Item 1. Business
Introduction
We are a blank check company
incorporated as a Delaware corporation on June 17, 2020, formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to in this report
as our initial business combination. While we may pursue an initial business combination in any industry or geographic region, we have
initially focused our efforts on businesses that would leverage our management team’s experience in acquiring and operating businesses,
including in the Consumer industry. We seek to capitalize on our founders’ distinctive and complementary backgrounds to identify,
acquire and transformatively impact a target business with a substantial portion of its activities in North America or Europe. We may
pursue a transaction with a company in other parts of the world, including Asia and Latin America, given our management team’s
strong relationships in the regions.
On July 7, 2020, we issued
an aggregate of 5,750,000 founder shares to our sponsor and our independent directors for an aggregate price of $25,000, or approximately
$0.004 per share. On July 23, 2021, our sponsor forfeited 1,437,500 founder shares, resulting in an aggregate of 4,312,500 founder shares
outstanding. Our sponsor subsequently transferred to certain of the underwriters of our initial public offering and certain of their
employees an aggregate of 240,001 founder shares at the original purchase price. On August 25, 2021, in connection with the underwriters’
election to partially exercise their over-allotment option and the forfeiture of the remaining portion of such over-allotment option,
an aggregate of 372,038 founder shares were forfeited to us at no cost, and 3,940,462 founder shares remain outstanding.
On August 12, 2021, the registration
statement on Form S-1 (File No. 333-248411) relating to our initial public offering was declared effective by the U.S. Securities and
Exchange Commission (the “SEC”). On August 17, 2021, we consummated our initial public offering of 15,000,000 units at $10.00
per unit, generating total gross proceeds of $150,000,000. Each unit consisted of one share of Class A common stock and one-half
of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of Class A common stock at an exercise
price of $11.50 per share, subject to adjustment. The warrants will become exercisable on the later of August 17, 2022 and 30 days after
the consummation of our initial business combination, and will expire five years after the consummation of our initial business combination,
or earlier upon redemption or liquidation.
On August 23, 2021, the underwriters
of our initial public offering notified us of their exercise of the over-allotment option in part and concurrent forfeiture of the remaining
portion of such option. As such, on August 25, 2021, the underwriters purchased 761,850 additional units at $10.00 per additional unit
upon the closing of the partial exercise of the over-allotment option, generating total gross proceeds of $7,618,500.
Simultaneously with the consummation
of our initial public offering, we consummated the private placement of an aggregate of 580,000 private placement units to our sponsor
and certain of the underwriters of our initial public offering and certain of the underwriters’ employees at a price of $10.00
per private placement unit, generating total gross proceeds of $5,800,000. Simultaneously with the closing of the partial exercise of
the over-allotment option, we consummated the private placement of an aggregate of 15,237 additional private placement units to such
purchasers at $10.00 per additional private placement unit, generating total gross proceeds of $152,370 (collectively, the “private
placements”).
Of the aggregate 15,761,850
units sold in our initial public offering, 13,365,000 units were purchased by our anchor investors. In connection with the closing of
our initial public offering, the anchor investors each acquired from our sponsor an indirect economic interest in 100,000 founder shares
(or an aggregate of 900,000 founder shares) at the original purchase price that our sponsor paid for the founder shares. Our sponsor
has agreed to distribute such founder shares to the anchor investors after the completion of our initial business combination.
A total of $157,618,500 (or
$10.00 per unit sold in our initial public offering) of the net proceeds from our initial public offering, including the partial
exercise of the underwriters’ over-allotment option, and the private placements was placed in a trust account established for the
benefit of our public stockholders (the “trust account”), with Continental Stock Transfer & Trust Company acting as trustee,
and has been invested in U.S. government securities, within the meaning of Section 2(a)(16) of the Investment Company Act of 1940,
as amended (the “Investment Company Act”), having a maturity of 185 days or less, or in money market funds meeting certain
conditions under Rule 2a-7 of the Investment Company Act that invest only in direct U.S. government treasury obligations. Except
with respect to interest earned on the funds held in the trust account that may be released to us to pay our tax obligations (less up
to $100,000 of interest to pay dissolution expenses), none of the funds held in the trust account will be released from the trust account
until the earliest of (i) the completion of our initial business combination, (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing
of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of the public shares if we
do not complete our initial business combination by August 17, 2023 or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, and (iii) our redemption of the public shares if we do not complete our initial
business combination within the required time period.
We incurred $9,292,595 in initial public offering related costs, including
$3,152,370 of underwriting fees, $5,516,648 of deferred underwriting fees and $623,577 of other offering costs. As of December 31, 2021,
we had $1,351,816 in our operating bank accounts, $157,618,500 in cash and marketable securities held in the trust account (including
$5,516,648 of deferred underwriting fees) and working capital of $1,259,780, which excludes $32,313 of interest earned on the trust account
that is available to pay franchise and income taxes payable.
Our units began trading on
August 13, 2021 on the Nasdaq Capital Market (“Nasdaq”) under the symbol “JAQCU.” Commencing on October 1, 2021,
the Class A common stock and warrants comprising the units began separate trading on Nasdaq under the symbols “JAQC” and
“JAQCW,” respectively. Those units not separated continue to trade on Nasdaq under the symbol “JAQCU.”
We believe that the extensive
operational, financial, M&A and capital markets experience of our management team led by James N. Hauslein, James N. Clarke, Gaurav
Burman, James Thayer and Jonathan Leong, and accompanied by our special advisors, including Paul Smucker Wagstaff of Embassy
Park Investment Company LLC (“Embassy Park”) and James Harrison and the broader resources of Clarke
Capital Partners LLC (“Clarke Capital”), coupled with a collective global network to source deals, positions us extremely
well to identify attractive business combination opportunities and to bring value to the business post-combination. We expect to favor
potential target companies with specific industry and business characteristics where we can offer advice on strategic direction, M&A
strategy, access to debt and equity capital markets, improvements in governance, and possible enhancements to operations. Key target
industry characteristics include compelling long-term growth prospects, an attractive competitive landscape, unique products or services,
consolidation opportunities, and favorable fundamental market shifts. Key business characteristics may include high growth or steady,
long-term revenue growth, high barriers to entry, attractive steady-state margins and potential for incremental margin expansion and
attractive and increasing free cash flow. In selective situations, we might consider business combinations where improvements in operations
can add value to our stockholders.
We believe many companies
in the Consumer sector and other related industries could benefit from access to the public markets but have been inhibited by several
factors, including the time it takes to conduct a traditional initial public offering, market volatility and pricing uncertainty. Specifically,
we believe that the COVID-19 pandemic has created dislocation and has adversely affected the ability of companies and business divisions
in these sectors to access public markets to raise capital to pursue organic growth opportunities, reduce leverage, or consolidate their
sectors. We believe there are many potential targets within the space that are both attractive merger candidates and positioned to deliver
substantial value to stockholders in the public markets. We intend to focus on evaluating high growth emerging as well as more established
companies with leading competitive positions, strong management teams, and strong long-term potential for revenue growth and margin expansion.
We are confident that the
combined experience of our management team and special advisors positions us well to identify, source, evaluate, negotiate,
structure, and execute an initial business combination with an attractive company or business in our targeted industries. The vast and
global network of executives, investors, and advisors accessible to our management team and special advisors will enable us to source
business combination opportunities from private equity firms, family-owned businesses,
or divisions of larger corporations. We will employ a disciplined and highly selective investment process and expect to add value
to a target company through advice on strategic direction, add-on acquisitions, optimization of its capital structure, and potential
improvements to operations. Our management team has significant special purpose acquisition company (“SPAC”) experience,
having previously worked with ten different SPACs in a variety of roles, including sponsor, board member, underwriter and M&A advisor.
With respect to the experiences
of our management team and special advisors, past performance is not a guarantee (i) that we will be able to identify a suitable
candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate.
You should not rely on the historical record of our management’s or special advisors’ performance as indicative of our future
performance.
