Item 1. Business
Introduction
We are a blank check
company formed under the laws of the State of Delaware on June 2, 2020 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses, which we refer
to throughout this report as our “Business Combination”. We intend to effectuate our Business Combination utilizing
cash from the proceeds of the Initial Public Offering, the partial exercise of the Over-Allotment Option and the sale of the Private
Placement Warrants, our capital stock, debt or a combination of cash, stock and debt. Although we are not limited to a particular
industry or sector for purposes of consummating a Business Combination, we initially focused our search on identifying a prospective
target business in the technology, media and telecommunications (“TMT”) industries in the United States and other developed
countries. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies.
Our board of directors
unanimously approved a business combination agreement, dated February 2, 2021, by and among us, Holicity Merger Sub Inc., our wholly
owned subsidiary (“Merger Sub”), and Astra Space, Inc., a Delaware corporation (“Astra”) (as it may be
amended and/or restated from time to time, the “Astra Agreement”). If the Business Combination Agreement is adopted
by our stockholders and the transactions under the Business Combination Agreement are consummated, Merger Sub will merge with and
into Astra with Astra surviving the merger as our wholly owned subsidiary (the “Astra Merger”). In addition, in connection
with the consummation of the Astra Merger, our company will be renamed “Astra Space, Inc.” and is referred to herein
as “New Astra” as of the time following such change of name. See “Proposed Astra Merger” below for more
detail on this transaction. If the Astra Merger is not approved or completed for any reason, we will continue to seek another Business
Combination as described herein.
Consummation of the
transactions contemplated by the Business Combination Agreement is subject to customary conditions of the respective parties, including
the approval of the Business Combination Agreement, the Business Combination and certain other actions related thereto by the Company’s
stockholders, certain approvals or other determinations from regulatory authorities, as applicable, and the availability of a minimum
amount of cash in the Trust Account (and/or from other specified sources, if necessary), after giving effect to redemptions by
the Company’s public stockholders, if any.
Other than as specifically
discussed, this report does not assume the closing of the Astra Merger.
Our Mission
We
seek to capitalize on the experience of our co-Founders, Craig McCaw and Randy Russell, who together have nearly 70 years of combined
operating, investing and financing experience. Mr. McCaw’s skills as a serial entrepreneur across public and private markets, and
Mr. Russell’s experience as a senior investment banker and trusted advisor to a broad range of companies and c-suite executives
in the Telecommunications, Media and Technology (“TMT”) industry and leading private equity firms, represent a compelling
combination. We believe our Founders’ distinctive and complementary backgrounds can facilitate a positive, transformational outcome
in an initial business combination.
Opportunities
for a potential business combination will be developed through our multi-decade relationships and proprietary network of corporate
executives, family offices, financial sponsors, investment bankers, private investors, and strategic advisors. We intend to be
proactive and highly selective in sourcing potential targets. We are focusing our efforts on opportunities where our founders’
strategic vision, operating expertise, deep relationships, and capital markets experience can be catalysts to enhance the growth,
competitive position and financial upside in an initial business combination. We intend to identify and execute an initial business
combination within the TMT industry in the United States and other developed countries, although we may pursue targets in any business,
industry, sector or geographical location.
We
believe that our management team is well positioned to identify attractive business combination opportunities during a time of
compelling industry and economic transformation. In seeking our initial business combination, we expect to favor a mix of targeted
industry and business characteristics, which may include:
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Attractive market and competitive dynamics
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Compelling long-term growth prospects
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Leadership in technology driven transformation
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High barriers to entry for new entrants
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Low or manageable risks of technological obsolescence
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Defensible position in intellectual property
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Strong recurring revenues
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Attractive steady-state margins
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High incremental margins
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Opportunities for operational improvement
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Opportunities for further consolidation
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Competitive Advantages
Our business strategy
is to identify and complete our initial business combination with a company that complements the experience of our founders and
can benefit from their operational expertise. Our selection process will leverage our management teams’ broad and deep relationship
network, unique industry experiences and proven deal sourcing capabilities to access a broad spectrum of differentiated opportunities.
This network has been developed through their extensive experience and demonstrated success in both investing in and operating
businesses across a variety of industries, developing a distinctive combination of capabilities including:
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a track record of building industry-leading companies and proven ability to deliver shareholder value over an extended time period with above-market-average investment returns that are multiples greater than comparable benchmarks;
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a prolific acquisition history, having completed in excess of 100 transactions that have in sum contributed to such companies’ financial results and strategic position. This acquisition history has been executed using extensive deal sourcing and differentiated transaction execution/structuring capabilities;
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experience deploying broad value creation strategies, including recruiting world-class talent and delivering operating efficiency by consistently exceeding synergy targets; and
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an extensive history of accessing the capital markets across various business cycles, including financing businesses and assisting companies with transition to public ownership.
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Upon completion of the
Initial Public Offering, our founders are communicating with their networks of relationships to articulate the parameters for our
search for a target company and a potential business combination and begin the process of pursuing and reviewing potential opportunities.
We intend to capitalize
on the following competitive advantages in our pursuit of a target company:
Proactive and Proprietary
Transaction Sourcing. Our management team believes that its market reputation, proactive approach to sourcing transactions,
and extensive network of relationships provide proprietary investment opportunities. Our team’s deep industry expertise across
numerous parts of the TMT industries and throughout the capital structure often make them a viable option for TMT companies seeking
capital solutions. Our management team believes that it has an established record of generating proprietary investment opportunities
resulting from original research. Within targeted sub-sectors, our management team analyzes current trends, develops investment
theses and creates strategies for originating and evaluating investment opportunities. This research-oriented, data-intensive process
allows us to proactively identify trends, find opportunities and execute transactions ahead of potential competitors. Additionally,
given Mr. McCaw’s long track record and reputation in the communications services sector as well as his broad and diverse network,
there is significant potential to source new opportunities that may not be broadly marketed.
Execution and Structuring
Capability. Our management team believes that its industry expertise and reputation allow it to source and complete transactions
possessing structural attributes that create an attractive investment thesis. These types of transactions are typically complex
and require creativity, industry knowledge and expertise, rigorous due diligence, and extensive negotiation and documentation.
Our team has experience investing in TMT assets throughout a company’s life cycle. In addition, complexity associated with TMT
relationships and operating logistics are also well understood by the management team and provide for a broader opportunity set.
Our management team believes that by focusing its investment activities on these types of transactions, it is able to generate
investment opportunities that have attractive risk/reward profiles based on their valuations, structural characteristics and relatively
low levels of financial leverage.
Broad and Extensive
Experience in Both Public and Private Markets. Our management team boasts decades of combined operating, investing and financing
experience across both public and private markets. Mr. McCaw has a long track record of investing across the TMT landscape, with
over 65 transactions completed, representing approximately $35 billion in capital raised. Mr. Russell has close to 20 years of
deal making experience as a trusted advisor to high profile c-suite executives, management teams and board of director’s members,
participating in over $230 billion in public and private market transactions. We believe that this versatility of experience and
complementary skills will allow our sponsor to identify companies that could make successful public market candidates and prepare
them to make the transition to strong publicly-traded companies.
Significant Value-Add
Capability The sector expertise and broad network of relationships of our management team allow it to add significant value
after consummation of an initial transaction. We anticipate that our management team will be involved with a target company in
a number of capacities, including: (i) assisting in setting strategic direction and priorities; (ii) designing specific performance
improvement projects; (iii) helping to identify and recruit managers; (iv) advising on acquisition and financing transactions;
(v) contributing market information; and (vi) developing a targeted investor relations program. Furthermore, our management team
is also experienced in navigating complex regulatory issues that many companies in TMT businesses manage over time. Our management
believes that its ability to identify and implement value creation initiatives has been an essential driver of past performance
and will remain central to its acquisition strategy.
Industry Opportunity
While we may acquire
a business in any industry, our focus is on the TMT industries in the United States and other developed countries. We believe the
TMT industries are attractive for a number of reasons:
Large Target Market.
The TMT sector benefits from positive macroeconomic trends and substantial actionable targets of meaningful scale that fit
our acquisition criteria. According to Thomson Reuters, from 2010 to 2019, the sector has benefited from robust M&A deal flow
with over 550 transactions completed between $1 billion and $10 billion, with a cumulative deal volume of over $1 trillion.
We believe changes occurring
within the TMT sector are propelling this strategic activity. For instance, technology advancements and over-the-top content
providers have caused what we believe are massive shifts in the media sector as key players look to consolidate and scale in order
to compete. Similarly, new technologies have reduced barriers to entry, introducing increased, low-cost competition, and the
need for strategic actions to address growing structural challenges. Additionally, the telecommunications industry is facing significant
consolidation and increased spending as the next generation of wireless and broadband technology nears. These critical themes in
TMT, among many, provide what we believe is a strong environment for sourcing a differentiated opportunity and consummating a business
combination.
Broad Universe of
Potential Targets. We intend to focus our investment effort broadly across TMT industries. We believe that our investment and
operating expertise in TMT across multiple industry verticals will give us a large, addressable universe of potential targets.
The diversity of the target universe and the number of largely uncorrelated sub-sectors maximizes that likelihood that the management
team will be able to identify and execute an attractive transaction.
Limited Competition.
Our management team believes that the complexity of the TMT industries acts as a barrier to entry, requiring investors to have
significant sector-specific knowledge and expertise to identify and appropriately analyze investment opportunities. Technical knowledge,
an understanding of the regulatory landscape, complex valuation methodologies, specialized accounting treatments, and regulatory
and political considerations may deter competition from generalist firms.
Favorable Trends.
Total global TMT expenditure has grown at a pace substantially above the rate of inflation in the recent past, and this growth
is projected to continue over the years to come, including an increasing pool of available services and economies those services
provide and improved access to such services.
Business Combination Criteria
Consistent with our
strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective
target businesses. We will utilize our management teams’ extensive network of contacts, which provides access to differentiated
deal flow and significant deal-sourcing capabilities and use these criteria and guidelines in evaluating acquisition opportunities,
but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
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Middle-Market Businesses. We believe that the middle market segment provides the greatest number of opportunities for investment and is consistent with Pendrell’s historical investment history. This segment is where we believe we also have the strongest network to identify the greatest number of attractive opportunities and we believe the larger market capitalization and public float of the resulting company is more attractive to our investors.
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Established Companies with Proven Track Records. We seek to acquire one or more established companies with consistent historical financial performance. We typically focus on companies with a history of strong operating and financial results and strong fundamentals. We do not intend to acquire start-up companies or companies without a path to long-term profitability.
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Companies with Recurring and Embedded Revenue and Earnings Growth or Potential for Revenue and Earnings Growth. We seek to acquire one or more businesses that have achieved or have the potential for significant revenue and earnings growth through a combination of organic growth, synergistic add-on acquisitions, new product markets and geographies, increased production capacity, expense reduction and increased operating leverage.
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Companies with, or with the Potential for, Strong Free Cash Flow Generation. We seek to acquire one or more businesses that already have, or have the potential to generate, consistent, stable and recurring free cash flow. We will focus on one or more businesses that have predictable revenue streams with high visibility.
