalize on the ability of our management team to identify and acquire
a business or businesses consistent with the experience of our management team and affiliates of Maxim. We believe our universe of potential
acquisition targets will meet the following criteria, but is not limited to:
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Global emerging growth and lower-to-middle market companies. We seek and initial business combination with an aggregate enterprise value of approximately $300 million to $1.5 billion. We believe this segment of the market enables us to leverage Maxim’s vast global network to identify opportunities.
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Attractive initial valuation arbitrage. We believe there are substantial private-to-public arbitrage opportunities that currently exist in the global emerging growth and lower-to-middle market sectors. We will seek to target an initial business combination that may provide a compelling private-to-public valuation arbitrage to initially capitalize on.
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Solid Free Cash Flow Generation. We will seek to acquire via our initial business combination a target with attractive operating margins, strong free cash flow generation and solid recurring revenue streams.
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Strong platforms within niche market segments that would benefit from access to the public markets. We intend to target an initial business combination with a platform company that can thrive within the public market. We believe there are many reasons to establish a public market platform including but not limited to, efficiencies of raising capital, a public market currency and valuation differentials.
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Platform opportunities that can benefit from “bolt-on” acquisitions. We believe that finding a core platform to transact with, will potentially benefit from acquisitions or consolidation within their respective industries. We may seek to target fragmented industries, but we also believe that future “bolt-on” acquisitions may provide additional enhanced margins, further operational scale and capture further valuation arbitrage opportunities.
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Investment opportunities that can thrive from deploying growth capital. We believe that in addition to capturing the private-to-public valuation arbitrage opportunity with our initial business combination, we also recognize that it is critical to find a target entity that will benefit from having access to growth capital. We believe that if this growth capital is deployed efficiently, the initial business combination may potentially provide additional attractive risk-adjusted returns.
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Management teams that have showcased industry leading operational expertise and a track record of providing returns to investors. We intend to seek opportunities that have strong management teams that have been able to historically provide returns to their investors. We believe that the expertise of a management team is one of the critical components for driving growth, operational efficiencies and unlocking value from an investment opportunity.
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Investment opportunities that can benefit from Maxim’s and our management team’s expertise. Maxim’s and its affiliates’ and our management team’s expertise and prior track record of acting as operators, investors and investment bankers uniquely position us to provide significant incremental value-added support to any potential target we transact with. We believe we will be able to enhance returns for any future potential target in concert with a target’s management team.
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Off market and complex proprietary transactions. As a result of its robust deal sourcing network, Maxim often comes across unique and complex transactions that may require a significant amount of financial engineering and creative capital structure enhancement to unlock cash flow generation and value. We will not shy away from such potential opportunities as we believe these potential transactions may unlock significant risk adjusted returns.
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These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to
enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose
that the target business does not meet the above criteria in our stockholder communications related to our initial business combination,
which would be in the form of proxy solicitation materials or tender offer documents that we would file with the U.S. Securities and Exchange
Commission.
Business Strategy
Our acquisition and value creation strategy is
to identify, acquire and, after our initial business combination, to build a company in an industry that complements the experience and
expertise of our management team. Our acquisition selection process will leverage the network of contacts developed by Maxim and our management
team and those of their affiliates, including relationships in the financial services industry, comprising management teams of public
and private companies, investment bankers, private equity sponsors, venture capital investors, hedge funds, alternative asset managers,
family offices, advisers, attorneys and accountants that we believe should provide us with a number of business combination opportunities.
Initial Business Combination Criteria
As long as we maintain a listing for our
securities on Nasdaq, we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding taxes payable on the interest earned on the trust account) at the time
of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the
determination as to the fair market value of our initial business combination. If our board of directors is not able to
independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent
investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA, or an independent accounting firm
with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to
make an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is
less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the
value of a target’s assets or prospects.
We may, at our option, pursue a business combination
opportunity jointly with Maxim or one or more entities affiliated with Maxim and/or one or more investors in funds or separate accounts
managed or advised by Maxim, which we refer to as an “Affiliated Joint Acquisition.” Any such parties would co-invest only
if (i) permitted by applicable regulatory and other legal limitations; (ii) we and Maxim considered a transaction to be mutually
beneficial to us as well as the affiliated entity; and (iii) other business reasons exist to do so, such as the strategic merits
of including such co-investors, the need for additional capital beyond the amount held in our trust account to fund the initial business
combination and/or the desire to obtain committed capital for closing the initial business combination. An Affiliated Joint Acquisition
may be effected through a co-investment with us in the target business at the time of our initial business combination, or we could raise
additional proceeds to complete the initial business combination by issuing to such parties a class of equity or equity-linked securities.
We refer to this potential future issuance, or a similar issuance to other specified purchasers, as a “specified future issuance”
throughout this Report. The amount and other terms and conditions of any such specified future issuance would be determined at the time
thereof. We are not obligated to make any specified future issuance and may determine not to do so. This is not an offer for any specified
future issuance. Pursuant to the anti-dilution provisions of our Class B common stock, any such specified future issuance would result
in an adjustment to the conversion ratio such that our initial stockholders and their permitted transferees, if any, would retain their
aggregate percentage ownership at 20% of the sum of the total number of all shares of common stock outstanding upon completion of our
initial public offering plus all shares issued in the specified future issuance, unless the holders of a majority of the then-outstanding
shares of Class B common stock agreed to waive such adjustment with respect to the specified future issuance at the time thereof.
We cannot determine at this time whether a majority of the holders of our Class B common stock at the time of any such specified
future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment due to (but not limited to)
the following: (i) closing conditions which are part of the agreement for our initial business combination; (ii) negotiation
with Class A stockholders on structuring an initial business combination; (iii) negotiation with parties providing financing
which would trigger the anti-dilution provisions of the Class B common stock; or (iv) as part of the Affiliated Joint Acquisition.
If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B
common stock, but would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the
specified future issuance would reduce the percentage ownership of holders of both classes of our common stock.
We anticipate structuring our initial business
combination either (i) in such a way so that the post-transaction company in which our public stockholders own shares will own or
acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such a way so that the post-transaction
company owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the
target management team or stockholders, or for other reasons, including an Affiliated Joint Acquisition as described above. However, we
will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as
an investment company under the Investment Company Act of 1940, as amended, or the “Investment Company Act”. Even if the post-transaction
company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the
initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination
could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity
interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business
or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% of net assets test. If the
initial business combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of
all of the transactions and we will treat the target businesses together as the initial business combination for purposes of a tender
offer or for seeking stockholder approval, as applicable. So long as we maintain a listing for our securities on Nasdaq, we would be required
to comply with such 80% rule.
Our
Business Combination Process
In evaluating prospective business combinations,
we conduct a thorough due diligence review process that encompasses, among other things: a review of historical financial and operating
data, meetings with management and their advisors (if applicable),on-site inspection of facilities and assets, discussion with customers
and suppliers, legal and other reviews as we deem appropriate. We utilize the expertise of our management team, directors and other employees
of Maxim (and its affiliates) in analyzing companies and evaluating operating projections, financial projections and determining the appropriate
return expectations We are not prohibited from pursuing an initial business combination with a business that is affiliated with Maxim
(or its affiliates), investment funds or separate accounts advised by Maxim or our initial stockholders, officers or directors. In the
event we seek to complete our initial business combination with a business that is affiliated with Maxim (or its affiliates), investment
funds or separate accounts advised by Maxim (or its affiliates) or our initial stockholders, officers or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent
valuation, appraisal or accounting firm that regularly provides fairness opinions that our initial business combination is fair to us
from a financial point of view.
Our Co-Chief Executive Officers indirectly own
founder shares and/or private placement warrants.
Because of such ownership and interests, our officers
and directors may have a conflict of interest in determining whether a particular target business is an appropriate business with which
to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect
to evaluating a particular business combination if the retention or resignation of any such officers and directors were to be included
by a target business as a condition to any agreement with respect to our initial business combination.
Maxim, our initial stockholders and management
will continuously be made aware of potential business opportunities, one or more of which we may desire to pursue for an initial business
combination; we have not, however, 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.
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. We believe,
however, that the fiduciary duties or contractual obligations of our sponsor and our officers or directors will not materially affect
our ability to complete our initial business combination. We may, at our option, pursue a business combination opportunity jointly with
Maxim or one or more entities affiliated with Maxim and/or one or more investors in funds or separate accounts managed or advised by Maxim
or an officer or director that has a fiduciary or contractual obligation (collectively an “Affiliated Joint Acquisition”).
Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional
proceeds to complete the initial business combination by making a specified future issuance to any such entity. Our amended and restated
certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity
is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the
director or officer is permitted to refer that opportunity to us without violating another legal obligation. The determination of whether
an opportunity has been expressly offered to a director of officer solely in his or her capacity as a director or officer of our company
will made based on express statements by the person offering the opportunity, and if a director or officer is unsure of whether an opportunity
was offered in such capacity, he or she shall seek guidance on such determination from the audit committee of our board of directors.
Our officers and directors have agreed not
to become an officer of any other special purpose acquisition company with a class of securities intended to be registered under the
Exchange Act, until we have entered into a definitive agreement regarding our initial business combination. If they do become such
an officer of another special purpose acquisition company upon our execution of a definitive agreement but before we consummate a
business combination, they have agreed to grant us the right of first refusal pursuant to which they have the obligation to present
to us any investment and business opportunities which may be appropriate for presentation to us before they present the same to any
other companies.
Status as a Public Company
We believe our structure make us an attractive
business combination partner to target businesses. As a public company, we offer a target business an alternative to the traditional initial
public offering through a merger or other business combination with us. Following an initial business combination, we believe the target
business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’
interests than it would as a private company. A target business can further benefit by augmenting its profile among potential new customers
and vendors and aid in attracting talented employees. In a business combination transaction with us, the owners of the target business
may, for example, exchange their shares of stock in the target business for our shares of Class A common stock (or shares of a new holding
company) or for a combination of our shares of Class A common 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 expeditious and cost-effective method
to becoming a public company than the typical initial public offering. The typical initial public offering process takes a significantly
longer period of time than the typical business combination transaction process, and there are significant expenses in the initial public
offering process, including underwriting discounts and commissions, marketing and road show efforts that may not be present to the same
extent in connection with an initial business combination with us.
Furthermore, once a proposed initial 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. Following an initial business combination, we believe the target business
would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’
interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further benefits by augmenting
a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure and our management
team’s backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank
check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial business
combination, negatively.
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 independent registered public accounting firm 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 last business day of our most recently completed second fiscal quarter, 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.
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
$250million 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.
Financial Position
With funds available for an initial business combination
initially in the amount of $138,718,750 assuming no redemptions and after payment of up to $5,031,250 of the marketing fee in each case
before fees and expenses associated with our initial business combination, we offer a target business a variety of options such as creating
a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening its balance
sheet by reducing its debt or leverage ratio. Because we are able to complete our initial business combination using our cash, debt or
equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us
to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure
third party financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged in, and we will not
engage in, any operations until we consummate our initial public offering. We intend to effectuate our initial business combination using
cash from the proceeds of our initial public offering and the private placement of the private placement warrants, the proceeds of the
sale of our securities in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements
which we may enter into following the consummation of our initial public offering or otherwise), shares issued to the owners of the target,
debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. We may seek to complete our initial
business combination with a company or business that may be financially unstable or in its early stages of development or growth, which
would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for
using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in
connection with our initial business combination or used for 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 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 (which may include
a specified future issuance), and we may effectuate our initial business combination using the proceeds of such offering rather than using
the amounts held in the trust account. In addition, we intend to target businesses larger than we could acquire with the net proceeds
of our initial public offering and the sale of the private placement warrants, and may as a result be required to seek additional financing
to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete
such financing only simultaneously with the completion of our initial business combination. In the case of an initial business combination
funded with assets other than the trust account assets, our proxy materials or tender offer documents disclosing the initial business
combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing.
There are no prohibitions on our ability to raise funds privately, including pursuant to any specified future issuance, or through loans
in connection with our initial business combination.
Sources of Target Businesses
We anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target
businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These
sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these
sources will have read this Report and know what types of businesses we are targeting. Our officers and directors, as well as our sponsor
and their affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts
as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition,
we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result
of the business relationships of our officers and directors and our sponsor and their affiliates. While we do not presently anticipate
engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, we may
engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee, advisory fee or
other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will engage a finder
only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available
to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest
to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee will be paid
out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors, or any
entity with which our sponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect
of any payment of a loan or other compensation by the company prior to, or in connection with any services rendered for any services they
render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is) other
than as described herein. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction
company following our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion
in our selection process of an initial business combination candidate.
We are not prohibited from pursuing an initial
business combination with an initial business combination target that is affiliated with our initial stockholders, officers or directors
or making the initial business combination through a joint venture or other form of shared ownership with our sponsor, officers or directors.
In the event we seek to complete our initial business combination with an initial business combination target that is affiliated with
our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm 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.
If any of our officers or directors becomes aware
of an initial business combination opportunity that falls within the line of business of any entity to which he or she has 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. Our officers and directors currently have certain relevant fiduciary duties
or contractual obligations that may take priority over their duties to us. We may, at our option, pursue an Affiliated Joint Acquisition
opportunity with Maxim (or its affiliates) or an entity to which Maxim (or its affiliates) or an officer or director has a fiduciary or
contractual obligation, but such parties would co-invest only if permitted by applicable regulatory and other legal limitations and to
the extent considered appropriate. Any such entity may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the initial business combination by making a specified future issuance to any such entity.
Selection of a Target Business and Structuring
of our Initial Business Combination
So long as we obtain and maintain a listing
for our securities on Nasdaq, we must complete one or more business combinations having an aggregate fair market value of at least
80% of the value of the assets held in the trust account (excluding taxes payable on the interest earned on the trust account) at
the time of our signing a definitive agreement in connection with our initial business combination. The fair market value of our
initial business combination will be determined by our board of directors based upon one or more standards generally accepted by the
financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses
or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not
able to independently determine the fair market value of our initial business combination, we will obtain an opinion from an
independent investment banking firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of
such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of
the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the
business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or
prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business
combination. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting
one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with
another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial
business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a
controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company
Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business
or businesses that are owned or acquired by the post-transaction company is what will be taken into account for purposes of Nasdaq’s
80% of net assets test. There is no basis for investors in our initial public offering to evaluate the possible merits or risks of any
target business with which we may ultimately complete our initial business combination.
To the extent we effect our initial business combination
with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous
risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target
business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective business target, we
expect to conduct a thorough due diligence review, which may encompass, among other things, meetings with incumbent management and employees,
document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other information
that will be made available to us.
The time required to select and evaluate a target
business and to structure and complete our initial business combination, and the costs associated with this process, are not currently
ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target
business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the
funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of time after the completion
of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it
is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business.
In addition, we are focusing our search for an initial business combination in a single industry. By completing our initial business combination
with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited Ability to Evaluate the Target’s
Management Team
Although we closely scrutinize the
management of a prospective target business when evaluating the desirability of effecting our initial business combination with that
business, our assessment of the target business’ management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members
of our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to
whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us
following our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent
to our initial business combination. Moreover, we cannot assure you that members of our management team will have significant
experience or knowledge relating to the operations of the particular target business.
We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel
will remain with the combined company will be made at the time of our initial business combination.
Following an initial business combination, we
may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will
have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary
to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve
Our Initial Business Combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable
stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table below is
a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required
under Delaware law for each such transaction.
Type of Transaction
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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 Class A common stock then outstanding (other than in a public offering);
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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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Permitted Purchases of our Securities
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the
tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase shares or
public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our
initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or
their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have
no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any
such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any
material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange
Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules
under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however,
if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will
comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to
the extent such purchasers are subject to such reporting requirements. None of the funds held in the trust account will be used to
purchase shares or public warrants in such transactions prior to completion of our initial business combination.
The purpose of any such purchases of shares could
be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval
of the initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would
otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding
or to vote such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been
possible. In addition, if such purchases are made, the public “float” of our shares of Class A common stock or warrants
may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain
the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, officers, directors and/or 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, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling
stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial
business combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination.
Our sponsor, officers, directors, advisors or their affiliates will only purchase shares if such purchases comply with Regulation M under
the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers, directors
and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will 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. Any such purchases will
be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such reporting
requirements.
Redemption Rights for Public Stockholders upon
Completion of our Initial Business Combination
We will provide our public stockholders with the
opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior
to the consummation of the initial business combination including interest earned on the funds held in the trust account and not previously
released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein.
The amount in the trust account is initially anticipated to be approximately $10.00 per public share. Our sponsor, officers, directors
and Nautilus entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect
to any founder shares and any public shares held by them in connection with the completion of our initial business combination. HB Strategies
has agreed to the waive its redemption rights with respect to its founder shares.