Business Strategy
Our objective is to generate
attractive returns for stockholders by identifying a high-quality target, negotiating favorable terms for a business combination, and
creating the foundation for long-term financial success. After our initial business combination, we envision that the combined company’s
strategy may include additional mergers and acquisitions with a focus on generating attractive risk-adjusted returns for our stockholders.
Our sourcing process will
leverage our management team’s expansive network of contacts and corporate relationships, unique industry knowledge, and deal-sourcing
capabilities in order to access a broad spectrum of potential proprietary and differentiated investment opportunities.
This network has been developed
over decades through our founders’ demonstrated success in investing, advising, and operating businesses across a variety of industries,
which has enabled us to develop a set of capabilities, including:
| ● | significant M&A deal experience,
including originating, crafting and executing transformational transactions; |
| ● | experience executing complex joint
ventures, carve-outs, and corporate spin-offs and split-offs; |
| ● | the ability to advise management teams
in the transition from private to public markets, including from a board and governance perspective; |
| ● | an extensive history of accessing
the debt and equity capital markets across various business cycles, including financing businesses
and assisting companies with transition to public ownership; |
| ● | a history of sourcing, structuring,
acquiring, operating, developing, growing, financing and selling family-owned, privately
owned and public businesses to create stockholder value; |
| ● | a track record of working with companies
during distressed situations to find suitable outcomes; and |
| ● | a proven ability to close on transactions
under all economic and financial market conditions. |
We believe our founders’ expertise
with acquiring and operating businesses, including Consumer businesses, and our keen awareness of industry trends and the strategic focus
of the large corporate participants seeking to divest non-core assets or divisions, will furnish us with a strong flow of potential target
companies via a broad aperture by which to find a suitable target company.
We intend to deploy a proactive,
thematic sourcing strategy and to focus on companies in which we believe the combination of our operating experience, relationships,
capital, and capital markets expertise can be catalysts to transform a target company and accelerate its growth and performance. In addition,
we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, which may include,
but are not limited to, family offices, private equity firms, investment banks, consultants, accounting firms, and extensive business
relationships in our focus industries. Upon completion of our initial public offering, members of our management team began 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 potentially interesting leads.
Our strategy is to identify
and complete our initial business combination with specific industry and business characteristics. We expect to distinguish ourselves
with our ability to:
| ● | source targets outside of formal sale
or financing processes; |
| ● | craft a highly bespoke solution given
extensive industry contacts and relationships; |
| ● | recognize situations, given our history
and experience with SPACs, where a blank check company could be a superior solution to the
needs of a target company and its current owners; |
| ● | engage with large corporations seeking
to divest non-core assets or divisions and execute carve-outs, joint ventures, partnerships
or other business combinations where an independent board and management focus can enhance
growth and value-creation; and |
| ● | exploit opportunities in the COVID-19 environment
by providing a publicly-listed currency to facilitate access to capital for growth,
debt reduction or diversification of wealth by family-owned companies. |
Acquisition Criteria
Consistent with our business
strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target
businesses. We will 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. We intend to acquire one or more businesses
that we believe:
| ● | have a strong competitive industry
position and demonstrated competitive advantages to maintain barriers to entry; |
| ● | operate in fast-growing markets
with large total addressable markets and have significant growth potential both organically
and through add-on acquisitions; |
| ● | have brand recognition and offer enduring
products, with the potential for revenue, market share or distribution improvements; |
| ● | possess proprietary aspects of products
and intellectual property or other protection for products and formulas; |
| ● | have potential to generate strong
and sustainable free cash flow; |
| ● | are fundamentally sound companies
that are not operating at their full potential and could benefit from our founders’
network or expertise (strategy, marketing, operations, capital structure optimization, M&A,
etc.); |
| ● | have a committed, skilled and experienced
management team whose interests and incentives are aligned with those of our stockholders; |
| ● | is sourced through our proprietary
channels; |
| ● | have an appropriate valuation and
will offer an attractive risk-adjusted return for our stockholders; and |
| ● | can benefit from being a publicly-traded company,
are prepared to be a publicly-traded company, and can utilize access to broader capital
markets. |
These criteria and guidelines
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 criteria and guidelines as well as other considerations, factors, criteria, and guidelines that
our management may deem relevant. While we have initially focused on the Consumer industry previously described, we will consider targets
outside this sector if deemed attractive to our stockholders. In the event that we decide to enter into our initial business combination
with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not meet
the above criteria and guidelines in our stockholder communications related to our initial business combination, which, as discussed
elsewhere in this report and our final prospectus, would be in the form of tender offer documents or proxy solicitation materials that
we would file with the SEC.
Acquisition
Process
In evaluating a prospective
target business, we expect to conduct an extensive due diligence review which may encompass, as applicable and among other things, meetings
with incumbent management and employees, document reviews, interviews of customers and suppliers, an inspection of facilities and a review
of financial, operational, legal and other information about the target and its industry. We will also utilize our management team’s
operational and capital planning experience and utilize the expertise and employees of Clarke Capital in analyzing companies and evaluating
operating projections, financial projections, and determining the appropriate return expectations given the risk profile of the target
business.
Nomura
has indicated its intent, if so requested by us, to use its commercially reasonable efforts to underwrite, arrange and/or syndicate up
to $400 million of additional financing for us in the form of equity
or debt (or a combination thereof) in connection with our initial business combination, subject to market conditions and on terms and
conditions satisfactory in all respects to Nomura in its sole judgment and determination. The additional financing arrangement is not
anticipated to have any impact on the redemption price of the Class A common stock, the conversion ratio of Class B common stock to Class
A common stock or the exercise of the warrants.
Following
our initial business combination, we also intend to develop and implement corporate strategies and initiatives to provide financial and
operating flexibility so that the company can improve its growth prospects, profitability, and long-term value. In doing so, the
management team anticipates evaluating corporate governance, opportunistically accessing capital markets and other opportunities to enhance
liquidity, identifying acquisition and divestiture opportunities, and
properly aligning management and board incentives with growing stockholder value.
Certain of our directors
and officers directly or indirectly own founder shares and/or private placement units and, accordingly, may have a conflict of interest
in determining whether a particular target business is an appropriate business with which to effectuate our initial business combination.
Further, such directors and officers may have a conflict of interest with respect to evaluating a particular business combination if
the retention or resignation of any such directors and officers was included by a target business as a condition to any agreement with
respect to our initial business combination.
Certain of our officers and
directors presently have, 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 subject to his
or her fiduciary duties. As a result, if any of our officers or directors becomes aware of a business combination opportunity which is
suitable for an entity to which he or she has then-current fiduciary or contractual obligations, then, subject to such officer’s
and director’s fiduciary duties, he or she will need to honor such fiduciary or contractual obligations to present such business
combination opportunity to such entity, before we can pursue such opportunity. If these other entities decide to pursue any such opportunity,
we may be precluded from pursuing the same. However, we do not expect these duties or obligations to materially affect our ability to
identify and pursue business combination opportunities or complete our initial business combination. Our amended and restated certificate
of incorporation provides that we renounce our interest in any business combination 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 it is
an opportunity that we are able to complete on a reasonable basis.
Our officers, directors,
or special advisors may sponsor, form, or participate in other blank check companies during the period in which we are seeking an initial
business combination. Any such companies may present additional conflicts of interest in pursuing an acquisition target, particularly
in the event there is overlap among investment mandates and the director and officer teams. However, we do not expect that any such other
blank check company would materially affect our ability to identify and pursue business combination opportunities or complete our initial
business combination.
In addition, our founders,
officers and directors, are not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts
of interest in allocating management time among various business activities, including identifying potential business combinations and
monitoring the related due diligence.