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Strong Competitive Position. We intend to focus on acquisition targets that have a leading, growing or niche market position in its industries. We will analyze the strengths and weaknesses of target businesses relative to their competitors. We will seek to acquire one or more businesses that demonstrate advantages when compared to their competitors, which may help to protect their market position and profitability.
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Experienced Management Team. We seek to acquire one or more businesses with a complete, experienced management team that provides a platform for us to further develop the acquired business’s management capabilities. We seek to partner with a potential target’s management team and expect that the operating and financial abilities of our executive team and board will complement their own capabilities.
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Benefit from Being a Public Company. We intend to acquire one or more businesses that will benefit from being publicly traded and can effectively utilize the broader access to capital and the public profile that are associated with being a publicly traded company.
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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 from time to time our
management may deem relevant.
Initial Business Combination
Nasdaq rules require
that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the
assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the
trust account) at the time of our signing a definitive agreement in connection with our initial business combination and that any
such business combination be approved by a majority of our independent directors. Both of these conditions will be satisfied with
the proposed Astra Merger. 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 which is a member of FINRA or a valuation or appraisal 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 the target’s assets or prospects.
We may pursue an initial
business combination opportunity jointly with the corporate parent of our sponsor, Pendrell, or one or more of its affiliates,
which we refer to as an Affiliated Joint Acquisition. Any such parties may co-invest with us in the target business at the time
of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such parties
a class of equity or equity-linked securities. As described in “Astra Merger” below, Pendrell made a $10 million investment
in Astra prior to the announcement of the Astra Merger. Any such issuance of equity or equity-linked securities would, on a fully
diluted basis, reduce the percentage ownership of our then-existing stockholders. Notwithstanding the foregoing, pursuant to the
anti-dilution provisions of our Class B common stock, issuances or deemed issuances of Class A common stock or equity-linked securities
would result in an adjustment to the ratio at which shares of Class B common stock shall convert into shares of Class A 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 the Initial Public Offering
plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the business combination
(excluding any shares or equity-linked securities issued, or to be issued, to any seller in the business combination), unless the
holders of a majority of the then-outstanding shares of Class B common stock agree to waive such adjustment with respect to such
issuance or deemed issuance at the time thereof. Neither our sponsor nor its affiliates have an obligation to make any such investment,
and may compete with us for potential business combinations.
We anticipate structuring
our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire
100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination
such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order
to meet certain objectives of the target management team or stockholders or for other reasons, including an Affiliated Joint Acquisition,
as described above. However, we will only complete such business combination if the post- transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, 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 business combination may collectively own a minority interest in the post-transaction company, depending on valuations
ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue
a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire
a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders
immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our
initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will
be taken into account for purposes of the 80% of net assets test described above. If the business combination involves more than
one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
We are not presently
engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business
combination using cash from the proceeds of the Initial Public Offering and the private placement of the private placement warrants,
the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements
or backstop agreements we may enter into following the consummation of the 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 expect all of the
funds released from the trust account to be used for payment of the consideration in connection with the Astra Merger.
Other than the proposed
Astra Merger, we have not selected any specific business combination target and we have not, nor has anyone on our behalf, engaged
in any substantive discussions, directly or indirectly, with any other business combination target. Accordingly, there is no current
basis for investors in our securities to evaluate the possible merits or risks of any target business other than Astra with which
we may ultimately complete our initial business combination. Although our management will assess the risks inherent in a particular
target business with which we may combine, we cannot assure you that this assessment will result in our identifying all risks that
a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that we can do nothing
to control or reduce the chances that those risks will adversely affect a target business.
We may need to obtain
additional financing to complete our initial business combination, either because the transaction requires more cash than is available
from the proceeds held in our trust account or because we become obligated to redeem a significant number of our public shares
upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with
such business combination. There are no prohibitions on our ability to issue securities or incur debt in connection with our initial
business combination. We are not currently a party to any arrangement or understanding with any third party with respect to raising
any additional funds through the sale of securities, the incurrence of debt or otherwise. We will not need any such financing in
connection with the Astra Merger.
We have filed a Registration
Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934,
as amended, or the Exchange Act. As a result, we will be subject to the rules and regulations promulgated under the Exchange Act.
We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or
subsequent to the consummation of our initial business combination.
Sourcing of Potential Initial Business
Combination Targets
Our management team
has spent significant portions of their careers working with businesses in the TMT industries, and have developed a wide network
of professional services contacts and business relationships in those industries. The members of our board of directors also have
significant executive management and public company experience with TMT companies.
This network has provided
our management team with a flow of referrals that have resulted in numerous transactions. We believe that the network of contacts
and relationships of our management team will provide us with an important source of acquisition opportunities. In addition, we
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
market participants, private equity groups, investment banks, consultants, accounting firms and large business enterprises.
We are not prohibited
from pursuing an initial business combination with a company that is affiliated with our sponsor or any of its executive officers
or directors, or making the acquisition through a joint venture or other form of shared ownership with our sponsor. In the event
we seek to complete an initial business combination with a target that is affiliated with our sponsor or any of its executive officers
or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking which
is a member of FINRA or a qualified independent accounting firm that such an initial business combination is fair to our company
from a financial point of view. We are not required to obtain such an opinion in any other context.
As more fully discussed
in “Management—Conflicts of Interest,” if any of our executive officers becomes aware of a business combination
opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations,
he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination
opportunity to us. All of our executive officers currently have certain relevant fiduciary duties or contractual obligations that
may take priority over their duties to us. In addition, we may pursue an Affiliated Joint Acquisition opportunity with an entity
to which an officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target
business at the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by
issuing to such entity a class of equity or equity-linked securities. Our amended and restated certificate of incorporation will
provide 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.
We anticipate that target
business candidates will also be brought to our attention from various unaffiliated sources, including investment bankers, private
investment funds and other intermediaries. Target businesses may be brought to our attention by such unaffiliated sources as a
result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses in which they
think we may be interested on an unsolicited basis, since many of these sources will have read the prospectus for the Initial Public
Offering and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also
bring to our attention target business candidates 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 opportunities that would not otherwise necessarily be available to us as a result of the track
record and business relationships of our officers and directors.
Financial Position
With funds available for a business combination initially in
the amount of $300,000,000 (assuming no redemptions), after payment of $10,500,000 of deferred underwriting fees, 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 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, except with respect to the Astra Merger, we have not taken any steps to secure third party financing
and there can be no assurance it will be available to us.
Lack of Business Diversification
For an indefinite period
of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future
performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple
entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. By completing our initial business combination with only a single entity, our
lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited Ability to Evaluate the Target’s
Management Team
Although we intend to
closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business
combination with that business, our assessment of the target business’s management may not prove to be correct. In addition, the
future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination
as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our
initial business combination.
Moreover, we cannot
assure you that members of our management team will have significant experience or knowledge relating to the operations of the
particular target business.
We cannot assure you
that any of our key personnel will remain in senior management or advisory positions with the combined company. The determination
as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following a business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot
assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability
to Approve Our Initial Business Combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended and restated
certificate of incorporation. However, we will seek stockholder approval if it is required by law or applicable stock exchange
rule, or we may decide to seek stockholder approval for business or other legal reasons.
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
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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 common stock that will be equal to or in excess of 20% of the number of our shares of 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 earned on the trust account (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common stock or voting power of 5% or more; or
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The issuance or potential issuance of common stock will result in our undergoing a change of control.
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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, executive 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. None of the funds in the trust account will be used to purchase shares or public
warrants in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when
they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by
Regulation M under the Exchange Act.
In the event that our
sponsor, initial stockholders, 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. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going- private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules.
The purpose of any such
purchases of shares could be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of
obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where
it appears that such requirement would otherwise not be met. 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 Class A common stock or public 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, initial
stockholders, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our initial
stockholders, officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting
us directly or by our receipt of redemption requests submitted by stockholders (in the case of Class A common stock) following
our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers, directors,
advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders
who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial
business combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination
but only if such shares have not already been voted at the stockholder meeting related to our initial business combination. Our
sponsor, executive officers, directors, advisors or any of their affiliates will select which stockholders to purchase shares from
based on a negotiated price and number of shares and any other factors that they may deem relevant and will only purchase shares
if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws. Our sponsor, officers,
directors and/or their affiliates will be restricted from making purchases of shares if the purchases would violate Section 9(a)(2)
of, or Rule 10b-5 under, the Exchange Act. We expect 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 calculated as of two business days prior to the consummation of the initial business combination, including interest
(less amounts released to us to pay our taxes), divided by the number of then outstanding public shares, subject to the limitations
and on the conditions described herein. The amount in the trust account is initially anticipated to be $10.00 per public share.
The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting
commissions we will pay to the underwriters. The redemption rights will include the requirement that any beneficial owner on whose
behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Our initial stockholders,
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their
redemption rights with respect to any founder shares and public shares they may hold in connection with the completion of our initial
business combination.
Limitations on Redemptions
Our amended and restated
certificate of incorporation provide that in no event will we redeem our public shares in an amount that would cause our net tangible
assets to be less than $5,000,001. In addition, our proposed initial business combination may impose a minimum cash requirement
for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes
or (iii) the retention of cash to satisfy other conditions. 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 in connection with such initial business combination,
and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise
funds through the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our
initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following
consummation of the Initial Public Offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash
requirements.
Manner of Conducting Redemptions
We will provide our
public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business
combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) without
a stockholder vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial
business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of
factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval
under applicable law or stock exchange listing requirements. Asset acquisitions and stock purchases would not typically require
stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than
20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder
approval. So long as we obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with Nasdaq’s
stockholder approval rules.
The requirement that
we provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above will
be contained in provisions of our amended and restated certificate of incorporation and will apply whether or not we maintain our
registration under the Exchange Act or our listing on Nasdaq. Such provisions may be amended if approved by holders of 65% of our
common stock entitled to vote thereon.
If we provide our public
stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A under 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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If we seek stockholder
approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted
are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person
or by proxy of shares of outstanding capital stock of the Company representing a majority of the voting power of all outstanding
shares of capital stock of the Company entitled to vote at such meeting. Our initial stockholders will count towards this quorum
and, pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote any founder shares they hold and
any public shares purchased during or after the Initial Public Offering (including in open market and privately-negotiated transactions)
in favor of our initial business combination.
As a result, we would
need 11,250,000, or 37.5%, of the 30,000,000 public shares sold in the Initial Public Offering (including the partial exercise
by the underwriters of their Over-Allotment Option) to be voted in favor of an initial business combination in order to have our
initial business combination approved (assuming all outstanding shares are voted). These quorum and voting thresholds, and the
voting agreements of our initial stockholders, may make it more likely that we will consummate our initial business combination.
Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction
or whether they were a stockholder on the record date for the stockholder meeting held to approve the proposed transaction.