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 initial business combination or (ii) by means of a
tender offer. The decision as to whether we will seek stockholder approval of a proposed initial business combination or conduct a tender
offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and
whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange listing requirement.
Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend
our amended and restated certificate of incorporation would require stockholder approval. If we structure an initial business combination
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 initial business combination. We may 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 initial 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 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 completion of our initial
business combination (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 initial
business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital
stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to
vote at such meeting. Our initial stockholders will count toward this quorum and pursuant to the letter agreement, our sponsor, officers,
directors, and Nautilus have agreed to vote their founder shares and any public shares purchased during or after our initial public offering
(including in open market and privately negotiated transactions) in favor of our initial business combination. HB Strategies has agreed
to vote its founder shares in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding
shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained.
As a result, in addition to our initial stockholders’ founder shares, we would need only 6,468,751, or 37.5%, of the 17,250,000
public shares sold in our initial public offering to be voted in favor of an initial business combination (assuming all outstanding shares
are voted; or 1,078,126, or 6.25%, assuming only the minimum number of shares representing a quorum are voted and assuming our sponsor,
officers and directors and their affiliates do not purchase any units in or after our initial public offering) 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 initial stockholders, may make it more likely that we will consummate our initial
business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the
proposed transaction.
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 completion of our initial business combination (so that we are not subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating
to our initial business combination. For example, the proposed initial business combination may require: (i) cash consideration to
be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes
or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination.
In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly
submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination
exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares, and all
shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption upon Completion
of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding the foregoing, if we seek
stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public
stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or
as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights
with respect to more than an aggregate of 25% of the shares sold in our initial public offering, which we refer to as the
“Excess Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction will
discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to
exercise their redemption rights against a proposed initial business combination as a means to force us or our management to
purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this
provision, a public stockholder holding more than an aggregate of 25% 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 25%
of the shares sold in our initial public offering without our prior consent, we believe we will limit the ability of a small group
of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in
connection with an initial business combination with a target that requires as a closing condition that we have a minimum net worth
or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares
(including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection
with 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 meeting held to approve a proposed initial business combination by a date set forth
in the proxy materials mailed to such holders or to deliver their shares to the transfer agent electronically using the DWAC System, at
the holder’s option. The proxy materials that we will furnish to holders of our public shares in connection with our initial business
combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder
would have from the time we send out our proxy materials until the date set forth in such proxy materials 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 $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee
would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The need
to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures
used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check
companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply
vote against a proposed initial business combination and check a box on the proxy card indicating such holder was seeking to exercise
his or her redemption rights. After the initial 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 initial 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 initial 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 initial 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 proxy materials. Furthermore, if a holder of a public share delivered its
certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not to elect to
exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically). It
is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly
after the completion of our initial business combination.
If our initial business combination is not approved
or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem
their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered
by public holders who elected to redeem their shares.
If our initial proposed initial business combination
is not completed, we may continue to try to complete an initial business combination with a different target until August 2, 2022.
Redemption of Public Shares and Liquidation
if no Initial Business Combination
Our amended and restated certificate of incorporation
provides that we will have only until August 2, 2022 to complete our initial business combination. If we are unable to complete our initial
business combination by August 2, 2022, 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 $100,000 of interest to pay dissolution expenses), divided by the number of
then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), 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 initial business combination by August 2, 2022.
Our sponsor, officers, directors, Nautilus and
HB Strategies entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from
the trust account with respect to any founder shares held by them if we fail to complete our initial business combination by August 2,
2022. However, if our sponsor, officers, directors or the other initial stockholders who are parties to the letter agreement 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 by August 2, 2022.
Our sponsor, officers, directors and Nautilus
agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation
(i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business
combination by August 2, 2022 or (ii) with respect to any other 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. HB Strategies has agreed to the foregoing terms except that it will not waive redemption
rights with respect to its 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 completion of our initial business combination (so that we
are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect to an
excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed
with the amendment or the related redemption of our public shares at such time.
We expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the proceeds
held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. We will depend on
sufficient interest being earned on the proceeds held in the trust account to pay any tax obligations we may owe. However, if those funds
are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any
interest accrued in the trust account not required to pay taxes on interest income earned on the trust account balance, we may request
the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds
of our initial public offering and the sale of the private placement warrants, other than the proceeds deposited in the trust
account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by
stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however, become
subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot assure
you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00. Under
Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make
provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for
before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot
assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we have sought and will continue to seek
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with
us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public
stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be
prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with
respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement
waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to
it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s
engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third
party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management
is unable to find a service provider willing to execute a waiver. Marcum LLP, our independent registered public accounting firm, and Maxim,
the underwriters of our initial public offering, will not execute agreements with us waiving such claims to the monies held in the trust
account.
In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the trust account for any reason. Each of our sponsor and Nautilus have agreed that it will
be liable to us, on a pro rata basis based on the number of founder shares owned by them, if and to the extent any claims by a third party
for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent,
confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser
of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation
of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable from interest,
provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any
and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under
our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. However, we have not asked our sponsor or Nautilus to reserve for such indemnification obligations, nor have we independently verified
whether any of these initial stockholders has sufficient funds to satisfy its indemnity obligations and believe that the only assets of
our sponsor and Nautilus are securities of our company. Therefore, we cannot assure you that our initial stockholders would be able to
satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties including, without limitation,
claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account
are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the
date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest
which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has
no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against
our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action
on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising
their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors
to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We
have not asked our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to
satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be less than $10.00 per public share.
We will seek to reduce the possibility that
our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers,
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under
our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the
Securities Act. 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.
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 by August 2, 2022 may be considered a liquidating distribution under Delaware law. If the corporation complies
with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims
against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period
during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions
are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust
account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business
combination by August 2, 2022, is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed
to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently
unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after
the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we are unable to complete
our initial business combination by August 2, 2022, 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 $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), 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 after August 2, 2022 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 have sought and will continue to seek to have all vendors, service providers,
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could
be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the
trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust
account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of
the amount of interest 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 $10.00 per share to our
public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is
not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either
a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty
to our creditors and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying
public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought
against us for these reasons.
Our public stockholders will be entitled to receive
funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the
redemption of any public shares properly tendered in connection with a stockholder vote to amend any provisions of our amended and restated
certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do
not complete our initial business combination by August 2, 2022 or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, and (iii) the redemption of all of our public shares if we are unable to complete
our business combination by August 2, 2022. In no other circumstances will a stockholder have any right or interest of any kind to or
in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us for
an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described above.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with a stockholder vote.
Competition
In identifying, evaluating and selecting a target
business for our initial business combination, we may encounter 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
business combinations. Many of these entities are well established and have extensive experience identifying and effecting business combinations
directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than
we do. Our ability to acquire larger target businesses is limited by our available financial resources. This inherent limitation gives
others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay cash in connection
with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination
and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses.
Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We currently have two officers. These individuals
are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary
to our affairs until we have completed our initial business combination. The amount of time they will devote in any time period will vary
based on whether a target business has been selected for our initial business combination and the stage of the 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 are subject to reporting obligations thereunder, including the requirement that we file
annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain
financial statements audited and reported on by our independent registered public accountants.
We will provide stockholders with audited financial
statements of the prospective target business as part of the 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, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited
in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets we may conduct
an initial business combination with because some targets may be unable to provide such statements in time for us to disclose such statements
in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame. We cannot
assure you that any particular target business identified by us as a potential business combination candidate will have financial statements
prepared in accordance with GAAP or IFRS or that the potential target business will be able to prepare its financial statements in accordance
with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed
target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation will
be material.
We will be required to evaluate our internal control
procedures for the fiscal year ending March 31, 2022 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 business combination. 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 are subject to the rules and regulations promulgated under
the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange
Act prior or subsequent to the consummation of our initial business combination.
We will remain an emerging growth company until
the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large
accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates exceeds $700
million as of the last business day of our most recently completed second fiscal quarter, and (2) the date on which we have issued
more than $1.0 billion in non-convertible debt during the prior three-year period.
Item 1A. Risk Factors.