Status as a Public Company
We believe our structure
will make us an attractive business combination partner to target businesses. As a public company, we offer a target business an alternative
to the traditional initial public offering through a merger or other business combination with us. Following an initial business combination,
we believe the target business would have greater access to capital and additional means of creating management incentives that are better
aligned with stockholders’ interests than it would as a private company. A target business can further benefit by augmenting its
profile among potential new customers and vendors and aid in attracting talented employees. In a business combination transaction with
us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares of Class A
common stock (or shares of a new holding company) or for a combination of our shares of Class A common stock and cash, allowing
us to tailor the consideration to the specific needs of the sellers.
Although there are various
costs and obligations associated with being a public company, we believe target businesses will find this method a more expeditious and
cost-effective method to becoming a public company than the typical initial public offering. The typical initial public offering
process takes a significantly longer period of time than the typical business combination transaction process, and there are significant
expenses in the initial public offering process, including underwriting discounts and commissions, marketing and road show efforts that
may not be present to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed
initial business combination is completed, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could delay
or prevent the offering from occurring or could have negative valuation consequences. Following an initial business combination, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent with
stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further
benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our
structure and our management team’s backgrounds will make us an attractive business partner, some potential target businesses may
view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any
proposed initial business combination, negatively.
Financial Position
With funds available in the
trust account for an initial business combination of $152,101,852 as of December 31, 2021, assuming no redemptions, before fees and expenses
associated with our initial business combination and after payment of $5,516,648 of deferred underwriting commissions, we offer a target
business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion
of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial
business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the
most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires.
However, there can be no assurance third party financing will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged
in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business combination
using cash from the proceeds of our initial public offering and the private placements of the private placement units, 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), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a
combination of the foregoing. We may seek to complete our initial business combination with a company or business that may be financially
unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and
businesses.
If our initial business combination
is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance
of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional
funds through a private offering of debt or equity securities in connection with the completion of our initial business combination,
and we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the
trust account. In addition, we intend to target businesses larger than we could acquire with the net proceeds of our initial public offering
and the private placements of the private placement units, and may as a result be required to seek additional financing to complete such
proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing
only simultaneously with the completion of our initial business combination. In the case of an initial business combination funded with
assets other than the trust account assets, our proxy materials or tender offer documents disclosing the initial business combination
would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing. There are
no prohibitions on our ability to raise funds privately or through loans in connection with 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 impact a target business.
Sources of Target Businesses
We anticipate that target
business candidates will be brought to our attention from various unaffiliated sources, including investment bankers and investment professionals.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings.
These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many
of these sources will have read our public filings and know what types of businesses we are targeting. Our officers and directors, as
well as our sponsor and their affiliates, may also bring to our attention target business candidates that they become aware of through
their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or
conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be
available to us as a result of the business relationships of our officers and directors and our sponsor and their respective industry
and business contacts as well as their affiliates. We may engage the services of professional firms or other individuals that specialize
in business acquisitions, in which event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined
in an arm’s length negotiation based on the terms of the transaction. We will engage a finder only to the extent our management
determines that the use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us
on an unsolicited basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s
fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account.
In no event, however, will our sponsor or any of our existing officers, directors or special advisors, or any of their respective affiliates,
be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the
company prior to, or in connection with any services rendered for any services they render in order to effectuate, the completion of
our initial business combination (regardless of the type of transaction that it is). None of our sponsor, executive officers, directors
or special advisors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting
fees from a prospective business combination target in connection with a contemplated initial business combination. We have agreed to
pay an affiliate of our sponsor an aggregate of $15,000 per month for office space, utilities and secretarial and administrative support
and to reimburse our sponsor, officers, directors and special advisors for any out-of-pocket expenses related to identifying, investigating
and completing an initial business combination. Some of our officers and directors may enter into employment or consulting agreements
with the post-transaction company following our initial business combination. The presence or absence of any such fees or arrangements
will not be used as a criterion in our selection process of an initial business combination candidate.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors, or making the acquisition
through a joint venture or other form of shared ownership with our sponsor, officers or directors. In the event we seek to complete an
initial business combination with a target that is affiliated with our sponsor, officers or directors, we, or a committee of independent
directors, would obtain an opinion from an independent investment banking firm that 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.
If any of our officers or
directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity to which
he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination
opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors currently have
certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Selection of a Target Business and Structuring
of our Initial Business Combination
As required by Nasdaq rules,
our initial business combination will be approved by a majority of our independent directors. Nasdaq rules also 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) at the time of our signing a definitive agreement in
connection with our initial business combination. The fair market value of our initial business combination will be determined by our
board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation,
a valuation based on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions
of comparable businesses. Even though our board of directors will rely on generally accepted standards, our board of directors will have
discretion to select the standards employed. In addition, the application of the standards generally involves a substantial degree of
judgment. Accordingly, investors will be relying on the business judgement of our board of directors in evaluating the fair market value
of the target or targets. The proxy solicitation materials or tender offer documents used by us in connection with any proposed transaction
will provide public stockholders with our analysis of our satisfaction of the 80% fair market value test, as well as the basis for our
determinations. If our board of directors is not able to independently determine the fair market value of our initial business combination,
we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions
with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make
an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar
or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s
assets or prospects. We do not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial
business combination. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting
one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with another
blank check company or a similar company with nominal operations.
In any case, we will only
complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or
otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under
the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses,
the portion of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into
account for purposes of the 80% fair market value test.
To the extent we effect our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth
we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks
inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective
business target, we expect to conduct a thorough due diligence review, which may encompass, among other things, meetings with incumbent
management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial
and other information that will be made available to us.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable. Any costs incurred with respect to the identification and evaluation of a prospective target business
with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the funds
we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period
of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or
several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in
a single line of business. By completing our initial business combination with only a single entity, our lack of diversification may:
| ● | subject
us to negative economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact on the particular industry in which we operate after our
initial business combination, and |
| ● | cause
us to depend on the marketing and sale of a single product or limited number of products
or services. |
Limited Ability to Evaluate the Target’s
Management Team
Although we intend to closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business’ management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of
our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any
of the members of our management team will remain with the combined company will be made at the time of our initial business combination.
While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business
combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination.
Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations
of the particular target business.
We cannot assure you that
any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following an initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure
you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve
Our Initial Business Combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required
by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other reasons. Presented in the
table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is
currently required under Delaware law for each such transaction.
Type
of Transaction |
|
Whether
Stockholder
Approval is
Required |
Purchase
of assets |
|
No |
Purchase
of stock of target not involving a merger with the company |
|
No |
Merger
of target into a subsidiary of the company |
|
No |
Merger
of the company with a target |
|
Yes |
Under Nasdaq’s listing
rules, stockholder approval would be required for our initial business combination if, for example:
| ● | we
issue shares of Class A common stock that will be equal to or in excess of 20% of the
number of shares of our Class A common stock then outstanding; |
| ● | any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a
5% or greater interest (or such persons collectively having 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 shares of
common stock or voting power of 5% or more; or |
| ● | the
issuance or potential issuance of common stock will result in our undergoing a change of
control. |
The decision as to whether
we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval is not required
by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors,
including, but not limited to:
| ● | the
timing of the transaction, including in the event we determine stockholder approval would
require additional time and there is either not enough time to seek stockholder approval
or doing so would place the company at a disadvantage in the transaction or result in other
additional burdens on the company; |
| ● | the
expected cost of holding a stockholder vote; |
| ● | the
risk that the stockholders would fail to approve the proposed business combination; |
| ● | other
time and budget constraints of the company; and |
| ● | additional
legal complexities of a proposed business combination that would be time-consuming and
burdensome to present to stockholders. |
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 initial stockholders, directors, officers, advisors or their respective affiliates may purchase public shares
or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial
business combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates
may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. If they engage in such transactions, they
will not make any such purchases when they are in possession of any material non-public information not disclosed to the seller
or if such purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the
Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers
determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers
are subject to such reporting requirements. None of the funds held in the trust account will be used to purchase public shares or public
warrants in such transactions prior to completion of our initial business combination.