If a stockholder vote
is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E under 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 pursuant to Regulation 14A under the Exchange Act, which regulates the solicitation of proxies.
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In the event we conduct
redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance
with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the
expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more
than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in
an amount that would cause our net tangible assets to be less than $5,000,001. If public stockholders tender more shares than we
have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
Upon the public announcement
of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we or our sponsor will
terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the open market,
in order to comply with Rule 14e-5 under the Exchange Act.
We intend to require
our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to
our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to
the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may
be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct
redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares
to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of
the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will furnish
to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public
stockholders to satisfy such delivery requirements. We believe that this will allow our transfer agent to efficiently process any
redemptions without the need for further communication or action from the redeeming public stockholders, which could delay redemptions
and result in additional administrative cost. If the proposed initial business combination is not approved and we continue to search
for a target company, we will promptly return any certificates or shares delivered by public stockholders who elected to redeem
their shares.
Our amended and restated
certificate of incorporation provide that in no event will we redeem our public shares in an amount that would cause our net tangible
assets to be less than $5,000,001. In addition, our proposed initial business combination may impose a minimum cash requirement
for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes
or (iii) the retention of cash to satisfy other conditions. 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 in connection with such initial business combination,
and all shares of Class A common stock submitted for redemption will be returned to the holders thereof. We may, however, raise
funds through the issuance of equity-linked securities or through loans, advances or other indebtedness in connection with our
initial business combination, including pursuant to forward purchase agreements or backstop arrangements we may enter into following
consummation of the Initial Public Offering, in order to, among other reasons, satisfy such net tangible assets or minimum cash
requirements.
Limitation on Redemption Upon Completion
of Our Initial Business Combination If We Seek Stockholder Approval
Notwithstanding the
foregoing redemption rights, 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 Excess Shares, without our prior consent. We believe this restriction will discourage
stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise
their redemption rights against a proposed business combination as a means to force us or our management to purchase their shares
at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder
holding more than an aggregate of 15% of the shares sold in the Initial Public Offering could threaten to exercise its redemption
rights if such holder’s shares are not purchased by us, our sponsor or our management at a premium to the then-current market price
or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in the Initial
Public Offering without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably
attempt to block our ability to complete our initial business combination, particularly in connection with a business combination
with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.
However, we would not
be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business
combination.
Delivering Stock Certificates in
Connection with the Exercise of Redemption Rights
As described above,
we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold
their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent
or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials,
this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition,
if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of
its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in
which the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether
we are requiring public stockholders to satisfy such delivery requirements, which will include the requirement that any beneficial
owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Accordingly,
a public stockholder would have up to two business days prior to the vote on the initial business combination if we distribute
proxy materials, or from the time we send out our tender offer materials until the close of the tender offer period, as applicable,
to submit or tender its shares if it wishes to seek to exercise its redemption rights. In the event that a stockholder fails to
comply with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be
redeemed. Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public
shares.
There is a nominal cost
associated with the above-referenced process and the act of certificating the shares or delivering them through the DWAC system.
The transfer agent will typically charge the broker submitting or tendering shares a fee of approximately $80.00 and it would be
up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of
whether or not we require holders seeking to exercise redemption rights to submit or tender their shares. The need to deliver shares
is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any request to redeem
such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials or tender offer documents,
as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption
rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request
that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed
to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial
business combination.
If our initial business
combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption
rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will
promptly return any certificates delivered by public holders who elected to redeem their shares.
If the Astra Merger is not completed, we may continue
to try to complete an initial business combination with a different target until 24 months from the closing of the Initial Public
Offering.
Redemption of Public Shares and Liquidation
if No Initial Business Combination
Our amended and restated
certificate of incorporation provides that we have only 24 months from the closing of the Initial Public Offering to complete our
initial business combination. If we do not complete our initial business combination within such 24-month period, we will: (i)
cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including interest (less amounts released to us to pay our taxes and up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate
and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will
expire worthless if we fail to complete our initial business combination within the 24- month time period.
Our initial stockholders,
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to
liquidating distributions from the trust account with respect to any founder shares they hold if we fail to complete our initial
business combination within 24 months from the closing of the Initial Public Offering. However, if our initial stockholders, sponsor
or management team acquired public shares in or after the Initial Public Offering, they will be entitled to liquidating distributions
from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted
24-month time period.
Our initial stockholders,
sponsor, officers and directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment to
our amended and restated certificate of incorporation 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 within 24 months from the closing of the Initial Public Offering
or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity,
unless we provide our public stockholders with the opportunity to redeem their public shares upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less
amounts released to us to pay our taxes), divided by the number of then outstanding public shares. However, we may not redeem our
public shares in an amount that would cause our net tangible assets to be less than $5,000,001. If this optional redemption right
is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement,
we would not proceed with the amendment or the related redemption of our public shares at such time.
We expect that all costs
and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts
remaining out of the approximately $1,000,000 of proceeds held outside the trust account, although we cannot assure you that there
will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated
with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required to
pay taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those
costs and expenses.
If we were to expend
all of the net proceeds of the Initial Public Offering 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 and any tax payments
or expenses for the dissolution of the trust, the per-share redemption amount received by stockholders upon our dissolution would
be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors
which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption
amount received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution
must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if
there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets
to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay
or provide for all creditors’ claims.
Although we will seek
to have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of
our public stockholders, 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 consider
whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if
management believes that such third party’s engagement would be in the best interests of the company under the circumstances. Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
The underwriters of the 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. In order to protect the amounts held in the trust account, our sponsor has agreed that it will be liable
to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business
with which we have entered into a written letter of intent, confidentiality or other similar agreement or business combination
agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual
amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per
public 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 the Initial Public Offering against certain liabilities, including liabilities under the Securities Act. However, we have not
asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient
funds to satisfy its indemnity obligations and we believe that our sponsor’s only assets are securities of our company. Therefore,
we cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully
made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less
than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the
proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount per public
share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions
in the value of the trust assets, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its indemnification
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance.
Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be
less than $10.00 per share.
We will seek to reduce
the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all
vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be
liable as to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including
liabilities under the Securities Act. We have access to up to approximately $1,000,000 from the proceeds of the Initial Public
Offering with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation,
currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined
that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable
for claims made by creditors. In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess
with funds from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the
trust account would decrease by a corresponding amount.
Conversely, in the event
that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the trust
account would increase by a corresponding amount.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion
of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 24 months from the closing of the Initial Public Offering may be considered a liquidating
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended
to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and
an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering, is not considered
a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the
imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant
to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a liquidating distribution. If we do not complete our initial business
combination within 24 months from the closing of the Initial Public Offering, we will: (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest
(less amounts released to us to pay our taxes and up to $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any) and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly,
it is our intention to redeem our public shares as soon as reasonably possible following our 24th month and, therefore, we do not
intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because we are not complying with Section 280, Section 281(b)
of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing
and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are
a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target
businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or
prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will
seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a
result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim
that would result in any liability extending to the trust account is remote.
Further, our sponsor
may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per
public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust
account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and
will not be liable as to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities,
including liabilities under the Securities Act. 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,
and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account
prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders
will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do
not complete our initial business combination within 24 months from the closing of the Initial Public Offering, (ii) in connection
with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our
obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the
closing of the Initial Public Offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial
business combination activity or (iii) if they redeem its shares for cash upon the completion of our initial business combination.
In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we
seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection with the business
combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account.
Such stockholder must have also exercised its redemption rights described above. These provisions of our amended and restated certificate
of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder
vote.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we may encounter competition from other entities having a
business objective similar to ours, including other special purpose acquisition companies, private equity groups and leveraged
buyout funds, public companies and operating businesses seeking strategic acquisitions. Many of these entities are well established
and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of
these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target
businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing
the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise
their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants,
and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors
may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We currently have three
executive officers: Craig McCaw, Randy Russell and Steve Ednie. 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 devote in any time period varies based on whether a target business has
been selected for our initial business combination and the stage of the business combination process we are in. We do not intend
to have any full-time employees prior to the completion of our initial business combination.
Periodic Reporting and Financial Information
Our units, Class A common
stock and warrants are registered under the Exchange Act and have reporting obligations, including the requirement that we file
annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports
contain financial statements audited and reported on by our independent registered public accountants.
We will provide stockholders
with audited financial statements of the prospective target business as part of the proxy solicitation materials or tender offer
documents sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will
need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial
statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements
may limit the pool of potential target businesses 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 the requirements
outlined above, 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 are required to evaluate
our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act. Only in the
event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company,
will we be required to have our internal control procedures audited. A target business 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 are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section
107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an
“emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of
the Initial Public Offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are
deemed to be a large accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates
exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt securities during the prior three-year period.
Proposed Astra Merger
Our board of directors
has unanimously approved a business combination agreement, dated February 2, 2021, by and among us, Holicity Merger Sub Inc., a
wholly owned subsidiary of Holicity (“Merger Sub”), and Astra Space, Inc., a Delaware corporation (“Astra”)
(as it may be amended and/or restated from time to time, the “Astra Merger Agreement”). If the Astra Merger Agreement
is adopted by our stockholders and the transactions under the Astra Merger Agreement are consummated, Merger Sub will merge with
and into Astra with Astra surviving the merger as our wholly owned subsidiary (the “Astra Merger”). In addition, in
connection with the consummation of the Astra Merger, Holicity will be renamed “Astra Space, Inc.” and is referred
to herein as “New Astra” as of the time following such change of name.
Astra was formed in
2014. Its mission is to launch a new generation of space services to improve life on Earth. These services are enabled by new constellations
of small satellites in low earth orbit (“LEO”), which have rapidly become smaller, cheaper, and many times more numerous
than legacy satellites. Launch vehicles, however, have not evolved in the same way – most rockets remain focused on serving
legacy satellites and human spaceflight missions. As a result, it believes existing launch vehicles are too large, expensive, infrequently
launched, and insufficiently responsive to meet the needs of new LEO constellations.
Astra aims to solve
this problem with the world’s first mass-produced dedicated orbital launch system. Its system consists of a small launch
vehicle and mobile ground infrastructure that can fit inside standard shipping containers for rapid deployment anywhere in the
world. Its rocket requires a launch site with little more than a concrete pad and only six Astra employees on-site, leveraging
its highly automated launch operations, and its production system is designed to scale efficiently to hundreds of launches per
year. Astra’s rocket’s payload capacity is tailored for the needs of modern LEO satellite constellations, allowing
precise and rapid placement of individual satellites in their required orbits. Astra believes this makes its system more responsive
and affordable than other launch alternatives for thousands of LEO satellites planned in the coming decade.
Under the Astra
Merger Agreement, we have agreed to acquire all of the outstanding equity interests of Astra for approximately $2.03 billion in
aggregate consideration. Astra stockholders will receive consideration in the form of shares of common stock of New Astra.