Our business is subject to numerous risks and uncertainties,
including those highlighted in the section title “Risk Factors,” that represent challenges that we face in connection with
the successful implementation of our strategy. The occurrence of one or more of the events or circumstances described in the section titled
“Risk Factors,” alone or in combination with other events or circumstances, may adversely affect our ability to effect a business
combination, and may have an adverse effect on our business, cash flows, financial condition and results of operations. Such risks include,
but are not limited to:
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we are a blank check Company with no revenue or basis to evaluate our ability to select a suitable business target;
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we may not be able to select an appropriate target business or businesses and complete our initial business combination in the prescribed time frame;
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our expectations around the performance of a prospective target business or businesses may not be realized;
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we may not be successful in retaining or recruiting required officers, key employees or directors following our initial business combination;
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our officers and directors may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest with our business or in approving our initial business combination;
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we may not be able to obtain additional financing to complete our initial business combination or reduce the number of stockholders requesting redemption;
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we may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time;
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you may not be given the opportunity to choose the initial business target or to vote on the initial business combination;
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trust account funds may not be protected against third party claims or bankruptcy;
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an active market for our public securities’ may not develop and you will have limited liquidity and trading;
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the availability to us of funds from interest income on the trust account balance may be insufficient to operate our business prior to the business combination;
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our financial performance following a business combination with an entity may be negatively affected by their lack an established record of revenue, cash flows and experienced management; and
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we may issue our shares to investors in connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time.
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RISK FACTORS
An investment in our securities involves a high degree of risk.
You should consider carefully all of the risks described below, together with the other information contained in this Report, before making
a decision to invest in our units. If any of the following events occur, our business, financial condition and operating results may be
materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your
investment.
Our public stockholders may not be afforded an opportunity to vote
on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our
public stockholders do not support such a combination.
We may choose not to hold a stockholder vote to
approve our initial business combination unless the initial business combination would require stockholder approval under applicable law
or stock exchange listing requirements 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 initial business combination or will allow stockholders
to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors,
such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
Accordingly, we may complete our initial business combination even if holders of a majority of our public shares do not approve of the
initial business combination we complete.
If we seek stockholder approval of our initial business combination,
our sponsor, officers, directors, and certain affiliates have agreed to vote in favor of such initial business combination, regardless
of how our public stockholders vote.
Pursuant to the letter agreement, our
sponsor, officers, directors, and Nautilus have agreed to vote their founder shares, as well as any public shares purchased during
or after our initial public offering (including in open market and privately negotiated transactions), in favor of our initial
business combination. HB Strategies agreed to vote its founder shares in favor of our initial business combination. As a result, in
addition to our initial stockholders’ founder shares, we would need 6,468,751, or 37.5%, of the 17,250,000 public shares sold
in our initial public offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted;
or 1,078,126, or 6.25%, assuming only the minimum number of shares representing a quorum are voted and assuming our sponsor,
officers and directors, Nautilus and their affiliates do not purchase any units in or after our initial public offering) in order to
have our initial business combination approved. Our initial stockholders will own shares representing 20% of our outstanding shares
of common stock immediately following the completion of this our initial public offering. Accordingly, if we seek stockholder
approval of our initial business combination, the agreement by our initial stockholders (other than HB Strategies) to vote in favor
of our initial business combination will increase the likelihood that we will receive the requisite stockholder approval for such
initial business combination.
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 initial business combination.
At the time of your investment in us, you will
not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our board of directors
may complete an initial business combination without seeking stockholder approval, public stockholders may not have the right or opportunity
to vote on the initial 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 an initial business combination with a target.
We may seek to enter into an initial business
combination agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount
of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as
a result, would not be able to proceed with the initial business combination. Furthermore, we will only redeem our public shares so long
as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon completion of our initial
business combination (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 or such greater amount necessary
to satisfy a closing condition, each as described above, we would not proceed with such redemption and the related business combination
and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant
to enter into an initial business combination with us.
The ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital
structure.
At the time we enter into an agreement for
our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will
need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our
initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet
such requirements, or arrange for third party financing. In addition, if a larger number of shares is submitted for redemption than
we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or
arrange for third party financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution
provision of the Class B common stock result in the issuance of Class A shares on a greater than one-to-one basis upon
conversion of the Class B common stock at the time of our business combination. The above considerations may limit our ability
to complete the most desirable business combination available to us or optimize our capital structure.
The ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful
and that you would have to wait for liquidation in order to redeem your stock.
If our initial business combination agreement
requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business combination
is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in
need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount
to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose
the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.
The requirement that we complete our initial business combination
within the prescribed time frame may give potential target businesses leverage over us in negotiating an initial business combination
and may decrease our ability to conduct due diligence on potential business combination targets, in particular as we approach our dissolution
deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders.
Any potential target business with which we enter
into negotiations concerning an initial business combination will be aware that we must complete our initial business combination by August
2, 2022. Consequently, such target business may obtain leverage over us in negotiating an initial business combination, knowing that if
we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business
combination with any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have
limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a
more comprehensive investigation.
We may not be able to complete our initial business combination
within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem
our public shares and liquidate, in which case our public stockholders may only receive $10.00 per share, or less than such amount in
certain circumstances, and our warrants will expire worthless.
Our amended and restated certificate of incorporation
provides that we must complete our initial business combination by August 2, 2022. 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.
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 $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), 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 $10.00 per share, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less
than $10.00 per share on the redemption of their shares. See “— If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per
share” and other risk factors below.
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.
As the number of special purpose acquisition companies evaluating
targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase
the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business
combination.
In recent years, the number of special purpose
acquisition companies that have been formed has increased substantially. Many potential targets for special purpose acquisition companies
have already entered into an initial business combination, and there are still many special purpose acquisition companies seeking targets
for their initial business combination, as well as many such companies currently in registration. As a result, at times, fewer attractive
targets may be available, and it may require more time, more effort and more resources to identify a suitable target and to consummate
an initial business combination.
In addition, because there are more special purpose
acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets
with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive
deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases
in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could
increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and
may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
Because we are neither limited to evaluating a target business in
a particular industry sector nor have we selected any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business’s operations.
We are neither limited to evaluating a
target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial
business combination, except that we are not, under our amended and restated certificate of incorporation, be permitted to
effectuate our initial business combination with another blank check company or similar company with nominal operations. Because we
have not yet selected or approached any specific target business with respect to a business combination, there is no basis to
evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows,
liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be affected by
numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable
business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to
evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of
the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be
outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target
business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a
direct investment, if such opportunity were available, in a business combination target. Accordingly, any securityholders who choose
to remain securityholders following our initial business combination could suffer a reduction in the value of their securities. Such
securityholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the
reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are
able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as
applicable, relating to the business combination contained an actionable material misstatement or material omission.
If we seek stockholder approval of our initial business combination,
our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares or warrants from public stockholders, which
may influence a vote on a proposed initial 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 initial business combination pursuant to the tender offer
rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares or public warrants or a combination thereof
in privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination,
although they are under no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase
shares or public warrants in such transactions.
Such a purchase may include a contractual acknowledgement
that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not
to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in
privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling
stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote
such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval of the
initial business combination, or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth
or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise
not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote
such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination. Any such
purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible.
Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers
are subject to such reporting requirements.
In addition, if such purchases are made, the public
“float” of our Class A common stock or public warrants and the number of beneficial holders of our securities may be
reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities
exchange.
If a stockholder fails to receive notice of our offer to redeem
our public shares in connection with our initial business combination, or fails to comply with the procedures for 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 initial 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, proxy materials or tender offer documents, as
applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly tender or 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 initial 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 will not have any rights or interests in funds from the trust
account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares
or warrants, potentially at a loss.
Our public stockholders will be entitled to receive
funds from the trust account only upon the earliest to occur of: (i) our completion of an initial business combination, and then
only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations
described herein, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our
amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public
shares if we do not complete our initial business combination by August 2, 2022 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 by August 2, 2022, subject to applicable law and as further described herein. In no
other circumstances will a public stockholder have any right or interest of any kind in the trust account. Holders of warrants will not
have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you
may be forced to sell your public shares or warrants, potentially at a loss.
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 25% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 25% 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 25% of the shares sold in our
initial public offering without our prior consent, which we refer to as the “Excess Shares.” However, we would not be restricting
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and
you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will
not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result,
you will continue to hold that number of shares exceeding 25% and, in order to dispose of such shares, would be required to sell your
stock in open market transactions, potentially at a loss.
Because of our limited resources and the significant competition
for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on our redemption
of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless.
We have encountered and expect to continue
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 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 industry knowledge than we do, and our financial resources
are 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 is 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 an initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share, 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 $10.00 per share upon our
liquidation. See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors
below.