The purpose of any such purchases
of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining
stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a target that requires
us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that
such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public
warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial
business combination. Any such purchases of our securities may result in the completion of our initial business combination that may
not otherwise have been possible. In addition, if such purchases are made, the public “float” of our shares of Class A
common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult
to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, officers, directors
and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent
that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and contact only
potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the trust account or
vote against our initial business combination, whether or not such stockholder has already submitted a proxy with respect to our initial
business combination. Our sponsor, officers, directors, advisors or their affiliates will only purchase shares if such purchases comply
with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor,
officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only
be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for
manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements
that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their
affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the
Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such
purchases are subject to such reporting requirements.
Redemption Rights for Public Stockholders
upon Completion of our Initial Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our
initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
as of two business days prior to the consummation of the initial business combination including interest earned on the funds held in
the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject
to the limitations described herein. The 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 may include the requirement
that a beneficial holder must identify itself in order to validly redeem its shares. Our sponsor, officers and directors have entered
into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares,
private shares and any public shares held by them in connection with the completion of our initial business combination.
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our
initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination
or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial business
combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as
the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or
stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder
approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding
common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure
an initial business combination with a target company in a manner that requires stockholder approval, we will not have discretion as
to whether to seek a stockholder vote to approve the proposed initial business combination. We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements
or we choose to seek stockholder approval for business or other reasons. So long as we maintain a listing for our securities on Nasdaq,
we will be required to comply with such rules.
If a stockholder vote is
not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated
certificate of incorporation:
| ● | conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act,
which regulate issuer tender offers, and |
| ● | file
tender offer documents with the SEC prior to completing our initial business combination
which contain substantially the same financial and other information about the initial business
combination and the redemption rights as is required under Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies. |
Upon the public announcement
of our initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to
purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to
comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under
the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer
period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public
shares which are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public shares in
an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and
after payment of deferred underwriting commissions (so that we are not subject to the SEC’s “penny stock” rules) or
any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete such initial
business combination.
If, however, stockholder
approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for
business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
| ● | conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the
Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender
offer rules, and |
| ● | file
proxy materials with the SEC. |
In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public stockholders with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval,
we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor
of the initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of
outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the
company entitled to vote at such meeting. Our initial stockholders will count toward this quorum and pursuant to the letter agreement,
our sponsor, officers and directors have agreed to vote their founder shares, private shares and any public shares they may purchase
(including in open market and privately negotiated transactions) in favor of our initial business combination. For purposes of seeking
approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial
business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder shares and private
shares, we would need only 5,613,076, or approximately 35.6% (assuming all outstanding shares are voted), or 538,689, or approximately
3.4% (assuming only the minimum number of shares representing a quorum are voted), of the 15,761,850 public shares sold in our initial
public offering to be voted in favor of an initial business combination in order to have our initial business combination approved. Furthermore,
if our anchor investors vote all of the public shares underlying the 13,365,000 units they acquired in our initial public offering in
favor of an initial business combination, we would not need any of the other public shares sold in our initial public offering to be
voted in favor of an initial business combination in order to have our initial business combination approved. We intend to give approximately
30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which
a vote shall be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our
sponsor, officers and directors, may make it more likely that we will consummate our initial business combination. Each public stockholder
may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction.
Our amended and restated
certificate of incorporation provides that 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 upon consummation of our initial business combination and after payment of deferred underwriting commissions
(so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. For example, the proposed initial business combination
may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms
of the proposed initial business combination. In the event the aggregate cash consideration we would be required to pay for all shares
of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to
the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the
initial business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned
to the holders thereof.
Limitation on Redemption upon Completion of our Initial Business
Combination if We Seek Stockholder Approval
Notwithstanding the foregoing,
if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public
stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as
a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with
respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.”
Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating
large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed
initial business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market
price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares
sold in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased
by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’
ability to redeem no more than 15% of the shares sold in our initial public offering without our prior consent, we believe we will limit
the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination,
particularly in connection with an initial business combination with a target that requires as a closing condition that we have a minimum
net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to vote all of their shares
(including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection with a Tender Offer
or Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer
documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial
business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using
the Depository Trust Company’s (“DTC”) DWAC (Deposit/Withdrawal
At Custodian) System, at the holder’s option, in each case up to two business days prior to the initially scheduled vote to approve
the business combination. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in
connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery
requirements, which may include the requirement that a beneficial holder must identify itself in order to validly redeem its public shares.
Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender offer
period, or up to two days prior to the vote on the initial business combination if we distribute proxy materials, as applicable, to tender
its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders
to use electronic delivery of their public shares.
There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System.
The transfer agent will typically charge the tendering broker the fee and it would be up to the broker whether or not to pass this cost
on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption
rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of
when such delivery must be effectuated.
The foregoing is different
from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations,
many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and
a holder could simply vote against a proposed initial business combination and check a box on the proxy card indicating such holder was
seeking to exercise his or her redemption rights. After the initial business combination was approved, the company would contact such
stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an
“option window” after the completion of the initial business combination during which he or she could monitor the price of
the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the
open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which
stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past
the completion of the initial business combination until the redeeming holder delivered its certificate. The requirement for physical
or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the initial
business combination is approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder
meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such
holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of
our initial business combination.
If our initial business combination
is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our initial proposed initial
business combination is not completed, we may continue to try to complete an initial business combination with a different target until
August 17, 2023.
Redemption of Public Shares and Liquidation if no Initial Business
Combination
Our amended and restated
certificate of incorporation provides that we will have only until August 17, 2023 to complete our initial business combination. If we
do not complete our initial business combination within the required time period, we will: (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest
earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to
pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. 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 required time period.
Our sponsor, officers and
directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares and
private shares held by them if we fail to complete our initial business combination within the required time period. However, if our
sponsor, officers or directors acquire public shares, 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 required time period.
Our sponsor, officers and
directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated
certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our
initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by August
17, 2023 or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval
of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number
of then outstanding public shares. 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 upon consummation of our initial business combination and after payment of deferred underwriting commissions
(so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with
respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we
would not proceed with the amendment or the related redemption of our public shares at such time.
We expect that all costs
and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from the net
proceeds of our initial public offering and the private placements of the private placement units held outside the trust account, although
we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the
proceeds held in the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the costs
and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account
not required to pay taxes on interest income earned on the trust account balance, we may request the trustee to release to us an additional
amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all
of the net proceeds of our initial public offering and the private placements of the private placement units, other than the proceeds
deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption
amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could,
however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We
cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00.
Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make
provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before
we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you
that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we seek to have
all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will all execute such agreements or even if they do execute such agreements that they would be prevented
from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with
respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement
waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to
it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s
engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third
party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are
believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where
management is unable to find a service provider willing to execute a waiver. We are not aware of any product or service providers who
have not or will not provide such waiver other than the underwriters of our initial public offering and our independent registered public
accounting firm.
In addition, there is no
guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor has agreed that it will
be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target
business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement,
reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount
per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due
to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third
party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account (whether or
not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial public offering
against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). However,
we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor
has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company.
Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds
in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the
trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net
of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the
independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. We have not asked our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor
would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the
per-share redemption price will not be less than $10.00 per public share.
We seek to reduce the possibility
that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers,
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest
or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity
of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. We have
access to funds held outside the trust account ($1,351,816 as of December 31, 2021) 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 the trust account could be liable for claims made by creditors.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of the trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination by August 17, 2023 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 the trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination by August 17, 2023 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 by August 17, 2023, we will: (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned
on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following August
17, 2023 and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for
any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond
the third anniversary of such date.
Because we will not be complying
with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that
will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent
ten years. However, because we are a blank check company, rather than an operating company, and our operations are 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 the underwriting agreement
related to our initial public offering, we seek to have all vendors, service providers, prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood
that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to
the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such
lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in
value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims
under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will not be responsible to
the extent of any liability for such third-party claims.