Furthermore, we entered
into subscription agreements (the “Subscription Agreements”) with certain institutional investors (the “PIPE
Investors”), pursuant to which the PIPE Investors have agreed to purchase immediately prior to the Closing an aggregate of
20,000,000 shares of our Class A common stock at a purchase price of $10.00 per share. In connection with the Closing, all of the
issued and outstanding shares of our Class A common stock, including the shares of our Class A common stock issued to the PIPE
Investors, will be exchanged, on a one-for-one basis, for shares of New Astra Class A common stock.
Immediately prior to
the Effective Time, each share of Astra Class A common stock held by Chris Kemp (“Kemp”) and Adam London (“London”)
(each an “Astra Founder” and together the “Astra Founders”) that is issued and outstanding as of such time
shall automatically convert into one (1) share of Astra Class B common stock in accordance with an exchange agreement dated prior
to the Effective Time between Astra and each Astra Founder. In addition, immediately prior to the Effective Time, each share of
our Class B common stock that is issued and outstanding as of such time shall automatically convert in accordance with the terms
of Holicity’s Certificate of Incorporation into one (1) share of our Class A common stock, all of the shares of our Class
B common stock converted into shares of our Class A common stock shall no longer be outstanding and shall cease to exist, and each
holder of our Class B common stock shall thereafter cease to have any rights with respect to such securities.
At the Effective Time
of the Astra Merger (the “Effective Time”), the stock consideration to be issued to (i) the then current holders of
stock in Astra (other than the holders of Astra Class B common stock or Astra Founders preferred stock) will be in the form of
Class A common stock of New Astra (“New Astra Class A common stock”) and (ii) the Astra Founders will be in the form
of shares of Class B common stock of New Astra (“New Astra Class B common stock”). The consummation of the Astra Merger
is conditioned upon, among other things, our having an aggregate cash amount of at least $250 million available at Closing from
the Trust Account and PIPE Investors (the “Minimum Cash Condition”) (though this condition may be waived by Astra).
At the Effective Time,
each outstanding option to purchase shares of Astra common stock (each an “Astra option”) that is outstanding and unexercised,
whether or not then vested or exercisable, will be assumed by New Astra and will be converted into an option to acquire shares
of Class A common stock of New Astra with the same terms and conditions as applied to the Astra option immediately prior to the
Effective Time (a “New Astra option”); provided that the number of shares underlying such New Astra option will be
determined by multiplying the number of shares of Astra common stock subject to such option immediately prior to the Effective
Time, by the ratio determined by dividing the per share merger consideration value by $10.00 (the product being the “Exchange
Ratio”), which product shall be rounded down to the nearest whole number of shares, and the per share exercise price of such
New Astra option will be determined by dividing the per share exercise price immediately prior to the Effective Time by the Exchange
Ratio, which quotient shall be rounded down to the nearest whole cent.
At the Effective Time,
each warrant to purchase shares of Astra’s capital stock (each an “Astra warrant”) that is issued and outstanding
immediately prior to the Effective Time and not terminated pursuant to its terms will be converted into a warrant to acquire shares
of Class A common stock of New Astra with the same terms and conditions as applied to the Astra warrant immediately prior to the
Effective Time (a “New Astra warrant”); provided that the number of shares underlying such New Astra warrant will be
determined by multiplying the number of shares of Astra common stock subject to such warrant immediately prior to the Effective
Time, by the Exchange Ratio, which product shall be rounded down to the nearest whole number of shares, and the per share exercise
price of such New Astra warrant will be determined by dividing the per share exercise price immediately prior to the Effective
Time by the Exchange Ratio, which quotient shall be rounded down to the nearest whole cent.
Immediately prior to
the Effective Time, each unvested restricted share of Astra common stock and each unvested restricted stock unit of Astra common
stock (each an “Astra restricted share”) will become immediately vested and the holder will be entitled to receive
the applicable per share merger consideration, less applicable tax withholding, if any.
Class B common stock
of New Astra will have the same economic terms as the Class A common stock of New Astra, but the Class B common stock will have
ten (10) votes per share. The New Astra Class B common stock will be subject to a “sunset” provision if the Astra Founders
and other qualified holders of Class B common stock collectively cease to beneficially own at least twenty percent (20%) of the
number of shares of New Astra Class B common stock collectively held by the Astra Founders and their permitted transferees as of
the Effective Time of the Astra Merger.
The total maximum number
of shares of New Astra Class A common stock expected to be issued at the Closing of the Astra Merger is approximately 201,277,817,
assuming no redemptions. The total number of shares of New Astra Class B common stock expected to be issued at the Closing of the
Astra Merger is approximately 59,222,183. Holders of shares of Astra capital stock will hold, in the aggregate approximately 78%
of the issued and outstanding shares of New Astra common stock immediately following the Closing of the Astra Merger and the Astra
Founders are expected to have approximately 75% of the combined voting power of New Astra. Accordingly, immediately following the
Closing of the Astra Merger, the holders of New Astra Class common stock and one or more of their permitted transferees will control
New Astra and New Astra will be a controlled company within the meaning of Nasdaq’s corporate governance standards. For a
description of the exemptions from Nasdaq’s corporate governance standards that are available to controlled companies, please
see the section entitled “New Astra Management After the Astra Merger — Controlled Company Exemption”
Immediately prior to
the Effective Time of the Astra Merger, each of the currently issued and outstanding shares of our Class A common stock will automatically
convert, on a one-for-one basis, into shares of New Astra Class A common stock in accordance with the terms of the Current Charter.
Our units, Class A
common stock and public warrants are publicly traded on the Nasdaq Capital Market (“Nasdaq”) under the symbols “HOLUU”,
“HOL” and “HOLUW”, respectively. We intend to apply to list the New Astra Class A common stock and public
warrants on Nasdaq under the symbols “ASTR” and “ASTR WS”, respectively, upon the Closing of the Astra
Merger. New Astra will not have units traded following Closing of the Astra Merger.
We will hold a special
meeting of stockholders (the “Special Meeting”) to consider matters relating to the Astra Merger. We cannot complete
the Astra Merger unless our stockholders consent to the approval of the Astra Merger Agreement and the transactions contemplated
thereby. We will send to our stockholders a proxy statement/prospectus to ask them to vote in favor of these and the other matters
described in such proxy statement/prospectus.
Item 1A. Risk Factors.
You should carefully
consider all of the following risk factors and all of the other information contained in this Report, including the financial
statements. If any of the following risks occur, our business, financial condition or results of operations may be materially
and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your
investment. The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation
with respect to us and our business.
We are a blank check company with no
operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check
company incorporated under the laws of the State of Delaware with no operating results. Because we lack an operating history, you
have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination.
We have no plans, arrangements or understandings with any prospective target business concerning a business combination and may
be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never
generate any operating revenues.
Our stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares
will participate in such vote, which means we may complete our initial business combination even though a majority of our public
stockholders do not support such a combination.
We may choose not to
hold a stockholder vote to approve our initial business combination if the business combination would not require stockholder approval
under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement,
the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell
their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such
as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
Even if we seek stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly,
we may complete our initial business combination even if a majority of our public stockholders do not approve of the business combination
we complete. Please see the section entitled “Proposed Business—Stockholders May Not Have the Ability to Approve Our
Initial Business Combination” for additional information.
Your only opportunity to affect the
investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares
from us for cash.
At the time of your
investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business
combination. Since our board of directors may complete a business combination without seeking stockholder approval, public stockholders
may not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your
only opportunity to affect the investment decision regarding our initial business combination may be limited to exercising your
redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed
to our public stockholders in which we describe our initial business combination.
If we seek stockholder approval of our
initial business combination, our initial stockholders and management team have agreed to vote in favor of such initial business
combination, regardless of how our public stockholders vote.
Immediately following
the completion of the Initial Public Offering, our initial shareholders owned 20% of our outstanding common stock, excluding the
private placement shares underlying the private placement units. Our initial stockholders and management team also may from
time to time purchase Class A common stock prior to our initial business combination. Our amended and restated certificate of incorporation
provides that, if we seek stockholder approval of an initial business combination, such initial business combination will be approved
if we receive the affirmative vote of a majority of the shares voted at such meeting, including the founder shares. As a result,
in addition to our initial stockholders’ founder shares, we would need 11,250,000, or 37.5%, of the 30,000,000 public shares sold
in the Initial Public Offering (including the partial exercise by the underwriters of their Over-Allotment Option) to be voted
in favor of an initial business combination in order to have our initial business combination approved (assuming all outstanding
shares are voted). Accordingly, if we seek stockholder approval of our initial business combination, the agreement by our initial
stockholders and management team to vote in favor of our initial business combination will increase the likelihood that we will
receive the requisite stockholder approval for such initial business combination.
The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which
may make it difficult for us to enter into a business combination with a target.
We may seek to enter
into a business combination transaction agreement with minimum cash requirement for (i) cash consideration to be paid to the target
or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other
conditions. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition
and, as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public
shares in an amount that would cause our net tangible assets to be less than $5,000,001. Consequently, if accepting all properly
submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or make us unable to satisfy a minimum
cash condition as described above, we would not proceed with such redemption and the related business combination and may instead
search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter
into a business combination transaction with us.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business
combination or optimize our capital structure.
At the time we enter
into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights,
and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to
pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash
in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares
is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion
of the cash in the trust account or arrange for third party financing. Raising additional third-party financing may involve dilutive
equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to
the extent that the anti-dilution provision of the Class B common stock results in the issues of shares of Class A common stock
on a greater than one-to-one basis upon conversion of the shares of Class B common stock at the time of our initial business combination.
In addition, the amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares
that are redeemed in connection with an initial business combination. The per share amount we will distribute to stockholders who
properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions,
the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions. The above
considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital
structure.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business
combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business
combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to
have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we
liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market;
however, at such time our shares may trade at a discount to the pro rata amount per share in the trust account. In either situation,
you may suffer a material loss on your investment or lose the benefit of funds expected in connection with your exercise of redemption
rights until we liquidate or you are able to sell your shares in the open market.
The requirement that we complete our
initial business combination within 24 months from the closing of the Initial Public Offering, or August 7, 2022, may give potential
target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due
diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine
our ability to complete our initial business combination on terms that would produce value for our stockholders.
Any potential target
business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial
business combination within 24 months from the closing of the Initial Public Offering, or August 7, 2022. Consequently, such
target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial
business combination with that particular target business, we may be unable to complete our initial business combination with any
target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time
to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive
investigation.
Our search
for a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by the recent coronavirus (COVID-19) outbreak and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread
throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization
declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On
January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States
to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized
the outbreak as a “pandemic”. The COVID-19 outbreak has and a significant outbreak of other infectious diseases could
result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business
of any potential target business with which we 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 continue to restrict travel, limit
the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable
to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination
will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge
concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed
by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination,
or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely
affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may
be impacted by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity in third-party
financing being unavailable on terms acceptable to us or at all.