If the net proceeds of our initial public offering, the sale of
the private placement warrants not being held in the trust account, are insufficient to allow us to operate until August 2, 2022, we may
be unable to complete our initial business combination, in which case our public stockholders may only receive $10.00 per share, or less
than such amount in certain circumstances, and our warrants will expire worthless.
The funds available to us outside of the trust
account, together with the loan committed by our initial stockholders for working capital, may not be sufficient to allow us to operate
until August 2, 2022, assuming that our initial business combination is not completed during that time. Of the funds available to us,
we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We
could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent
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 initial business combination, although we do not have
any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to
complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share upon our liquidation. See “— If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share”
and other risk factors below.
We may seek business combination opportunities in industries or
sectors which may or may not be outside of our management’s area of expertise.
We will consider an initial business
combination outside of our management’s area of expertise if an initial business combination candidate is presented to us and
we determine that such candidate offers an attractive business combination opportunity for our company or we are unable to identify
a suitable candidate in this sector after having expanded a reasonable amount of time and effort in an attempt to do so. Although
our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you
that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our
units will not ultimately prove to be less favorable to investors in our initial public offering than a direct investment, if an
opportunity were available, in an initial business combination candidate. In the event we elect to pursue a business combination
outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its
evaluation or operation, and the information contained in this 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 of the significant risk factors. Accordingly, any securityholders who choose to remain
securityholders following our initial business combination could suffer a reduction in the value of their securities. Such
securityholders 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 $10.00 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 $10.00 per share on the
redemption of their shares. See “— If third parties bring claims against us, the proceeds held in the trust account could
be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors
below.
We may seek business combination opportunities with a financially
unstable business or an entity lacking an established record of revenue, cash flow or earnings, which could subject us to volatile revenues,
cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete our initial business
combination with 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 volatile 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 of the significant risk factors and we may not
have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and 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 initial 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 materials or tender offer documents, as applicable, related to
our initial business combination.
If the net proceeds of our initial public offering, the sale of
the private placement warrants not being held in the trust account and the loan committed by our sponsor for working capital 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 additional loans from our sponsor or management team to fund our search for an initial 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 approximately $749,737 will be available to us (as of March 31, 2021) initially outside
the trust account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow funds
from our initial stockholders, management team or other third parties to operate or may be forced to liquidate. None of our initial stockholders,
members of our management team nor any of their affiliates is under any obligation to advance additional funds to us in such circumstances.
Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial
business combination. Up to $1,500,000 of such loans (only if such loans are made to us after April 29, 2021) may be convertible into
private placement warrants at a price of $1.00 per unit at the option of the lender. Prior to the completion of our initial business combination,
we do not expect to seek loans from parties other than our sponsor, an affiliate of our sponsor and certain other initial stockholders
affiliated with us 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
$10.00 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 $10.00 per share on the redemption of their shares. See “— If third parties bring claims
against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share” and other risk factors below.
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 debt financing to partially
finance the initial business combination. Accordingly, any securityholders who choose to remain securityholders following the initial
business combination could suffer a reduction in the value of their securities. Such securityholders are unlikely to have a remedy for
such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors
of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws
that the proxy solicitation or tender offer materials, as applicable, relating to the initial business combination constituted an actionable
material misstatement or omission.
If third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share.
Our placing of funds in the trust account
may not protect those funds from third-party claims against us. Although we have sought and will continue to seek to have all
vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public
stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from
bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an
agreement waiving such claims to the monies held in the trust account, our management will 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. Marcum LLP, our independent
registered public accounting firm, and the underwriters of the offering, will not execute agreements with us waiving such claims to
the monies held in the trust account.
Examples of possible instances where we may engage
a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases
where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to
complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with
our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought
against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could
be less than the $10.00 per share initially held in the trust account, due to claims of such creditors. Pursuant to the letter agreement,
the form of which is filed as Exhibit 10.1 to the registration statement, each of our sponsor and Nautilus has agreed that it will
be severally liable to us, on a pro rata basis based on the number of their founder shares, if and to the extent any claims by a third
party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter
of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to
below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of
the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less
taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business who executed
a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to
any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. However, we have not asked our sponsor or Nautilus to reserve for such indemnification obligations, nor have we independently
verified whether they have sufficient funds to satisfy such indemnity obligations and believe that the only assets of our sponsor and
Nautilus are securities of our company. Therefore, we cannot assure you that our sponsor or Nautilus would be able to satisfy those obligations.
None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective
target businesses.
Our directors may decide not to enforce the indemnification obligations
of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
In the event that the proceeds in the trust account
are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share held in the trust account as of the
date of the liquidation of the trust account if less than $10.00 per share due to reductions in the value of the trust assets, in each
case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations or
that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal
action against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent
directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular
instance if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable
or if the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce these
indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced
below $10.00 per share.
We may not have sufficient funds to satisfy indemnification
claims of our directors and officers.
We have agreed to indemnify our officers and directors
to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of
any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever. Accordingly,
any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account
or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders
from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect
of reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay
the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
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.
Resources could be wasted in researching business combinations that
are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If
we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, or
less than such amount in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We anticipate that the investigation of each specific
target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for accountants, attorneys, consultants and others. If we decide not to
complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be
recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business
combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs
incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share, 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 $10.00 per share on the redemption of their shares. See “— If third parties bring claims against us,
the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors below.
Our ability to successfully effect our initial business combination
and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our
initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination
business.
Our ability to successfully effect our initial
business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however,
cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory
positions following our initial business combination, it is likely that some or all of the management of the target business will remain
in place. While we intend to closely scrutinize any individuals we employ after our initial business combination, we cannot assure you
that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating
a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
In addition, the officers and directors of an initial business combination candidate may resign upon completion of our initial business
combination. The departure of an initial business combination target’s key personnel could negatively impact the operations and
profitability of our post-combination business. The role of an initial business combination candidate’s key personnel upon the completion
of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an initial business
combination candidate’s management team will remain associated with the initial business combination candidate following our initial
business combination, it is possible that members of the management of an initial business combination candidate will not wish to remain
in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
We may have a limited ability to assess the management of a prospective
target business and, as a result, may effect our initial business combination with a target business whose management may not have the
skills, qualifications or abilities to manage a public company, 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 securityholders who choose to remain securityholders following
the initial business combination could suffer a reduction in the value of their securities. Such securities are unlikely to have a remedy
for such reduction in value.
We may engage in an initial business combination with one or more
target businesses that have relationships with entities that may be affiliated with our sponsor, officers, directors or existing holders
which may raise potential conflicts of interest.
In light of the involvement of our sponsor, officers
and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers or directors.
Our officers and directors also serve as officers and board members for other entities, including, without limitation, those described
under the section of this Report entitled “Directors, Executive Officers and Corporate Governance – Conflicts of Interest.”
Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware
of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and
there have been no preliminary discussions concerning an initial business combination with any such entity or entities. 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 stockholders from a financial point of view of an initial business combination with one or more domestic or international
businesses affiliated with our officers, directors or existing holders, potential conflicts of interest still may exist and, as a result,
the terms of the initial business combination may not be as advantageous to our public stockholders as they would be absent any conflicts
of interest. In order to satisfy applicable regulatory or other legal requirements applicable to an Affiliated Joint Acquisition, our
initial business combination may be effected on less favorable terms than otherwise would apply if the initial business combination were
not an Affiliated Joint Acquisition.
We may acquire a target business through an Affiliated Joint Acquisition
with one or more affiliates of Maxim. This may result in conflicts of interest as well as dilutive issuances of our securities.
We may, at our option, pursue a business combination
opportunity jointly with Maxim or one or more entities affiliated with it and/or one or more investors in funds or separate accounts managed
or advised by it, which we refer to as an “Affiliated Joint Acquisition.” Any such parties would co-invest only if (i) permitted
by applicable regulatory and other legal limitations; (ii) we and Maxim considered a transaction to be mutually beneficial to us
as well as the affiliated entity; and (iii) other business reasons exist to do so, such as the strategic merits of including such
co-investors, the need for additional capital beyond the amount held in our trust account to fund the initial business combination and/or
the desire to obtain committed capital for closing the initial business combination. An Affiliated Joint Acquisition may be effected through
a co-investment with us in the target business at the time of our initial business combination, or we could raise additional proceeds
to complete the initial business combination by issuing to such parties a class of equity or equity-linked securities. Accordingly, such
persons or entities may have a conflict between their interests and ours.