If we file a bankruptcy petition
or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over
the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to
return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors may be viewed as having
breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our company to claims of
punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure
you that claims will not be brought against us for these reasons.
Our public stockholders will
be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business
combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend any provisions
of our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination by August 17, 2023 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity, and (iii) the redemption of all of our public shares if we do not complete our business combination by August
17, 2023, subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or in the
trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting
in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us for an
applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as described above. These
provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation,
may be amended with a stockholder vote.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we may encounter intense competition from other entities having
a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating
businesses seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying
and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our
obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available
to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not
be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully
negotiating an initial business combination.
Employees
We currently have five officers.
These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their
time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time they will devote
in any time period will vary based on whether a target business has been selected for our initial business combination and the stage
of the initial business combination process we are in. We do not intend to have any full-time employees prior to the completion of our
initial business combination.
Periodic Reporting and Audited Financial Statements
We have registered our units,
Class A common stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. Such reports and other information filed by the company with the SEC are available free of
charge on the SEC’s website at www.sec.gov. The contents of this website is not incorporated into this report. 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 tender offer materials or proxy solicitation materials
sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared
in accordance with, or reconciled to, United States generally accepted accounting principles (“GAAP”) or international financial
reporting standards (“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) (the “PCAOB”).
These financial statement requirements may limit the pool of potential targets we may conduct an initial business combination with because
some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules
and complete our initial business combination within the prescribed time frame. We cannot assure you that any particular target business
identified by us as a potential business combination candidate will have financial statements prepared in accordance with GAAP or that
the potential target business will be able to prepare its financial statements in accordance with the requirements outlined above. To
the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the
pool of potential business combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate
our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”). Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging
growth company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the
provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such
entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
We filed a Registration Statement on Form 8-A with the SEC to 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 Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”). As such, we
are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent
registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be
a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption
of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the
benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our
initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to
be a large accelerated filer, which means the aggregate worldwide market value of our shares of common stock that are held by non-affiliates
equals or exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt during the prior three-year period.
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 or the market value of our common stock held by non-affiliates equals or exceeds $700 million as of the prior June 30th.
Item 1A. Risk Factors
Ownership of our securities
involves a high degree of risk. If any of the following events occur, our business, financial condition and operating results may be
materially adversely affected. In that event, the trading price of our securities could decline and a holder of our securities could
lose all or part of its investment. This report also contains forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the
risks described below.
Risks Relating to Searching for and Consummating
a Business Combination
Our public stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even
though a majority of our public stockholders do not support such a combination.
We may choose not to hold
a stockholder vote to approve our initial business combination unless the initial business combination would require stockholder approval
under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other reasons.
Except as required by law, the decision as to whether we will seek stockholder approval of a proposed initial business combination or
will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to
seek stockholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of our public
shares do not approve of the initial business combination we complete.
If we seek stockholder approval of our
initial business combination, our sponsor, officers and directors have agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote.
Pursuant to the letter agreement,
our sponsor, officers and directors have agreed to vote their founder shares and private shares, as well as any public shares purchased
during or after our initial public offering (including in open market and privately negotiated transactions), in favor of our initial
business combination. As a result, in addition to our initial stockholders’
founder shares and private shares, we would need only 5,613,076, or approximately 35.6% (assuming all outstanding shares are voted),
or 538,689, or approximately 3.4% (assuming only the minimum number of shares representing a quorum are voted), of the 15,761,850 public
shares sold in our initial public offering to be voted in favor of an initial business combination in order to have our initial business
combination approved. We expect that our initial stockholders and their permitted transferees will own shares representing approximately
20% of our outstanding shares of common stock (not including the shares of Class A common stock underlying the private placement units)
at the time of any such stockholder vote. Accordingly, if we seek stockholder approval of our initial business combination, the agreement
by our sponsor, officers and directors 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. Furthermore, if our anchor investors vote all of the
public shares underlying the 13,365,000 units they acquired in our initial public offering in favor of an initial business combination,
we would not need any of the other public shares sold in our initial public offering to be voted in favor of an initial business combination
in order to have our initial business combination approved. Although our anchor investors are not contractually obligated to vote in
favor of an initial business combination, their interest in certain of our founder shares may provide an incentive for them to do so.
Since our anchor investors have acquired
an interest in certain of our founder shares from our sponsor, a conflict of interest may arise in determining whether a particular target
business is appropriate for our initial business combination.
Each of the anchor investors
has acquired an economic interest in 100,000 founder shares for a nominal amount, which our sponsor will distribute to our anchor investors
after the completion of an initial business combination. Accordingly, the anchor investors will share in any appreciation in the value
of the founder shares above that nominal amount, provided that we successfully complete a business combination. Moreover, as the anchor
investors acquired all of the aggregate 13,365,000 units they purchased in our initial public offering for a purchase price of $10.00
per unit and paid approximately $0.004 per share for their interests in the founder shares, and assuming each warrant had no value and
without taking into account any liquidity discount on the founder shares, the anchor investors paid an effective price of approximately
$9.37 per share acquired, as compared to the $10.00 per share paid by the other public stockholders in our initial public offering. As
a result, the anchor investors may have an incentive to vote any public shares they own in favor of a business combination, and, if a
business combination is approved, they may make a substantial profit on such interest, even if the market price of our securities declines
in value below the price to the public in our initial public offering and the business combination is not profitable for other public
stockholders. In addition, as discussed above, if the anchor investors retain a substantial portion of their interests in our public
shares and if the anchor investors vote those public shares in favor of a business combination, we will receive sufficient votes to approve
the business combination, regardless of how any other public stockholder votes their shares. You should consider the anchor investors’
financial incentive to complete an initial business combination when evaluating whether to invest in our securities and/or redeem your
shares prior to or in connection with an initial business combination.
Your only opportunity to affect the investment
decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash,
unless we seek stockholder approval of the initial business combination.
At the time of your investment
in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since
our board of directors may complete an initial business combination without seeking stockholder approval, public stockholders may not
have the right or opportunity to vote on the initial business combination, unless we seek such stockholder vote.
Accordingly, if we do not
seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination may be
limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender
offer documents mailed to our public stockholders in which we describe our initial business combination.
The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make
it difficult for us to enter into an initial business combination with a target.
We may seek to enter into
an initial business combination agreement with a prospective target that requires as a closing condition that we have a minimum net worth
or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing
condition and, as a result, would not be able to proceed with the initial business combination. Furthermore, 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 upon consummation of our initial business
combination and after payment of deferred underwriting commissions (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less than
$5,000,001 upon consummation of our initial business combination and after payment of deferred underwriting commissions or such greater
amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related business
combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and, thus,
may be reluctant to enter into an initial business combination with us.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
At the time we enter into
an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore
will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such
requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially
expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third
party financing. This risk may be increasingly prevalent given recent high levels of redemptions among other SPACs completing their initial
business combinations. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness
at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the
Class B common stock results in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class
B common stock at the time of our business combination. The above considerations may limit our ability to complete the most desirable
business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to
the underwriters 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 per-share value of shares held by non-redeeming stockholders will reflect our obligation
to pay the deferred underwriting commissions.
The requirement that the target business
or businesses that we acquire must collectively have a 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) at the time of the execution of a definitive agreement for
our initial business combination may limit the type and number of companies with which we may complete such a business combination.
Nasdaq rules and our amended
and restated certificate of incorporation require that the target business or businesses that we acquire must collectively have a 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) at the time of the execution of a definitive agreement for our initial business combination. This restriction may limit
the type and number of companies with which we may complete such a business combination. If we are unable to locate a target business
or businesses that satisfy this fair market value test, we may be forced to liquidate and our public stockholders will only be entitled
to receive their pro rata portion of the funds in the trust account, which may be less than $10.00 per share.
The requirement that we complete our initial
business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating an initial
business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our
dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value
for our stockholders.