We may not be able to complete our initial
business combination within 24 months from the closing of the Initial Public Offering, or August 7, 2022, in which case we would
cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We
may not be able to find a suitable target business and complete our initial business combination within
24 months from the closing of the Initial Public Offering, or August 7, 2022. For example, the outbreak of COVID-19 continues to
grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments,
it could limit our ability to complete our initial business combination, including as a result of increased market volatility,
decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak
of COVID-19 may negatively impact businesses we may seek to acquire. 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
(less amounts released to us to pay our taxes and up to $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case,
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
If we seek stockholder approval of our
initial business combination, our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates may
elect to purchase shares or public warrants from public stockholders, which may influence a vote on a proposed business combination
and reduce the public “float” of our Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates
may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following
the completion of our initial business combination, although they are under no obligation to do so. There is no limit on the number
of shares our initial stockholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject
to compliance with applicable law and Nasdaq rules. However, other than as expressly stated herein, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None
of the funds in the trust account will be used to purchase shares or public warrants in such transactions. Such purchases may include
a contractual acknowledgment that such stockholder, although still the record holder of our shares, is no longer the beneficial
owner thereof and therefore agrees not to exercise its redemption rights.
In the event that our
sponsor, initial stockholders, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would
be required to revoke their prior elections to redeem their shares. The purpose of any such purchases of shares could be to vote
such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business
combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain
amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be
met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote
such warrants on any matters submitted to the warrantholders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have
been possible. We expect 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. See “Proposed Business—Permitted purchases of our securities”
for a description of how our sponsor, directors, executive officers, advisors or any of their affiliates will select which stockholders
to purchase securities from in any private transaction.
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 proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination.
Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable,
such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly tender or submit public shares for redemption. For example,
we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold
their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent,
or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender offer
documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the proposal
to approve the initial business combination. In addition, if we conduct redemptions in connection with a stockholder vote, we intend
to require a public stockholder seeking redemption of its public shares to also submit a written request for redemption to our
transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included. In the
event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials, as
applicable, its shares may not be redeemed. See the section of this this Form 10-K entitled “Proposed Business—Submitting
Stock Certificates in Connection with Redemption Rights.”
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be
forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders
will be entitled to receive funds from the trust account only upon the earlier 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 tendered in connection with a stockholder
vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination within 24 months from the closing of the Initial
Public Offering, or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity, and (iii) the redemption of our public shares if we do not complete an initial business combination within 24 months
from the closing of the Initial Public Offering, subject to applicable law and as further described herein. In addition, if our
plan to redeem our public shares if we do not complete an initial business combination within 24 months from the closing of the
Initial Public Offering, or August 7, 2022, is not completed for any reason, compliance with Delaware law may require that we submit
a plan of dissolution to our then- existing stockholders for approval prior to the distribution of the proceeds held in our trust
account. In that case, public stockholders may be forced to wait beyond 24 months from the closing of the Initial Public Offering
before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest
of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect
to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially
at a loss.
Nasdaq may delist our securities from
trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional
trading restrictions.
Our units, Class A common
stock and warrants are listed on Nasdaq. We cannot assure you that our securities will continue to be listed on Nasdaq in the future
or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our initial business
combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum amount
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 share price would generally be required
to be at least $4.00 per share and our stockholder’s equity would generally be required to be at least $5,000,000. We cannot assure
you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists our
securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we
expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our 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.” Our units, Class A common stock and warrants are listed on
Nasdaq, and qualify as covered securities under the statute. Although the states are preempted from regulating the sale of our
securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there
is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While
we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies,
other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers,
or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were
no longer listed on Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to
regulation in each state in which we offer our securities.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds
of the Initial Public Offering and the sale of the private placement warrants are intended to be used to complete an initial business
combination with a target business that has not been selected, we may be deemed to be a “blank check” company under the
United States securities laws. However, because we have net tangible assets in excess of $5,000,000 and have filed a Current Report
on Form 8- K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect
investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of
those rules. Among other things, this means that we will have a longer period of time to complete our initial business combination
than do companies subject to Rule 419. Moreover, if the Initial Public Offering had been subject to Rule 419, that rule would have
prohibited the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust
account were released to us in connection with our completion of an initial business combination. For a more detailed comparison
of our offering to offerings that comply with Rule 419, please see “Proposed Business—Comparison of the Initial Public
Offering to Those of Blank Check Companies Subject to Rule 419.”
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares
in excess of 15% of our Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 15% of the shares sold in the Initial Public Offering without our prior consent, which we refer to as the “Excess
Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our
ability to complete our initial business combination and you could suffer a material loss on your investment in us if you sell
Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess
Shares if we complete our initial business combination. And as a result, you will continue to hold that number of shares exceeding
15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at
a loss.
Because of our limited resources and
the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business
combination. If we do not complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We expect to encounter
competition from other entities having a business objective similar to ours, including private investors (which may be individuals
or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types
of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in
identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess similar or greater technical, human and other resources to ours or more local industry knowledge
than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there are numerous target businesses we could potentially acquire with the net proceeds of the Initial Public Offering
and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses
that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares the
right to redeem their shares for cash at the time of our initial business combination in conjunction with a stockholder vote or
via a tender offer. Target companies will be aware that this may reduce the resources available to us for our initial business
combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.
If we do not complete our initial business combination, our public stockholders may receive only their pro rata portion of the
funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
If the net proceeds of the Initial Public
Offering and the sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate
for at least the 24 months following the closing of the offering, it could limit the amount available to fund our search for a
target business or businesses and complete our initial business combination, and we will depend on loans from our sponsor or management
team to fund our search and to complete our initial business combination.
Of the net proceeds
of the Initial Public Offering, only $1,000,000 was made available to us initially outside the trust account to fund our working
capital requirements. We believe that the funds available to us outside of the trust account will be sufficient to allow us to
operate for at least the 24 months following the Initial Public Offering; however, we cannot assure you that our estimate is accurate.
Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with
our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision
(a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for
transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular
proposed 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.
In the event that our
offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the trust account. In
such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely,
in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside
the trust account would increase by a corresponding amount. The amount held in the trust account will not be impacted as a result
of such increase or decrease. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management
team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our management team nor any
of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only
from funds held outside the trust account or from funds released to us upon completion of our initial business combination. Up
to $1,500,000 of such loans may be convertible into warrants of the post-business combination entity at a price of $1.50 per warrant
at the option of the lender. The warrants would be identical to the private placement warrants. Prior to the completion of our
initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor
as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access
to funds in our trust account. If we do not complete our initial business combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive
an estimated $10.00 per share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless.
Subsequent to our completion of our
initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges
that could have a significant negative effect on our financial condition, results of operations and the price of our securities,
which could cause you to lose some or all of your investment.
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues
that may be present with a particular target business, that it would be possible to uncover all material issues through a customary
amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result
of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or
other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even
though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of
this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may
cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a
target business or by virtue of our obtaining debt financing to partially finance the initial business combination or thereafter.
Accordingly, any stockholders or warrantholders who choose to remain stockholders or warrantholders following the business combination
could suffer a reduction in the value of their securities. Such stockholders or warrantholders 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 materials or tender offer documents, as applicable, relating to the business combination contained
an actionable material misstatement or material 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 will seek to have all vendors,
service providers (except our independent registered public accounting firm), prospective target businesses and other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if
they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited
to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability
of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in
the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will consider whether competitive alternatives are reasonably available to us and will only enter into an agreement
with such third party if management believes that such third party’s engagement would be in the best interests of the company under
the circumstances. The underwriters of the Initial Public Offering will not execute agreements with us waiving such claims to the
monies held in the trust account.
Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any
reason. Upon redemption of our public shares, if we do not complete our initial business combination within the prescribed timeframe,
or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide
for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption.
Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per public share initially
held in the trust account, due to claims of such creditors. Pursuant to the letter agreement the form of which is filed as an exhibit
to this Form 10-K, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services
rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality
or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser
of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation
of the trust account, if less than $10.00 per public 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 the Initial Public Offering against certain liabilities, including liabilities
under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our sponsor’s only assets
are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. As
a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination
and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial
business combination, and you would receive such lesser amount per share in connection with any redemption of your public shares.
None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available
for distribution to our public stockholders.
In the event that the
proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per public share
held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions
in the value of the trust assets, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do
so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount
of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be
viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us
to claims of punitive damages.
If, after we distribute
the proceeds in the trust account to our public stockholders, we file a bankruptcy 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. 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, by paying public stockholders from the
trust account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
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.
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to
be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities,
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each of which may make it difficult for
us to complete our initial business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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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 that we are not subject to.
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In order not to be regulated
as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged
primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing,
reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of
U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete a business combination
and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets
with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that
our 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.
The Initial Public Offering
is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust
account is intended as a holding place for funds pending the earliest to occur of either: (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 our amended
and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering; and (iii)
absent an initial business combination within 24 months from the closing of the Initial Public Offering or with respect to any
other material provisions relating to stockholders’ rights or pre-initial business combination activity, our return of the funds
held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest the proceeds
as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment
Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted
funds and may hinder our ability to complete a business combination. If we do not complete our initial business combination, our
public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders, and our warrants will expire worthless.
Changes in laws or regulations, or a
failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete
our initial business combination, and results of operations.
We are subject to laws
and regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC
and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes
could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with
applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
Our stockholders may be held liable
for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion
of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 24 months from the closing of the Initial Public Offering may be considered a liquidating
distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended
to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and
an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
However, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the closing
of the Initial Public Offering in the event we do not complete our initial business combination and, therefore, we do not intend
to comply with the foregoing procedures.
Because we are not be
complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that
will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the
10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section
281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be
barred after the third anniversary of the dissolution.
We cannot assure you
that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may
extend beyond the third anniversary of such date.
Furthermore, if
the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the
event we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering is not
considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially
due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful
redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of
stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders
to elect directors.
In accordance with Nasdaq
corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal
year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting
of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent
in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of
our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual
meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination,
they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section
211(c) of the DGCL.
We are not registering
the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws
at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor
from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
If the issuance of the Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration
or qualification under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise
such warrants and such warrants 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 Class A common stock included in the units.
We are not registering
the 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 efforts to file with the SEC a registration statement
covering the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants and thereafter
will use our commercially reasonable efforts to cause the same to become effective within 60 business days following our initial
business combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants
until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will
be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in
the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current
or correct or the SEC issues a stop order.
If the shares of Class
A common stock issuable upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant
agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be
required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. If holders
exercise their warrants on a cashless basis, the number of shares of Class A common stock that you will receive upon such cashless
exercise will be based on a formula subject to a maximum amount of shares of 0.361 shares of Class A common stock per warrant (subject
to adjustment).
In no event will warrants
be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise
their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the
state of the exercising holder, or an exemption from registration or qualification is available.