In addition, any specified future issuance in
connection with Affiliated Joint Acquisition would trigger the anti-dilution provisions of our Class B common stock, which, unless
waived, would result in an adjustment to the conversion ratio of our Class B common stock such that our initial stockholders and
their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total number of all shares
of common stock outstanding upon completion of our initial public offering plus all shares issued in the specified future issuance. If
such adjustment is not waived as described elsewhere in this Report, the specified future issuance would not reduce the percentage ownership
of holders of our Class B common stock, but would reduce the percentage ownership of holders of our Class A common stock.
We may compete with other affiliates of Maxim for acquisition opportunities
for our company, which could negatively impact our ability to locate a suitable business combination.
Our business strategy may overlap with some of
the strategies of Maxim and certain of their other affiliates. Maxim and its affiliates specialize in financial services for institutional
and retail customers operating in diversified industries globally. Since we may pursue an acquisition in the financial services or real
estate services space, acquisition opportunities that may be of interest to us may come to those other affiliates instead of us or may
be pursued by those affiliates. Our affiliates are not restricted from competing with our business and none of our affiliates are required
to refer any such opportunities to us. Our sponsor and its affiliates face conflicts of interest relating to performing services on our
behalf and allocating investment opportunities to us, and such conflicts may not be resolved in our favor, meaning we could find less
suitable acquisition opportunities which could limit our ability to find a business combination that we find attractive.
Since our sponsor, officers and directors will lose their entire
investment in us if our initial business combination is not completed, a conflict of interest may arise in determining whether a particular
business combination target is appropriate for our initial business combination.
In April 2010, an affiliate of our sponsor
purchased an aggregate of 5,000,000 founder shares for an aggregate purchase price of $25,000. In July 2012, we issued 376,344
shares of our common stock to a third party as consideration for services performed. In February 2020, the third party forfeited
257,649 shares of our common stock and we effectuated a recapitalization of our common stock into two classes (intended to qualify
as a “reorganization” under Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended). All founder shares,
which represented all of the common stock issued and outstanding as of that date, were re-designated as Class B common stock and we
created a new Class A common stock. In February 2020, we also effected a 0.8425-for-1 reverse stock split resulting in an aggregate
of 4,312,500 founder shares. On August 14, 2020, our sponsor forfeited an aggregate of 2,833,333 shares of Class B Common Stock to
the Company for no consideration, and each of Nautilus and HB Strategies purchased from the Company 1,379,167 shares of Class B
Common Stock for a purchase price of $2,043 (or an aggregate purchase price of $4,086). In January 2021, three initial stockholders
of the Company forfeited an aggregate of 718,750 shares of Class B common stock at no cost, which we cancelled, resulting in an
aggregate of 3,593,750 founder shares outstanding and held by our initial stockholders. On January 29, 2021, we effectuated a
1.2-for-1 forward stock split, resulting in an aggregate of 4,312,500 shares held by our initial stockholders. The number of founder
shares issued and outstanding was determined based on the expectation that such founder shares would represent 20% of the
outstanding shares after our initial public offering. The founder shares will be worthless if we do not complete an initial business
combination. In addition, our initial stockholders purchased an aggregate of 5,175,000 private placement warrants if the
underwriters’ over-allotment option is exercised in full) for an aggregate purchase price of $5,175,000, that will also be
worthless if we do not complete an initial business combination. Our sponsor, officers, directors, and Nautilus have entered into a
letter agreement with us, pursuant to which they have agreed (A) to vote any shares owned by them in favor of any proposed initial
business combination and (B) not to redeem any founder shares in connection with a stockholder vote to approve a proposed initial
business combination. HB Strategies has agreed to vote its founder shares in favor of our initial business combination. In addition,
we may obtain loans from our initial stockholders, affiliates of our initial stockholders 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.
Since our officers and directors will not be eligible to be reimbursed
for their out-of-pocket expenses, and our sponsor and other initial stockholders affiliated with our officers and directors will not be
eligible to be repaid for loans they have provided to 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.
Our officers and directors, or any of their respective
affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying
potential target businesses and performing due diligence on suitable business combinations. Reimbursement for such expenses will be paid
by us out of loans by our sponsor and other initial stockholders, including certain affiliates of our officers and directors, and interest
earned on the trust account. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities
on our behalf. These financial interests of our sponsor, officers and directors may influence their motivation in identifying and selecting
a target business combination and completing an initial business combination.
We may issue notes or other debt securities, or otherwise incur
substantial debt, to complete an initial business combination, which may adversely affect our leverage and financial condition and thus
negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of 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 initial business combination. We have agreed that we will not incur any indebtedness
unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust
account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless,
the incurrence of debt could have a variety of negative effects, including:
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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 services and limited operating activities. This lack of diversification may negatively
impact our operating results and profitability.
Of the net proceeds from our initial public offering
and the sale of the private placement warrants, $172,500,000 is available to complete our initial business combination and pay related
fees and expenses.
We may effectuate our initial business combination
with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able
to effectuate our initial business combination with more than one target business because of various factors, including the existence
of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating
results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial
business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory
developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting
of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different
areas of a single industry. In addition, we have focused and intend to continue 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 risks, any or all of which may have a substantial adverse impact upon the particular industry
in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business combinations
with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise to increased
costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire
several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and
delay our ability, to complete our initial business combination. We do not, however, intend to purchase multiple businesses in
unrelated industries in conjunction with our initial business combination. With multiple business combinations, we could also face
additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the
operations and services or products of the acquired companies in a single operating business. If we are unable to adequately address
these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial business combination with
a private company about which little information is available, which may result in an initial business combination with a company that
is not as profitable as we suspected, if at all.
In pursuing our initial business combination strategy,
we may seek to effectuate our initial business combination with a privately held company. Very little public information generally exists
about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination on
the basis of limited information, which may result in an initial business combination with a company that is not as profitable as we suspected,
if at all.
Our management may not be able to maintain control of a target business
after our initial business combination.
We may structure an initial business combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets
of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to
be required to register as an investment company under the Investment Company Act. We will not consider any transaction that does not
meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our stockholders prior
to the initial business combination may collectively own a minority interest in the post business combination company, depending on valuations
ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial
number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a target. In this case, we would
acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our
stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent
to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or
group obtaining a larger share of 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 an initial business combination with which a substantial majority
of our stockholders do not agree.
Our amended and restated certificate of incorporation
does not provide a specified maximum redemption threshold, except that we will only redeem our public shares so long as (after such redemption)
our net tangible assets will be at least $5,000,001 either immediately prior to or upon completion of our initial business combination
(such 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. As a result, we may be able to complete our initial
business combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed
their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares
to our sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we would be required
to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash
conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we
will not complete the initial business combination or redeem any shares, all shares of Class A common stock submitted for redemption
will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business combination, blank check
companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant
agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments
in a manner that makes it easier for us to complete our initial business combination that our stockholders may not support.
In order to effectuate an initial business combination,
blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including
their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption
thresholds and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant
agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated certificate of
incorporation requires the approval of holders of 65% of our common stock, and amending our warrant agreement will require a vote of holders
of at least a majority of the public warrants. In addition, our amended and restated certificate of incorporation requires us to provide
our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated
certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do
not complete our initial business combination by August 2, 2022 or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity. To the extent any such amendments would be deemed to fundamentally change the nature
of any securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected
securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate
an initial business combination in order to effectuate our initial business combination.
We may be unable to obtain additional financing to complete our
initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon
a particular business combination.
We intend to target businesses larger than we
could acquire with the net proceeds of our initial public offering, the sale of the private placement warrants. As a result, we may be
required to seek additional financing to complete such proposed initial business combination. We cannot assure you that such financing
will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete
our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination
and seek an alternative target business candidate. Further, the amount of additional financing we may be required to obtain could increase
as a result of future growth capital needs for any particular transaction, 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 and/or the terms of negotiated transactions to purchase shares in connection with our initial business
combination. In addition, even if we do not need additional financing to complete our initial business combination, we may require such
financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse
effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide
any financing to us in connection with or after our initial business combination. If we are unable to complete our initial business combination,
our public stockholders may only receive approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust
account, and our warrants will expire worthless. Furthermore, as described in the risk factor entitled “If third parties bring claims
against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share,” under certain circumstances our public stockholders may receive less than $10.00 per share upon the
liquidation of the trust account.
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 an initial business combination meeting certain financial significance tests include
historical and/or pro forma financial statement disclosure in periodic reports. 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 statements in accordance with federal proxy rules and
complete our initial business combination within the prescribed time frame.