Any potential target business
with which we enter into negotiations concerning an initial business combination will be aware that we must complete our initial business
combination by August 17, 2023. Consequently, such target business may obtain leverage over us in negotiating an initial business combination,
knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete
our initial business combination with any target business. This risk will increase as we get closer to the timeframe described above.
In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would
have rejected upon a more comprehensive investigation.
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 coronavirus
(COVID-19) pandemic and the status of debt and equity markets.
The COVID-19 pandemic
has adversely affected, and other events (such as terrorist attacks, geopolitical unrest, natural disasters or a significant outbreak
of other infectious diseases) could adversely affect, economies and financial markets worldwide, and the business of any potential target
business with which we consummate a business combination could be, or may already have been, materially and adversely affected. Furthermore,
we may be unable to complete a business combination if 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 service 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. Moreover, the Federal Reserve
has shifted its focus to limiting inflationary and other potentially adverse effects of the extensive pandemic- related government stimulus,
which signals the potential for a continued period of economic uncertainty even if the pandemic subsides. If the disruptions posed by
COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination,
or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
In addition, our ability
to consummate a business combination may be dependent on the ability to raise equity and debt financing, which may be impacted by COVID-19 and
other events (such as terrorist attacks, geopolitical unrest, natural disasters or a significant outbreak of other infectious diseases),
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.
The COVID-19 pandemic
and other events (such as terrorist attacks, geopolitical unrest, natural disasters or a significant outbreak of other infectious diseases)
may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related
to the market for our securities and cross-border transactions.
Our search for a business combination,
and any target business with which we ultimately consummate a business combination, may be materially adversely affected by negative
impacts on the global economy, capital markets or other geopolitical conditions resulting from the recent invasion of Ukraine by Russia
and subsequent sanctions against Russia, Belarus and related individuals and entities.
United States and global
markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the recent invasion of Ukraine
by Russia in February 2022. In response to such invasion, the North Atlantic Treaty Organization (“NATO”) deployed additional
military forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various
sanctions and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial
institutions from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including
the United States, have also provided and may continue to provide military aid or other assistance to Ukraine during the ongoing military
conflict, increasing geopolitical tensions with Russia. The invasion of Ukraine by Russia and the resulting measures that have been taken,
and could be taken in the future, by NATO, the United States, the United Kingdom, the European Union and other countries have created
global security concerns that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing
military conflict in Ukraine is highly unpredictable, the conflict could lead to market disruptions, including significant volatility
in commodity prices, credit and capital markets, as well as supply chain interruptions. Additionally, Russian military actions and the
resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in
capital markets.
Any of the abovementioned
factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian
invasion of Ukraine and subsequent sanctions, could adversely affect our search for a business combination and any target business with
which we ultimately consummate a business combination. The extent and duration of the Russian invasion of Ukraine, resulting sanctions
and any related market disruptions are impossible to predict, but could be substantial, particularly if current or new sanctions continue
for an extended period of time or if geopolitical tensions result in expanded military operations on a global scale. Any such disruptions
may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related
to the market for our securities, cross-border transactions or our ability to raise equity or debt financing in connection with any particular
business combination. If these disruptions 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.
If we seek stockholder approval of our
initial business combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares or warrants
from public stockholders, which may influence a vote on a proposed initial business combination and reduce the public “float”
of our Class A common stock.
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase public shares or public warrants
or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of our
initial business combination, although they are under no obligation to do so. None of the funds in the trust account will be used to
purchase public shares or public warrants in such transactions.
Such a purchase may include
a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner
thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or their
affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption
rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases
could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder
approval of the initial business combination, or to satisfy a closing condition in an agreement with a target that requires us to have
a minimum net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement
would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public warrants outstanding
or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the completion of our initial business combination that may not otherwise have been
possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such
purchasers are subject to such reporting requirements.
In addition, if such purchases
are made, the public “float” of our Class A common stock or public warrants and the number of beneficial holders of our securities
may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national
securities exchange.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures
for tendering its shares, such shares may not be redeemed.
We will comply with the tender
offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our
compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may
not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that
we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly tender or redeem public shares, which may include the requirement that a beneficial holder
must identify itself. For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are
record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to
the date set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote
on the proposal to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to
the transfer agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may
not be redeemed.
In connection with any stockholder meeting
called to approve a proposed initial business combination, we may require stockholders who wish to redeem their shares in connection
with a proposed business combination to comply with specific requirements for redemption that may make it more difficult for them to
exercise their redemption rights prior to the deadline for exercising their rights.
In connection with any stockholder
meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether
he or she is voting for or against such proposed business combination or does not vote at all, to demand that we redeem his or her shares
into a pro rata share of the trust account as of two business days prior to the consummation of the initial business combination. We
may require public stockholders who wish to redeem their shares in connection with a proposed business combination to either (i) tender
their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using DTC’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holders’ option, in each case prior to a date set forth in the tender offer documents or proxy materials
sent in connection with the proposal to approve the business combination. In order to obtain a physical stock certificate, a stockholder’s
broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders
should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any
control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate.
While we have been advised that it takes a short time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly,
if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet
the deadline for exercising their redemption rights and thus may be unable to redeem their shares.
If, in connection with any stockholder
meeting called to approve a proposed business combination, we require public stockholders who wish to redeem their shares to comply with
specific requirements for redemption, such redeeming stockholders may be unable to sell their securities when they wish to in the event
that the proposed business combination is not approved.
If we require public stockholders
who wish to redeem their shares to comply with specific requirements for redemption and such proposed business combination is not consummated,
we will promptly return such certificates to the tendering public stockholders. Accordingly, investors who attempted to redeem their
shares in such a circumstance will be unable to sell their securities after the failed business combination until we have returned their
securities to them. The market price for our shares of Class A common stock may decline during this time and you may not be able to sell
your securities when you wish to, even while other stockholders that did not seek redemption may be able to sell their securities.
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 approximately $10.00 per share on our
redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless.
We expect to encounter intense
competition from other entities having a business objective similar to ours, including private investors (which may be individuals or
investment partnerships), other blank check companies and other entities competing for the types of businesses we intend to acquire.
Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly
or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors possess
greater technical, human and other resources or more industry knowledge than we do, and our financial resources will be relatively limited
when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire
with the net proceeds of our initial public offering and the private placements of the private placement units, our ability to compete
with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This
inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, because
we are obligated to pay cash for the shares of Class A common stock which our public stockholders redeem in connection with our initial
business combination, target companies will be aware that this may reduce the resources available to us for our initial business combination.
This may place us at a competitive disadvantage in successfully negotiating an initial business combination. If we do not complete our
initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of the trust
account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share
upon our liquidation. See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
As the number of special purpose acquisition
companies increases, there may be more competition to find an attractive target for an initial business combination. This could increase
the costs associated with completing our initial business combination and may result in our inability to find a suitable target for our
initial business combination.
In recent years, the number
of special purpose acquisition companies that have been formed has increased substantially. Many companies have entered into business
combinations with special purpose acquisition companies, and there are still many special purpose acquisition companies seeking targets
for their initial business combination, as well as many additional special purpose acquisition companies currently in registration. As
a result, at times, fewer attractive targets may be available, and it may require more time, effort and resources to identify a suitable
target for an initial business combination.
In addition, because there
are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition
for available targets with attractive fundamentals or business models may increase, which could cause target companies to demand improved
financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical
tensions, including the recent invasion of Ukraine by Russia and the resulting sanctions, or increases in the cost of additional capital
needed to close business combinations or operate targets post-business combination. This could increase the cost of, delay or otherwise
complicate or frustrate our ability to find a suitable target for and/or complete our initial business combination.