If our shares of Class
A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy
the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit
holders of warrants who seek to exercise their warrants to do so for cash and, instead, require them to do so on a cashless basis
in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file or maintain
in effect a registration statement or register or qualify the shares underlying the warrants under applicable state securities
laws, and in the event we do not so elect, we will use our commercially reasonable efforts to register or qualify the shares underlying
the warrants under applicable state securities laws to the extent an exemption is not available. Exercising the warrants on a cashless
basis could have the effect of reducing the potential “upside” of the holder’s investment in our company because the
warrant holder will hold a smaller number of shares of Class A common stock upon a cashless exercise of the warrants they hold
than they would have upon a cash exercise.
In no event will we be required to net cash settle any warrant,
or issue securities (other than upon a cashless exercise as described above) or other compensation in exchange for the warrants
in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable
state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt
from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant
may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will
have paid the full unit purchase price solely for the shares of Class A common stock included in the units. There may be a circumstance
where an exemption from registration exists for holders of our private placement warrants to exercise their warrants while a corresponding
exemption does not exist for holders of the public warrants included as part of units sold in the Initial Public Offering. In such
an instance, our sponsor and its permitted transferees (which may include our directors and executive officers) would be able to
exercise their warrants and sell the ordinary shares underlying their warrants while holders of our public warrants would not be
able to exercise their warrants and sell the underlying ordinary shares. If and when the warrants become redeemable by us, we may
exercise our redemption right even if we are unable to register or qualify the underlying shares of Class A common stock for sale
under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the holders are
otherwise unable to exercise their warrants.
The warrants may become exercisable
and redeemable for a security other than shares of Class A common stock, and you will not have any information regarding such other
security at this time.
In certain situations,
including if we are not the surviving entity in our initial business combination, the warrants may become exercisable for a security
other than the shares of Class A common stock. As a result, if the surviving company redeems your warrants for securities pursuant
to the warrant agreement, you may receive a security in a company of which you do not have information at this time. Pursuant to
the warrant agreement, the surviving company will be required to use its commercially reasonable efforts to register the issuance
of the security underlying the warrants within fifteen business days of the closing of an initial business combination.
The grant of registration rights to
our initial stockholders and holders of our private placement warrants may make it more difficult to complete our initial business
combination, and the future exercise of such rights may adversely affect the market price of our shares of Class A common stock.
Pursuant to an agreement
entered into concurrently with the Initial Public Offering, our initial stockholders and their permitted transferees can demand
that we register the shares of Class A common stock into which founder shares are convertible, holders of our private placement
warrants and their permitted transferees can demand that we register the private placement warrants and the Class A common stock
issuable upon exercise of the private placement warrants and holders of warrants that may be issued upon conversion of working
capital loans may demand that we register such warrants or the Class A common stock issuable upon conversion of such warrants.
The registration rights will be exercisable with respect to the founder shares and the private placement warrants and the Class
A common stock issuable upon exercise of such private placement warrants. We will bear the cost of registering these securities.
The registration and availability of such a significant number of securities for trading in the public market may have an adverse
effect on the market price of our Class A common stock. In addition, the existence of the registration rights may make our initial
business combination more costly or difficult to conclude. This is because the stockholders of the target business may increase
the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market
price of our Class A common stock that is expected when the shares of common stock owned by our initial stockholders, holders of
our private placement warrants or holders of our working capital loans or its permitted transferees are registered.
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.
Our efforts to identify
a prospective initial business combination target will not be limited to a particular industry, sector or geographic region. While
we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on the ability of
our management team to identify, acquire and operate a business or businesses that can benefit from our management team’s established
global relationships and operating experience. Our management team has extensive experience in identifying and executing strategic
investments globally and has done so successfully in a number of sectors. Our amended and restated certificate of incorporation
prohibits us from effectuating a business combination with another blank check company or similar company with nominal operations.
Because we have not yet selected or approached any specific target business with respect to a business combination, there is no
basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows,
liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be affected by
numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable
business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our
control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct
investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders or warrantholders
who choose to remain stockholders or warrantholders following the business combination could suffer a reduction in the value of
their securities. Such stockholders or warrantholders 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 materials or
tender offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material
omission.
We may face risks related to businesses
in the TMT industries.
Business combinations
with businesses in the TMT industries entail special considerations and risks. If we are successful in completing a business combination
with such a target business, we may be subject to, and possibly adversely affected by, the following risks:
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if we do not develop successful new products or improve existing ones, our business will suffer;
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we may invest in new lines of business that could fail to attract or retain users or generate revenue;
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we face significant competition and if we are not able to maintain or improve our market share, our business could suffer;
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the loss of one or more members of our management team, or our failure to attract and retain other highly qualified personnel in the future, could seriously harm our business;
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if our security is compromised or if our platform is subjected to attacks that frustrate or thwart our users’ ability to access our products and services, our users, advertisers, and partners may cut back on or stop using our products and services altogether, which could seriously harm our business;
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mobile malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products could seriously harm our business and reputation;
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if we are unable to successfully grow our user base and further monetize our products, our business will suffer;
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if we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be seriously harmed;
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we may be subject to regulatory investigations and proceedings in the future, which could cause us to incur substantial costs or require us to change our business practices in a way that could seriously harm our business;
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components used in our products may fail as a result of a manufacturing, design, or other defect over which we have no control, and render our devices inoperable;
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an inability to manage rapid change, increasing consumer expectations and growth;
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an inability to build strong brand identity and improve subscriber or customer satisfaction and loyalty;
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an inability to deal with our subscribers’ or customers’ privacy concerns;
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an inability to license or enforce intellectual property rights on which our business may depend;
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an inability by us, or a refusal by third parties, to license content to us upon acceptable terms;
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potential liability for negligence, copyright, or trademark infringement or other claims based on the nature and content of materials that we may distribute;
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competition for the leisure and entertainment time and discretionary spending of subscribers or customers, which may intensify in part due to advances in technology and changes in consumer expectations and behavior; and
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disruption or failure of our networks, systems or technology as a result of misappropriation of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or similar events.
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Any of the foregoing could have an adverse
impact on our operations following a business combination. However, our efforts in identifying prospective target businesses is
not be limited to the TMT industries. Accordingly, if we acquire a target business in another industry, we will be subject to risks
attendant with the specific industry in which we operate or target business which we acquire, which may or may not be different
than those risks listed above.
Past performance by our management team
or their affiliates, including investments and transactions in which they have participated and businesses with which they have
been associated, may not be indicative of future performance of an investment in us.
Information regarding
performance by, or businesses associated with, our management team and their affiliates, or businesses associated with them, is
presented for informational purposes only. Past performance by such individuals and entities is not a guarantee either (i) of success
with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our
initial business combination. You should not rely on the historical record of the performance of our management team or their affiliates
or businesses associated with them as indicative of our future performance of an investment in us or the returns we will, or is
likely to, generate going forward.
We may seek business combination opportunities
in industries outside of the TMT industries (which industries may or may not be outside of our management’s area of expertise).
Although we intend to
focus on identifying business combination candidates in the TMT industries in the United States (including candidates based in
the United States which may have operations or opportunities outside the United States) or other developed countries, and we will
not initially actively seek to identify business combination candidates in other industries (which industries may be outside our
management’s area of expertise), we will consider a business combination outside of the TMT industries if a business combination
candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company
or we are unable to identify a suitable candidate in the TMT industries after having expended 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 may not adequately ascertain or assess all of the risks. An investment in our units may ultimately prove to be less
favorable to investors in our securities than a direct investment, if an opportunity were available, in a business combination
candidate.
In the event we elect
to pursue a business combination outside of the TMT industries, our management’s expertise may not be directly applicable to its
evaluation or operation, and the information contained in this Form 10-K regarding the TMT industries would not be relevant to
an understanding of the business that we elect to acquire.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial
business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which
we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which
we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other 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 do not complete
our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust account
that are available for distribution to public stockholders, and our warrants will expire worthless.
We may seek acquisition opportunities
with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings,
which could subject us to volatile revenues or earnings or difficulty in retaining key personnel.
To the extent we complete
our initial business combination with an early stage company, a financially unstable business or an entity lacking an established
record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine.
These risks include investing in a business without a proven business model and with limited historical financial data, 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 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 a valuation or appraisal 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 stockholders from a financial point of
view.
Unless we complete our
initial business combination with an affiliated entity or our board of directors cannot independently determine the fair market
value of the target business or businesses (including with the assistance of financial advisors), we are not required to obtain
an opinion from an independent investment banking firm which is a member of FINRA or from a valuation or appraisal firm that the
price we are paying is fair to our stockholders from a financial point of view. If no opinion is obtained, our stockholders will
be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted
by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable,
related to our initial business combination.
We may issue additional shares of Class
A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive plan after
completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the founder
shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
contained 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 200,000,000 shares of Class A common stock, par value $0.0001 per
share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value
$0.0001 per share.
After the Initial Public
Offering (and the partial exercise of the underwriters’ Over-Allotment Option), there were 170,000,000 and 12,500,000 authorized
but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance which amount does not
take into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion of the
Class B common stock. The Class B common stock is automatically convertible into Class A common stock at the time of the consummation
of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein and in our
amended and restated certificate of incorporation. There are no shares of preferred stock issued and outstanding.
We may issue a substantial
number of additional shares of Class A common stock or shares of preferred stock to complete our initial business combination or
under an employee incentive plan after completion of our initial business combination. We may also issue shares in connection with
the redemption of our warrants as described in “Description of Securities –Redeemable Warrants—Public Stockholders’
Warrants – Redemption of Warrants When the Price Per Share of Class A Common Stock Equals or Exceeds $10.00” or 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 as set forth therein.
However, our amended
and restated certificate of incorporation provide, among other things, that prior to our initial business combination, we may not
issue additional shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class
with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate
of incorporation to (x) extend the time we have to consummate a business combination beyond 24 months from the closing of the Initial
Public Offering or (y) amend the foregoing provisions. These provisions of our amended and restated certificate of incorporation,
like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote. The issuance
of additional shares of common stock or shares of preferred stock:
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may significantly dilute the equity interest of investors in our securities;
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may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock;
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could cause a change in control if a substantial number of shares of Class A common stock is 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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Unlike some other similarly structured
special purpose acquisition companies, our initial stockholders will receive additional shares of Class A common stock if we issue
certain shares to consummate an initial business combination.
The founder shares automatically
convert into shares of Class A common stock at the time of the consummation of our initial business combination on a one-for-one
basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to
further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked securities are
issued or deemed issued in connection with our initial business combination, the number of shares of Class A common stock issuable
upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares
of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock
by public stockholders), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon
conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or
in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked
securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller
in the initial business combination and any private placement warrants issued to our sponsor, officers or directors upon conversion
of working capital loans, provided that such conversion of founder shares will never occur on a less than one-for-one basis. This
is different than some other similarly structured special purpose acquisition companies in which the initial stockholders will
only be issued an aggregate of 20% of the total number of shares to be outstanding prior to our initial business combination.
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 have not completed our initial business combination within the required time period, our
public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders, and our warrants will expire worthless.