If we effect 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 effect 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, including but not limited to 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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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.
Risks Relating to Our Company, Sponsor and Management
We are a 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 were incorporated on January 4, 2010 as a vehicle
to pursue a business combination with an existing company. 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 an initial business combination and may be unable
to complete our initial business combination. If we fail to complete our initial business combination, we will never generate any operating
revenues.
If we are deemed to be an investment company under the Investment
Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it
difficult for us to complete our initial business combination.
If we are deemed to be an investment company under
the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
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In addition, we may have imposed upon us burdensome requirements,
including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business
other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding
or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities
and cash items) on an unconsolidated basis. Our business will be to identify and complete an initial business combination and thereafter
to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale
or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our principal activities
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 was
not intended for persons who were 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 initial business combination;
(ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated
certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do
not complete our initial business combination by August 2, 2022 or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity; or (iii) absent an initial business combination by August 2, 2022, our return
of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest
the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the
Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted
funds and may hinder our ability to complete an initial business combination or may result in our liquidation. If we are unable to complete
our initial business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances,
on the liquidation of our trust account and our warrants will expire worthless.
Past performance by Maxim (and its affiliates), including our management
team, may not be indicative of future performance of an investment in the Company.
Information regarding performance by, or businesses
associated with, Maxim and its affiliates is presented for informational purposes only. Past performance by Maxim (and its affiliates),
including our management team, is not a guarantee either (i) of success with respect to any business combination we may consummate
or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical
record of Maxim’s (and its affiliates’) or our management team’s performance as indicative of our future performance
of an investment in the company or the returns the company will, or is likely to, generate going forward.
We are dependent upon our officers and directors and their departure
could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals and, in particular, our officers and directors. We believe that our success depends on the continued service
of our officers and directors, at least until we have completed our initial business combination. We do not have an employment agreement
with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our
directors or officers could have a detrimental effect on us.
Our key personnel may negotiate employment or consulting agreements
with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation
following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular
business combination is the most advantageous.
Our key personnel may be
able to remain with the company after the completion of our initial business combination only if they are able to negotiate
employment or consulting agreements in connection with the initial business combination. Such negotiations would take place
simultaneously with the negotiation of the initial business combination and could provide for such individuals to receive
compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the
initial business combination. The personal and financial interests of such individuals may influence their motivation in identifying
and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion of our
initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any
potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the
completion of our initial business combination. We cannot assure you that any of our key personnel will remain in senior management
or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time
of our initial business combination.
Our officers and directors allocate their time to other businesses
thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could
have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required to,
and do not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations
and our search for an initial business combination and their other businesses. We do not intend to have any full-time employees prior
to the completion of our initial business combination. Each of our officers is engaged in other business endeavors for which he may be
entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs.
Our directors and certain of our officers also serve as officers and board members for other entities. If our officers’ and directors’
other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels,
it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business
combination. For a complete discussion of our officers’ and directors’ other business affairs, please see “Management — Directors
and Officers.”
Certain of our officers and directors are now, and all of them may
in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly,
may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
Until we consummate our initial business combination,
we will continue to engage in the business of identifying and combining with one or more businesses. Our sponsor and officers and directors
are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a
similar business, although our officers may not become an officer or director of any other special purpose acquisition companies with
a class of securities registered under 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 by August 2, 2022.
Our officers and directors also may become aware
of business opportunities which may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or
contractual duties.
Accordingly, they may have conflicts of interest
in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor
and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one
we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director
or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our officers, directors, security holders and their respective affiliates
may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits
our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment
to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into an initial
business combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not intend
to do so, or we may acquire a target business through an Affiliated Joint Acquisition with one or more affiliates of Maxim. 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.
Our initial stockholders may exert a substantial influence on actions
requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders own shares representing
approximately 20.0% of our issued and outstanding shares of common stock ( not including any securities purchased in our initial public
offering by affiliates). Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially in a
manner that you do not support, including amendments to our amended and restated certificate of incorporation and approval of major corporate
transactions. If our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated
transactions, this would increase their control. Factors that would be considered in making such additional purchases would include consideration
of the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our
initial stockholders, is and will be divided into two classes, each of which will generally serve for a term of two years with only one
class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion
of our initial business combination, in which case all of the current directors will continue in office until at least the completion
of the initial business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors,
only a portion of the board of directors will be considered for election and our initial stockholders, because of their ownership position,
will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least
until the completion of our initial business combination.
We are an emerging growth company within the meaning of the Securities
Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth 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 September 30 before that time, in which case we would no longer be an
emerging growth company as of the following March 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.
Compliance obligations under the Sarbanes-Oxley Act may make it
more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase
the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending
March 31, 2022. 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 initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Provisions in our amended and restated certificate of incorporation
and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A
common stock and could entrench management.
Our amended and restated certificate of incorporation
contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These
provisions include a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series
of preferred shares, which may make the removal of management more difficult and may discourage transactions that otherwise could involve
payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions
under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more
difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Our amended and restated certificate of incorporation requires,
to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees
or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in the State of Delaware
and, if brought outside of Delaware, the stockholder bringing the suit will, subject to certain exceptions, be deemed to have consented
to service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers,
other employees or stockholders.
Our amended and restated certificate of incorporation
requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers,
other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in
the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines
that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent
to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter
jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have
notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision
may limit or make more costly a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation
to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,
which could harm our business, operating results and financial condition.
Our amended and restated certificate of incorporation
provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created
by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought
to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
In addition, our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an
alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive
forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the rules and regulations promulgated
thereunder. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive
compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent
jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the
rules and regulations thereunder.
Cyber incidents or attacks directed at us could result in information
theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information
systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the
cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early
stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.
We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents.
It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial
loss.
Changes in laws or regulations, or a failure to comply with any
laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination
and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
Those laws and regulations and their interpretation
and application may also change from time to time and those changes could have a material adverse effect on our business, investments
and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have
a material adverse effect on our business, including our ability to negotiate and complete our initial business combination and results
of operations.
The provisions of our amended and restated certificate of incorporation
that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from
our trust account), including an amendment to permit us to withdraw funds from the trust account such that the per share amount investors
will receive upon any redemption or liquidation is substantially reduced or eliminated, may be amended with the approval of holders of
65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us,
therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial
business combination that some of our stockholders may not support.
Our amended and restated
certificate of incorporation provides that any of its provisions related to pre-initial business combination activity (including the
requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust account
and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein and including to permit us to withdraw funds from the trust account such that the per share amount investors will receive
upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our
common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our
trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our
amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled
to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional
securities that can vote with common stockholders on matters related to our pre-initial business combination activity, on any
amendment to certain provisions of our amended and restated certificate of incorporation or on our initial business combination. Our
initial stockholders, who collectively beneficially own 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-initial business combination behavior more easily than some other blank check
companies, and this may increase our ability to complete an initial business combination with which you do not agree. Our
stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our sponsor, officers, directors and Nautilus
have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination by August 2, 2022 or (ii) with respect to any other 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, divided by the number of then outstanding public shares. HB Strategies has agreed to the foregoing terms
except that it will not waive redemption rights with respect to its public shares. These agreements are contained in a letter agreement
that we have entered into with our initial stockholders and officers and directors. Our public 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 public stockholders would need to pursue a stockholder
derivative action, subject to applicable law.
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 by August 2, 2022 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 after by
August 2, 2022 in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing
procedures.
Because we will not be
complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at
such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us
within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and
our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution
complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is
limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we
will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable
for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond
the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders
upon the redemption of our public shares in the event we do not complete our initial business combination by August 2, 2022 is not
considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due
to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the
unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders until after the
consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual meeting until no later than March 31, 2022. 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.
Risks Relating to our Initial
Public Offering and Our Securities
Nasdaq may delist our securities from trading on its exchange, which
could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our units are listed on Nasdaq. 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). 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, 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 (with at least 50% of such round lot holders holding securities with a market value of at least
$2,500) of our securities. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists any of our securities from trading
on its exchange and we are not able to list such securities on another national securities exchange, we expect such securities could be
quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our 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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a 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 our units, Class A common stock and warrants are listed on Nasdaq, our units, Class A
common stock and warrants are covered securities. Although the states are preempted from regulating the sale of our securities, the federal
statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity,
then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used
these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state
securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the
sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not
be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection with
our initial business combination.
We have not registered and 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. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration
or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire
worthless.