If the net proceeds of our initial public
offering and the private placements of the private placement units not being held in the trust account are insufficient to allow us to
operate until August 17, 2023, we may be unable to complete our initial business combination, in which case our public stockholders may
only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
The funds available to us
outside of the trust account may not be sufficient to allow us to operate for at least until August 17, 2023, assuming that our initial
business combination is not completed during that time. We believe that the funds available to us outside of the trust account will be
sufficient to allow us to operate until August 17, 2023; however, we cannot assure you that our estimate is accurate. Of the funds available
to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business.
We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent
or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies on terms
more favorable to such target businesses) with respect to a particular proposed initial business combination, although we do not have
any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we do not complete
our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of the trust
account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share
upon our liquidation. See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If the net proceeds of our initial public
offering and the private placements of the private placement units not being held in the trust account are insufficient, it could limit
the amount available to fund our search for a target business or businesses and complete our initial business combination and we will
depend on loans from our sponsor or management team to fund our search for an initial business combination, to pay our taxes and to complete
our initial business combination. If we are unable to obtain these loans, we may be unable to complete our initial business combination.
As of December 31, 2021, we had $1,351,816 in our operating bank accounts,
$157,618,500 in cash and marketable securities held in the trust account (including $5,516,648 of deferred underwriting fees) and working
capital of $1,259,780, which excludes $32,313 of interest earned on the trust account that is available to pay franchise and income taxes
payable. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management team or other third
parties to operate or may be forced to liquidate. None of our sponsor, 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 private placement-equivalent units at a price of $10.00 per unit at the option of the lender. Prior to the completion of our
initial business combination, we do not expect to seek loans from parties other than our sponsor 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 the trust account. If we are unable to obtain these loans, we may be unable to complete our initial business combination. If we are
unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease
operations and liquidate the trust account. Consequently, our public stockholders may only receive approximately $10.00 per share on our
redemption of our public shares, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive
less than $10.00 per share on the redemption of their shares. See “— If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per
share” and other risk factors herein.
Changes in the market for directors and
officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In recent months, the market
for directors and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and our management
team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies
have generally increased and the terms of such policies have generally become less favorable. These trends may continue into the future.
The increased cost and decreased
availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete
an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of
becoming a public company, the post-business combination entity might need to incur greater expense and/or accept less favorable
terms. Furthermore, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s
ability to attract and retain qualified officers and directors.
In addition, after completion
of any initial business combination, our directors and officers could be subject to potential liability from claims arising from conduct
alleged to have occurred prior to such initial business combination. As a result, in order to protect our directors and officers, the
post-business combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”).
The need for run-off insurance would be an added expense for the post-business combination entity and could interfere with
or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
Because we are not limited to evaluating
a target business in a particular industry, sector or any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business’ operations.
Although we may complete
a business combination with an operating company in the Consumer industry in the United States (which may include a company based in
the United States with operations or opportunities outside the United States), we may also pursue acquisition opportunities in other
industries, except that we will not, under our amended and restated certificate of incorporation, be permitted to effectuate our initial
business combination with another blank check company or similar company with nominal operations. To the extent we complete our initial
business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if
we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by
the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and
directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these
risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business. We also cannot assure you that an investment in our securities will ultimately prove to be more favorable to investors
than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders who choose
to remain stockholders following our initial business combination could suffer a reduction in the value of their securities. Such stockholders
are unlikely to have a remedy for such reduction in value 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.
Past performance by members of our management
team may not be indicative of future performance of an investment in us or in the future performance of any business that we may acquire.
Past performance by members
of our management team is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that
we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical record of
members of our management team’s performance as indicative of our future performance of an investment in the company or the returns
the company will, or is likely to, generate going forward.
We may seek business combination opportunities
in industries or sectors which may or may not be outside of our management’s area of expertise.
Although we have initially
focused on identifying companies that would leverage our management team’s experience in acquiring and operating businesses, including
in the Consumer industry, we will consider an initial business combination outside of our management’s area of expertise if an
initial business combination candidate is presented to us and we determine that such candidate offers an attractive business combination
opportunity for our company or we are unable to identify a suitable candidate in one of these industries after having expanded a reasonable
amount of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular
business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors.
We also cannot assure you that an investment in our securities will not ultimately prove to be less favorable to investors in our initial
public offering than a direct investment, if an opportunity were available, in an initial business combination candidate. In the event
we elect to pursue a business combination outside of the areas of our management’s expertise, our management’s expertise
may not be directly applicable to its evaluation or operation, and the information contained elsewhere in this report and our final prospectus
regarding the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire.
As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders
who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their shares. Such
stockholders are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter
into our initial business combination will not have all of these positive attributes. If we complete our initial business combination
with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business
that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target
that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which
may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain
amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval
for business or other reasons, it may be more difficult for us to attain stockholder approval of our initial business combination if
the target business does not meet our general criteria and guidelines. If we do not complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share on the liquidation of the trust account and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares. See “—
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and other risk factors herein.
We may seek business combination opportunities
with an early stage company, a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings,
which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete
our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record
of revenue, cash flow 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, as well as risks related to any financial projections we may provide
to the public, any changes in these projections or the failure to meet such projections. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant
risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control
and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
Management’s flexibility in identifying
and selecting a prospective target business or businesses, along with our management’s financial interest in consummating our initial
business combination, may lead management to enter into an acquisition agreement that is not in the best interest of our stockholders.
Subject to the requirements
in Nasdaq rules and our amended and restated certificate of incorporation that we must complete one or more business combinations having
an aggregate fair market value of at least 80% of the value of the assets held in the trust account (excluding the deferred underwriting
commissions and taxes payable) at the time of the execution of a definitive agreement for such initial business combination, we have
virtually unrestricted flexibility in identifying and selecting a prospective target business or businesses. Investors will be relying
on management’s ability to identify business combinations, evaluate their merits, conduct or monitor diligence and conduct negotiations.
Management’s flexibility in identifying and selecting a prospective target business or businesses, along with management’s
financial interest in consummating our initial business combination, may lead management to enter into an acquisition agreement that
is not in the best interest of our stockholders, which would be the case if the trading price of our shares of Class A common stock after
giving effect to such business combination was less than the per-share trust liquidation value that our stockholders would have
received if we had dissolved without consummating our initial business combination.
We are not required to obtain an opinion
from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from
an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our initial
business combination with an affiliated entity or our board cannot independently determine the fair market value of the target business
or businesses, we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from
an independent accounting firm that the price we are paying is fair to our company from a financial point of view. If no opinion is obtained,
our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally
accepted by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable,
related to our initial business combination.
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 do not complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share, or less than such amount in certain circumstances, on the liquidation of the trust account and our warrants will expire
worthless.
The investigation of each
specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments
requires substantial management time and attention and substantial costs for accountants, attorneys, consultants and others. If we decide
not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would
not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial
business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the
related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
If we do not complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the
liquidation of the trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive
less than $10.00 per share on the redemption of their shares. See “— If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00
per share” and other risk factors herein.
We are dependent upon our officers and
directors and their departure could adversely affect our ability to operate.
Our operations are dependent
upon a relatively small group of individuals and, in particular, our officers and directors. We believe that our success depends on the
continued service of our officers and directors, at least until we have completed our initial business combination. We do not have an
employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss of the services
of one or more of our directors or officers could have a detrimental effect on us.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete an initial business combination, which may adversely affect our leverage and financial
condition and thus negatively impact the value of our stockholders’ investment in us.