We anticipate that the
investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys 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 have not completed our initial business combination within the required time
period, our public stockholders may only receive their pro rata portion of the funds in the trust account that are available for
distribution to public stockholders, and our warrants will expire worthless.
We are dependent upon our executive
officers and directors and their loss could adversely affect our ability to operate.
Our operations are dependent
upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success
depends on the continued service of our officers and directors, at least until we have completed our initial business combination.
In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs and, accordingly,
will have conflicts of interest in allocating their time among various business activities, including identifying potential business
combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on the
life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive
officers could have a detrimental effect on us.
Our ability to successfully effect our
initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom
may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the
target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our initial business combination, it is likely that some or all of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial
business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
These individuals may
be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and
resources helping them become familiar with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business
combination may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to
receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in
determining whether a particular business combination is the most advantageous.
Our key personnel may
be able to remain with our company after the completion of our initial business combination only if they are able to negotiate
employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously
with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of
cash payments and/or our securities for services they would render to us after the completion of the business combination. Such
negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal and
financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject
to their fiduciary duties under Delaware law.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business
whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the
desirability of effecting our initial business combination with a prospective target business, our ability to assess the target
business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the
target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary to manage a
public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any
stockholders or warrantholders who choose to remain stockholders or warrantholders following the business combination could suffer
a reduction in the value of their securities. Such stockholders or warrantholders are unlikely to have a remedy for such reduction
in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a
duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws
that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable
material misstatement or material omission.
The officers and directors of an acquisition
candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel
could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition
candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although
we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate
following our initial business combination, it is possible that members of the management of an acquisition candidate will not
wish to remain in place.
Our executive officers and directors
will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to
devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers
and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a business combination and their other businesses. We do not
intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers
is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers
are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers
and board members for other entities. If our executive officers’ and directors’ other business affairs require them to devote substantial
amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our
affairs which may have a negative impact on our ability to complete our initial business combination. For a complete discussion
of our executive officers’ and directors’ other business affairs, please see “Management—Officers, Directors and Director
Nominees.”
Our officers and directors presently
have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly,
may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Until we consummate
our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses.
Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations
to other entities, pursuant to which such officer or director is or will be required to present a business combination opportunity
to such entity. Our amended and restated certificate of incorporation will provide that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her
capacity as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake
and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity
to us without violating another legal obligation. In addition, our sponsor and our officers and directors may sponsor or form other
special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in
which we are seeking an initial business combination. Any such companies, businesses or ventures may present additional conflicts
of interest in pursuing an initial business combination. However, we do not believe that any such potential conflicts would materially
affect our ability to complete our initial business combination.
For a complete discussion
of our executive officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware
of, please see “Management—Officers, Directors and Director Nominees,” “Management—Conflicts of Interest”
and “Certain Relationships and Related Party Transactions.”
Our executive officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted
a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party
or have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor,
our directors or executive officers, although we do not intend to do so or we may acquire a target business through an Affiliated
Joint Acquisition. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and
ours.
The personal and financial
interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and
completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable
target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular
business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be a breach of their
fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such individuals for infringing
on our stockholders’ rights. However, we might not ultimately be successful in any claim we may make against them for such reason.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsor and its executive
officers, directors or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our sponsor, and its executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated
with our sponsor or its executive officers, directors or existing holders. Our directors also serve as officers and board members
for other entities, including, without limitation, those described under “Management—Conflicts of Interest.” Such
entities may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware
of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated,
and there have been no substantive discussions concerning a business combination with any such entity or entities. Although we
will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction
if we determined that such affiliated entity met our criteria for a business combination as set forth in “Proposed Business—Effecting
our initial business combination—Selection of a target business and structuring of our initial business combination”
and such transaction was approved by a majority of our independent directors. Despite our agreement to obtain an opinion from an
independent investment banking firm which is a member of FINRA or a valuation or appraisal firm regarding the fairness to our company
from a financial point of view of a business combination with one or more domestic or international businesses affiliated with
our sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result,
the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts
of interest.
Since our sponsor, executive officers
and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect
to public shares they may acquire during or after the Initial Public Offering), a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
On June 4, 2020, Pendrell
purchased an aggregate of 7,187,500 founder shares in exchange for payment of company liabilities of $25,000, or approximately
$0.003 per share. Pendrell transferred such shares to our sponsor on June 9, 2020. In July 2020, our sponsor transferred 30,000
founder shares to each of Wayne Perry, Dennis Weibling and Cathleen A. Massey, our independent directors, 150,000 shares to Craig
O. McCaw, 100,000 shares to Randy Russell, 80,000 shares to R. Gerard Salemme, 40,000 shares to Steve Ednie and 239,000 to other
directors, officers, employees and consultants of Pendrell, in each case for approximately the same per-share price initially paid
by our sponsor, resulting in our sponsor holding 6,488,500 founder shares. On August 4, 2020, the Company effectuated a 1.1-for-1
Class B common stock split resulting in an aggregate of 7,906,250 founder shares outstanding, of which 7,137,350 were held by our
sponsor. Prior to the initial investment in the company of $25,000 by Pendrell, the company had no assets, tangible or intangible.
The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number
of founder shares issued. The number of founder shares outstanding was determined based on the expectation that the total size
of the Initial Public Offering would be a maximum of 31,625,000 units if the underwriters’ Over-Allotment Option is exercised in
full, and therefore that such founder shares would represent 20% of the outstanding shares after the Initial Public Offering. 406,250
of the founder shares were forfeited due to the underwriters’ partial exercise of the Over-Allotment Option so that the founder
shares represent 20.0% of the Company’s issued and outstanding shares. The founder shares will be worthless if we do not complete
an initial business combination. In addition, our sponsor purchased 5,333,333 private placement warrants, each exercisable for
one share of Class A common stock at $11.50 per share, for an aggregate purchase price of $8,000,000, or $1.50 per warrant, that
will also be worthless if we do not complete our initial business combination. The personal and financial interests of our executive
officers and directors may influence their motivation in identifying and selecting a target business combination, completing an
initial business combination and influencing the operation of the business following the initial business combination. This risk
may become more acute as the 24-month anniversary of the closing of the Initial Public Offering nears, which is the deadline for
our completion of an initial business combination.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial
condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no
commitments as of the date of this Form 10-K to issue any notes or other debt securities, or to otherwise incur outstanding debt
following the Initial Public Offering, we may choose to incur substantial debt to complete our initial business combination. We
and our officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right,
title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the
per share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of
negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
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our inability to pay dividends on our Class A common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We may only be able to complete one
business combination with the proceeds of the Initial Public Offering and the sale of the private placement warrants, which will
cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
The net proceeds from
the Initial Public Offering and the private placement of warrants provided us with $300,000,000 that we may use to complete our
initial business combination (after taking into account the $10,500,000 of deferred underwriting commissions being held in the
trust account).
We may effectuate our
initial business combination with a single target business or multiple target businesses simultaneously or within a short period
of time.
However, we may not
be able to effectuate our initial business combination with more than one target business because of various factors, including
the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the
SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined
basis. By completing our initial business combination with only a single entity, our lack of diversification may subject us to
numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success
may be:
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solely dependent upon the performance of a single business, property or asset, or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination
and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase
of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult
for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we could also
face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these
risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
In pursuing our business
combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public
information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial business combination on the basis of limited information, which may result in a business combination with a company that
is not as profitable as we suspected, if at all.
Our management may not be able to maintain
our control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control
of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such
business.
We may structure our
initial business combination so that the post-transaction company in which our public stockholders own shares will own less than
100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will
not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target business, our stockholders prior to the business combination may collectively own a minority interest
in the post business combination company, depending on valuations ascribed to the target and us in the business combination. For
example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as
a result of the issuance of a substantial number of new shares of Class A common stock, our stockholders immediately prior to such
transaction could own less than a majority of our outstanding Class A common stock subsequent to such transaction. In addition,
other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share
of the company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not be able
to maintain our control of the target 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 our initial business combination
with which a substantial majority of our stockholders or warrantholders do not agree.
Our amended and restated
certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem
our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. In addition, our proposed initial
business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners,
(ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. As
a result, we may be able to complete our initial business combination even though a substantial majority of our public stockholders
do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination
and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered
into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or any of their affiliates.
In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly
submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination
exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares in connection
with such initial business combination, all shares of Class A common stock submitted for redemption will be returned to the holders
thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business
combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other
governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and
restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial
business combination that our stockholders may not support.
In order to effectuate
a business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters
and governing instruments, including their warrant agreements. For example, special purpose acquisition companies have amended
the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business
combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash
and/or other securities. Amending our amended and restated certificate of incorporation will require the approval of holders of
65% of our common stock, and amending our warrant agreement will require a vote of holders of at least 50% of the public warrants
and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant agreement
with respect to the private placement warrants, 50% of the number of the then outstanding private placement warrants. In addition,
our amended and restated certificate of incorporation will require us to provide our public stockholders with the opportunity to
redeem their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation to modify
the substance or timing of our obligation to redeem 100% of our public shares if we do not complete an initial business combination
within 24 months of the closing of the Initial Public Offering or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity. To the extent any of such amendments would be deemed to fundamentally change
the nature of the securities offered through the Initial Public Offering, 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.
A provision of our warrant agreement
may make it more difficult for us to consummate an initial business combination.
Unlike most blank check
companies, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in
connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per
share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors
and, in the case of any such issuance to our initial stockholders or their affiliates, without taking into account any founder
shares held by our initial stockholders or such affiliates, as applicable, prior to such issuance including any transfer or reissuance
of such shares), (y) the aggregate gross proceeds from such issuances represent more than 50% of the total equity proceeds, and
interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial
business combination (net of redemptions), and (z) the volume weighted average trading price of our Class A common stock during
the 10 trading day period starting on the trading day prior to the day on which we consummate our initial business combination
(such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to
the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption
trigger price of the warrants will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and
the Newly Issued Price (see “Description of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption
of Warrants When the Price Per Shares of Class A Common Stock Equals or Exceeds $18.00” and “—Redemption of Warrants
When the Price Per Shares of Class A Common Stock Equals or Exceeds $10.00”), and the $10.00 per share redemption trigger
price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price (see “Description
of Securities—Redeemable Warrants—Public Stockholders’ Warrants—Redemption of Warrants When the Price Per Shares
of Class A Common Stock Equals or Exceeds $10.00”). This may make it more difficult for us to consummate an initial business
combination with a target business.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement
governing the release of funds from our trust account) may be amended with the approval of holders of 65% of our common stock,
which is a lower amendment threshold than that of some other special purpose acquisition companies. It may be easier for us, therefore,
to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business combination
that some of our stockholders may not support.