We have not registered 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 commercially reasonable
best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of
Class A common stock issuable upon exercise of the warrants and thereafter will use our commercially reasonable best efforts to
cause the same to become effective within 60 business days following our initial business combination and to maintain a current
prospectus relating to the Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants in
accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any
facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus,
the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order.
If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit
holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and
we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon
such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from
registration is available. Notwithstanding the 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, and in the event we do not so
elect, we will use our commercially reasonable 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, or issue securities or other
compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants
under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the
warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be
entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their
warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common
stock included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right if the
issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable
state blue sky laws or we are unable to effect such registration or qualification. We will use our commercially reasonable best
efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in
which the warrants were offered by us in our public offering. However, there may be instances in which holders of our public
warrants may be unable to exercise such public warrants but holders of our private placement warrants may be able to exercise such
private placement warrants.
If you exercise your public warrants on a “cashless basis,”
you will receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
There are circumstances in which the exercise
of the public warrants may be required or permitted to be made on a cashless basis. First, if a registration statement covering the shares
of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after the closing of our
initial business combination, warrantholders may, until such time as there is an effective registration statement, exercise warrants on
a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. Second, if our Class A
common stock is at any time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition
of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of
public warrants who exercise their warrants to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities
Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we
do not so elect, we will use our commercially reasonable best efforts to register or qualify the shares under applicable blue sky laws
to the extent an exemption is not available. Third, if we call the public warrants for redemption, our management will have the option
to require all holders that wish to exercise warrants to do so on a cashless basis. In the event of an exercise on a cashless basis, a
holder would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal
to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants,
multiplied by the difference between the exercise price of the warrants and the “fair market value” (as defined in the next
sentence) by (y) the fair market value. The “fair market value” is the average volume weighted average last reported
sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice
of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As
a result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for
cash.
The grant of registration rights to our initial stockholders may
make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market
price of our Class A common stock.
Our initial stockholders and their permitted transferees
can demand that we register the private placement warrants, the shares of Class A common stock issuable upon conversion of the founder
shares or exercise of the private placement warrants held, or to be held, by them and holders of securities that may be issued upon conversion
of working capital loans may demand that we register such units or securities underlying such units. In addition, Hudson Bay acquired
units in our initial public offering and became an affiliate (as defined in the Securities Act) of us, and we agreed to file a registration
statement to register the resale of the units (including the shares of Class A common stock and warrants included in the units) purchased
by Hudson Bay (or its nominee). We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock.
In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more
cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the securities
owned by our initial stockholders or holders of working capital loans or their respective permitted transferees are registered.
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
time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate
of incorporation. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation
authorizes the issuance of up to 110,000,000 shares of common stock, including 100,000,000 shares of Class A common stock, par value
$0.0001 per share, and 10,000,000 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 was 72,180,000 and 5,687,500 and taking into
account shares reserved for issuances upon exercise of warrants but excluding shares of Class A common stock issuable upon conversion
of Class B common stock) authorized but unissued shares of Class A common stock and Class B common stock, respectively, available
for issuance. 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. Shares of Class B common stock are also convertible at the
option of the holder at any time.
We may issue a substantial number of additional
shares of common or preferred stock to complete our initial business combination (including pursuant to a specified future issuance) 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, on any amendment to certain provisions of our amended and restated certificate of incorporation or on our initial
business combination). We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio
greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended
and restated certificate of incorporation. However, our amended and restated certificate of incorporation provides, among other things,
that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof
to (i) receive funds from the trust account or (ii) vote on any initial business combination. These provisions of our amended
and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended
with the approval of our stockholders. However, our 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 (A) to modify the substance or timing
of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by August 2, 2022 g or (B) with
respect to any other 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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may significantly dilute the equity interest of investors;
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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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We may amend the terms of the warrants in a manner that may be adverse
to holders of public warrants with the approval by the holders of at least a majority of the then outstanding public warrants. As a result,
the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares of our Class A
common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants are issued in registered form under
a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides
that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision,
but requires the approval by the holders of at least a majority of the then outstanding public warrants to make any change that adversely
affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner
adverse to a holder if holders of at least a majority of the then outstanding public warrants approve of such amendment. Although our
ability to amend the terms of the public warrants with the consent of at least a majority of the then outstanding public warrants is unlimited,
examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants
into cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock purchasable upon exercise
of a warrant.
Our warrant agreement will designate 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 will provide 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 not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt
from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification.
We will use our commercially reasonable best efforts to register or qualify such shares of common stock under the blue sky laws of the
state of residence in those states in which the warrants were offered by us in our initial public offering. 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. None of the private placement warrants will be redeemable by us so long
as they are held by our initial stockholders or their permitted transferees.
Our warrants, founder shares and private placement warrants may
have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our initial business
combination.
We issued warrants to purchase 8,625,000 shares
of Class A common stock as part of the units in our initial public offering and, simultaneously with the closing of our initial public
offering and the exercise of the over-allotment option, we sold in a private placement warrants to purchase an aggregate of 5,175,000
shares of Class A common stock at $11.50 per share, subject to adjustment. Our initial stockholders currently own an aggregate of
4,312,500 founder shares. The founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject
to adjustment as set forth herein. In addition, if our initial stockholders make any working capital loans, up to $1,500,000 of such loans
(only if such loans are made to us after April 29, 2021) may be converted into warrants, at the price of $1.00 per warrant at the option
of the lender. The warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise
period.
To the extent we issue shares of Class A
common stock to effectuate an initial business combination, the potential for the issuance of a substantial number of additional shares
of Class A common stock upon exercise of the warrants could make us a less attractive business combination vehicle to a target business.
Any such issuance will increase the number of issued and outstanding shares of our Class A common stock and reduce the value of the
shares of Class A common stock issued to complete the initial business combination. Therefore, our warrants, founder shares and private
placement warrants may make it more difficult to effectuate an initial business combination or increase the cost of acquiring the target
business.
Because each unit contains one-half of one redeemable warrant and
only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
Each unit contains one-half of one redeemable
warrant. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you
purchase a multiple of two units, the number of warrants issuable to you upon separation of the units will be rounded down to the nearest
whole number of warrants. This is different from other offerings similar to ours whose units include one share of common stock and one
warrant to purchase one whole share. We have established the components of the units in this way in order to reduce the dilutive effect
of the warrants upon completion of an initial business combination since the warrants will be exercisable in the aggregate for one-half
of the number of shares compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more
attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if they included
a warrant to purchase one whole share.
Our warrants are accounted for as a warrant liability and are recorded
at fair value upon issuance with changes in fair value each period to be reported in earnings, which may have an adverse effect on the
market price of our common stock.
We account for our warrants as a warrant liability
that were recorded at fair value upon issuance, and we will report any changes in fair value each period in earnings as determined by
us based upon a valuation report obtained from an independent third party valuation firm. The impact of changes in fair value on earnings
may have an adverse effect on the market price of our common stock.
We identified a material weakness in our internal control over
financial reporting related to the accounting and reporting for complex financial instruments, due to our reconsideration of the accounting
treatment for our warrants and the classification of redeemable shares subject to redemption in connection with the SEC Staff Statement.
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management also
evaluates the effectiveness of our internal controls and we will disclose any changes and material weaknesses identified through such
evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements
will not be prevented or detected on a timely basis.
As described in Item 9A. in this Annual Report,
we identified material weaknesses in our internal control over financial reporting related to the accounting classification of our warrants
and the classification of redeemable shares subject to redemption. On April 12, 2021, following the closing of our initial public
offering, the staff of the Securities and Exchange Commission (“SEC”) issued “Staff Statement on Accounting and Reporting
Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (“SEC Staff Statement”)
advising that, in the view of the SEC staff, warrants issued pursuant to warrant agreements comparable to the warrant agreement entered
into by the Company should be accounted for as liabilities rather than as equity. In addition, the SEC issued comment letters to multiple
SPACs that addressed certain accounting and reporting considerations related to redeemable equity instruments of a kind similar to those
issued by the Company (the “SEC Comment Letters”). Based on ASC 480-10-S99, redemption provisions not solely within the control
of the Company require the Public Shares of the Company’s Class A common stock subject to redemption to be classified outside of
permanent equity. We have, following the date of the SEC Staff Statement, undertaken measures to review our warrants and to properly account
for the warrants as liabilities. We also classified those Public Shares as temporary equity regardless of the charter’s requirement
and that management concluded that all Public Shares should be reported as temporary equity on the Company’s balance sheet.