Our amended and restated
certificate of incorporation provide that any of its provisions related to pre-business combination activity (including the requirement
to deposit proceeds of the Initial Public Offering and the private placement of warrants into the trust account and not release
such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein) may
be amended if approved by holders of 65% of our common stock entitled to vote thereon and corresponding provisions of the trust
agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock
entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders
of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable
stock exchange rules. Our initial stockholders, who collectively beneficially own 20% of our common stock, may participate in any
vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote
in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation
which govern our pre- business combination behavior more easily than some other special purpose acquisition companies, and this
may increase our ability to complete a business combination with which you do not agree. Our stockholders may pursue remedies against
us for any breach of our amended and restated certificate of incorporation.
Our sponsor, executive
officers, directors and director nominees have agreed, pursuant to written agreements with us, that they will not propose any amendment
to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of
our public shares if we do not complete our initial business combination within 24 months from the closing of the Initial Public
Offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity, unless we provide our public stockholders with the opportunity to redeem their 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 (less amounts released to us to pay our taxes), divided by the number of then outstanding public shares. Our stockholders
are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies
against our sponsor, executive officers, directors or director nominees for any breach of these agreements. As a result, in the
event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
Certain agreements related to the Initial
Public Offering may be amended without stockholder approval.
Each of the agreements
related to the Initial Public Offering to which we are a party, other than the warrant agreement and the investment management
trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement
among us and our initial stockholders, sponsor, officers and directors; the registration rights agreement among us and our initial
stockholders; the private placement warrants purchase agreement between us and our sponsor; and the administrative services agreement
among us, our sponsor and an affiliate of our sponsor. These agreements contain various provisions that our public stockholders
might deem to be material. For example, our letter agreement and the underwriting agreement contain certain lock-up provisions
with respect to the founder shares, private placement warrants and other securities held by our initial stockholders, sponsor,
officers and directors. Amendments to such agreements would require the consent of the applicable parties thereto and would need
to be approved by our board of directors, which may do so for a variety of reasons, including to facilitate our initial business
combination. While we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial
business combination, it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary
duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection with the consummation
of our initial business combination will be disclosed in our proxy materials or tender offer documents, as applicable, related
to such initial business combination, and any other material amendment to any of our material agreements will be disclosed in a
filing with the SEC. Any such amendments would not require approval from our stockholders, may result in the completion of our
initial business combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment
in our securities. For example, amendments to the lock-up provision discussed above may result in our initial stockholders selling
their securities earlier than they would otherwise be permitted, which may have an adverse effect on the price of our securities.
We may be unable to obtain additional
financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel
us to restructure or abandon a particular business combination.
We have not selected
any specific business combination target but intend to target businesses with enterprise values that are greater than we could
acquire with the net proceeds of the Initial Public Offering and the sale of the private placement warrants. As a result, if the
cash portion of the purchase price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemption
by public stockholders, we may be required to seek additional financing to complete such proposed initial business combination.
Such financing may not be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable
when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon
that particular business combination and seek an alternative target business candidate. Further, we may be required to obtain additional
financing in connection with the closing of our initial business combination for general corporate purposes, including for maintenance
or expansion of operations of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred
in completing our initial business combination, or to fund the purchase of other companies. If we do not complete our initial business
combination, our public stockholders may only receive their pro rata portion of the funds in the trust account that are available
for distribution to public stockholders, and our warrants will expire worthless. In addition, even if we do not need additional
financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target
business. The failure to secure additional financing could have a material adverse effect on the continued development or growth
of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection
with or after our initial business combination.
Our initial stockholders control a substantial
interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that
you do not support.
Our initial stockholders
own 20% of our issued and outstanding common stock. Accordingly, they may exert a substantial influence on actions requiring a
stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate
of incorporation. If our initial stockholders purchase any additional Class A common stock in the aftermarket or in privately negotiated
transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers or
directors, have any current intention to purchase additional securities, other than as disclosed in this Form 10-K. Factors that
would be considered in making such additional purchases would include consideration of the current trading price of our Class A
common stock. 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 business combination.
Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial business combination.
We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding
public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and
the number of shares of Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants will be
issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and
us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any
ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding
public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly,
we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding
public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at
least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other
things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than initially
provided), shorten the exercise period or decrease the number of shares of Class A common stock purchasable upon exercise of a
warrant.
Our warrant agreement designates the
courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability
of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement
provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way
to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York
or the United States District Court for the Southern District of New York, and (ii) we irrevocably submit to such jurisdiction,
which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the
foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by
the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice
of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within
the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the
United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of
our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located
in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement
action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon
such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum
provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement
inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional
costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business,
financial condition and results of operations and result in a diversion of the time and resources of our management and board of
directors.
We may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability
to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per
warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock capitalizations, 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 we give notice of redemption to the warrant holders and provided certain
other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are
unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a result, we may
redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption of the outstanding
warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants
or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to
be substantially less than the market value of your warrants.
In addition, we have
the ability to redeem the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price
of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that the closing price of our
shares of Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations,
recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to
proper notice of such redemption and provided that certain other conditions are met, including that holders will be able
to exercise their warrants prior to redemption for a number of shares of Class A common stock determined based on the redemption
date and the fair market value of our shares of Class A common stock. Please see “Description of Securities – Warrants
– Public Stockholders’ Warrants – Redemption of Warrants When the Price Per Share of Class A Common Stock Equals or
Exceeds $10.00.” The value received upon exercise of the warrants (1) may be less than the value the holders would have received
if they had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the
holders for the value of the warrants, including because the number of ordinary shares received is capped at 0.361 shares of Class
A common stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
None of the private
placement warrants will be redeemable by us (except as set forth under “Description of Securities – Redeemable Warrants
– Public Stockholders’ Warrants – Redemption of Warrants When the Price Per Share of Class A Common Stock Equals or
Exceeds $10.00”) so long as they are held by our initial stockholder or their permitted transferees.
Our warrants may have an adverse effect
on the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business combination.
In connection with the
Initial Public Offering (including the partial exercise by the underwriters of their Over-Allotment Option), we issued warrants
to purchase 10,000,000 shares of our Class A common stock as part of the units offered and we issued in a private placement 5,333,333
private placement warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share. In addition, if
our sponsor or an affiliate of our sponsor or certain of our officers and directors makes any working capital loans, such lender
may convert those loans into up to an additional 1,000,000 private placement warrants, at the price of $1.50 per warrant. To the
extent we issue common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional
shares of Class A common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target
business. Such warrants, when exercised, will increase the number of issued and outstanding shares of Class A common stock and
reduce the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants may make it more
difficult to effectuate a business transaction or increase the cost of acquiring the target business.
Because each unit contains one-third
of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other special purpose acquisition
companies.
Each unit contains one-third
of one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only
whole units will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share,
we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the
warrantholder. This is different from other offerings similar to ours whose units include one common share 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 a business combination since the warrants will be exercisable in the aggregate for one-third of the number of
shares compared to units that each contain a whole warrant to purchase one 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 it included
a warrant to purchase one whole share.
There is currently no market for our
securities and a market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
There is currently no
market for our securities. Stockholders therefore have no access to information about prior market history on which to base their
investment decision. The price of our securities may vary significantly due to one or more potential business combinations and
general market or economic conditions, including as a result of the COVID-19 outbreak. Furthermore, an active trading market for
our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a
market can be established and sustained.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy rules
require that the proxy statement with respect to the vote on an initial business combination include historical and pro forma financial
statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether
or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance
with, or be reconciled to, accounting principles generally accepted in the United States of America (“GAAP”), or international
financial reporting standards as issued by the International Accounting Standards Board (“IFRS”), depending on the circumstances
and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (“PCAOB”).
These financial statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such
financial statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial
business combination within the prescribed time frame.
We are an emerging growth company and
a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive
to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain
information they may deem important. We could be an emerging growth company for up to five years, although circumstances could
cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds
$700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following
December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our
securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading
prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out
of such extended transition period which means that when a standard is issued or revised and it has different application dates
for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Additionally, we are
a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage
of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock
held by non-affiliates equals or exceeds $250 million as of the prior June 30th, and (2) our annual revenues equaled or exceeded
$100 million during such completed fiscal year and the market value of our common stock held by non-affiliates equals or exceeds
$700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make
comparison of our financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley
Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the
year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no
longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm
attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth
company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our
internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which
we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal 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 shares of Class A common stock and could entrench management.
Our amended and restated
certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider
to be in their best interests. These provisions include the ability of the board of directors to designate the terms of and issue
new series of preferred stock, which may make more difficult the removal of management and may discourage transactions that otherwise
could involve payment of a premium over prevailing market prices for our securities.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated
certificate of incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative
action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director,
officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or
employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or
(iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may
be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the
State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and
the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination),
(B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court
of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court
of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. If an action is brought
outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s
counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in
the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is
enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders
will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Notwithstanding the
foregoing, our amended and restated certificate of incorporation provides that the exclusive forum provision will not apply to
suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive
jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty
or liability created by the Exchange Act or the rules and regulations thereunder.
Although we believe
this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which
it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
Cyber incidents or attacks directed
at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital
technologies, including information systems, infrastructure and cloud applications and services, including those of third parties
with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
If we effect our initial business combination
with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect
us.
If we pursue a target
company with operations or opportunities outside of the United States for our initial business combination, we may face additional
burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial
business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target
a company with operations or opportunities outside of the United States for our initial business combination, we would be subject
to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing
our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local
governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial
business combination with such a company, 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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costs and difficulties inherent in managing cross-border business operations;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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challenges in managing and staffing international operations;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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underdeveloped or unpredictable legal or regulatory systems;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks and wars; and
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deterioration of political relations with the United States.
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We may not be able to
adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination,
or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact our business,
financial condition and results of operations.
An investment in our securities may
result in uncertain or adverse U.S. federal income tax consequences.
An investment in our
securities may result in uncertain U.S. federal income tax consequences. For instance, because there are no authorities that directly
address instruments similar to the units, the allocation an investor makes with respect to the purchase price of a unit between
the share of Class A common stock and the one-third of one redeemable warrant included in each unit could be challenged by the
IRS or the courts. In addition, if we are determined to be a personal holding company for U.S. federal income tax purposes our
taxable income would be subjected to an additional 20% federal income tax, which would reduce the net after-tax amount of interest
income earned on the funds placed in our trust account. Furthermore, the U.S. federal income tax consequences of a cashless exercise
of warrants included in the units and of a redemption of warrants for Class A common stock are unclear under current law. Finally,
it is unclear whether the redemption rights with respect to our shares suspend the running of a U.S. holder’s holding period for
purposes of determining whether any gain or loss realized by such holder on the sale or exchange of Class A common stock is long-term
capital gain or loss and for determining whether any dividend we pay would be considered “qualified dividends” for federal
income tax purposes. See the section titled “U.S. Federal Income Tax Considerations” for a summary of the principal U.S.
federal income tax consequences of an investment in our securities. Prospective investors are urged to consult their tax advisors
with respect to these and other tax consequences when purchasing, holding or disposing of our securities.