We may choose to incur substantial
debt to complete our initial business combination. We have agreed that we will not incur any indebtedness unless we have obtained from
the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance
of debt will affect the per-share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could
have a variety of negative effects, including:
| ● | default and
foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations; |
| ● | acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments
when due if we breach certain covenants that require the maintenance of certain financial
ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our immediate
payment of all principal and accrued interest, if any, if the debt is payable on demand; |
| ● | our inability
to obtain necessary additional financing if the debt contains covenants restricting our ability
to obtain such financing while the debt is outstanding; |
| ● | our inability
to pay dividends on our common stock; |
| ● | using a substantial
portion of our cash flow to pay principal and interest on our debt, which will reduce the
funds available for dividends on our common stock if declared, our ability to pay expenses,
make capital expenditures and acquisitions, and fund other general corporate purposes; |
| ● | limitations
on our flexibility in planning for and reacting to changes in our business and in the industry
in which we operate; |
| ● | increased vulnerability
to adverse changes in general economic, industry and competitive conditions and adverse changes
in government regulation; |
| ● | limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, and execution of our strategy; and |
| ● | other disadvantages
compared to our competitors who have less debt. |
We may only be able to complete one business
combination with the proceeds of our initial public offering and the private placements of the private placement units received by us,
which will cause us to be solely dependent on a single business which may have a limited number of services and limited operating activities.
This lack of diversification may negatively impact our operating results and profitability.
We may effectuate our initial
business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However,
we may not be able to effectuate our initial business combination with more than one target business because of various factors, including
the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that
present operating results and the financial condition of several target businesses as if they had been operated on a combined basis.
By completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic,
competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading
of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different
industries or different areas of a single industry.
Accordingly, the prospects
for our success may be:
| ● | solely dependent
upon the performance of a single business, property or asset, or |
| ● | dependent upon
the development or market acceptance of a single or limited number of products, processes
or services. |
This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and
give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and
delay our ability, to complete our initial business combination. We do not, however, intend to purchase multiple businesses in unrelated
industries in conjunction with our initial business combination. With multiple business combinations, we could also face additional risks,
including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are
multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or products of
the acquired companies in a single operating business. If we do not adequately address these risks, it could negatively impact our profitability
and results of operations.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in an initial business combination
with a company that is not as profitable as we suspected, if at all.
In pursuing our initial business
combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information
generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business
combination on the basis of limited information, which may result in an initial business combination with a company that is not as profitable
as we suspected, if at all, or that fails to meet the projections upon which our valuation may be based.
We may seek business combination opportunities
with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our
desired results.
We may seek business combination
opportunities with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement
such improvements, to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination
may not be as successful as we anticipate.
To the extent we complete
our initial business combination with a large complex business or entity with a complex operating structure, we may also be affected
by numerous risks inherent in the operations of the business with which we combine, which could delay or prevent us from implementing
our strategy. Although our management team will endeavor to evaluate the risks inherent in a particular target business and its operations,
we may not be able to properly ascertain or assess all of the significant risk factors until we complete our business combination. If
we are not able to achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may
not achieve the gains that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us
with no ability to control or reduce the chances that those risks and complexities will adversely impact a target business. Such combination
may not be as successful as a combination with a smaller, less complex organization.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete an initial business combination with which
a substantial majority of our stockholders do not agree.
Our amended and restated
certificate of incorporation does not provide a specified maximum redemption threshold, except that 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 upon consummation of our initial business combination
and after payment of deferred underwriting commissions (such that we are not subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
As a result, we may be able to complete our initial business combination even though a substantial majority of our public stockholders
do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination
and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into
privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event
the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate
amount of cash available to us, we will not complete the initial business combination or redeem any shares, all shares of Class A common
stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business
combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments,
including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation
or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders
may not support.
In order to effectuate an
initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified
governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business
combination, increased redemption thresholds 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 provisions
in our amended and restated certificate of incorporation that relate to our pre-initial business combination activity requires the
approval of holders of 65% of our common stock, and amending our warrant agreement requires a vote of holders of at least 50% of the
then outstanding public warrants; provided that, solely with respect to any amendment to the terms of the private warrants or any provision
of the warrant agreement with respect to the private warrants that does not adversely affect any of the terms of the public warrants,
such amendment requires only the written consent or vote of the registered holders of at least 50% of the then outstanding private warrants.
In addition, our amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity
to redeem their public shares for cash if we propose an amendment to our amended and restated certificate of incorporation (A) to modify
the substance or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of
our public shares if we do not complete our initial business combination by August 17, 2023 or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity. To the extent any such amendments would be
deemed to fundamentally change the nature of any securities offered through the registration statement for our 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.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-initial business combination activity (and corresponding provisions of the agreement
governing the release of funds from the trust account), including an amendment to permit us to withdraw funds from the trust account
such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated, may
be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some other blank
check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement
to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated
certificate of incorporation provides that any of its provisions related to pre-initial business combination activity (including
the requirement to deposit proceeds of our initial public offering and the private placements of private placement units into the trust
account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein and including to permit us to withdraw funds from the trust account such that the per share amount investors will receive upon
any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our common stock
entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from the trust account may
be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our amended and restated
certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject
to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional securities that can vote on amendments
to our amended and restated certificate of incorporation. Our initial stockholders, who collectively beneficially own, on an as converted
basis, approximately 20.0% of our common stock (not including the shares of Class A common stock included in the private placement units),
will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the
discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate
of incorporation which govern our pre-initial business combination behavior more easily than some other blank check companies, and
this may increase our ability to complete an initial business combination with which you do not agree. Our stockholders may pursue remedies
against us for any breach of our amended and restated certificate of incorporation.
Our sponsor, officers and
directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated
certificate of incorporation (i) to modify the substance or timing of our obligation to allow redemption in connection with our
initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by August
17, 2023 or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval
of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account,
including interest earned on the funds held in the trust account and not previously released to us to pay taxes, divided by the number
of then outstanding public shares. These agreements are contained in a letter agreement that we have entered into with our sponsor, officers
and directors. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not
have the ability to pursue remedies against our sponsor, officers or directors for any breach of these agreements. As a result, in the
event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
Certain agreements related to our initial
public offering may be amended without stockholder approval.
Certain agreements, including
the letter agreement among us and our sponsor, officers, directors and initial stockholders, and the registration rights agreement entered
into in connection with our initial public offering, may be amended without stockholder approval. These agreements contain various provisions,
including transfer restrictions on our founder shares, that our public stockholders might deem to be material. 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 in connection with the consummation of our initial business combination. 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.
We may be unable to obtain additional financing
to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination.
We intend to target businesses
larger than we could acquire with the net proceeds of our initial public offering and the private placements of the private placement
units. As a result, we may be required to seek additional financing to complete such proposed initial business combination. We cannot
assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be
unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or
abandon that particular business combination and seek an alternative target business candidate. Further, the amount of additional financing
we may be required to obtain could increase as a result of future growth capital needs for any particular transaction, the depletion
of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from
stockholders who elect redemption in connection with our initial business combination and/or the terms of negotiated transactions to
purchase shares in connection with our initial business combination. If we do not complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share plus any pro rata interest earned on the funds held in the trust account
and not previously released to us to pay our taxes on the liquidation of the trust account and our warrants will expire worthless. In
addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to
fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect
on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide
any financing to us in connection with or after our initial business combination. If we do not complete our initial business combination,
our public stockholders may only receive approximately $10.00 per share on the liquidation of the trust account, and our warrants will
expire worthless. Furthermore, as described in the risk factor entitled “If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00
per share,” under certain circumstances our public stockholders may receive less than $10.00 per share upon the liquidation of
the trust account.
Our initial stockholders may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders
collectively beneficially own, on an as converted basis, approximately 20.0% of our issued and outstanding shares of common stock (not
including the shares of Class A common stock included in the private placement units). Accordingly, they may exert a substantial influence
on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated
certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase any additional shares
of common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Factors that would be
considered in making such additional purchases would include consideration of the current trading price of our Class A common stock.
In addition, our board of directors, whose members were elected by certain of our initial stockholders, is and will be divided into three
classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. We
may not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial business combination, in
which case all of the current directors will continue in office until at least the completion of the initial business combination. If
there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of our board of directors
will be considered for election and our initial stockholders, because of their ownership position, will have considerable influence regarding
the outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our initial business
combination.
Unlike many other similarly structured
blank check companies, our initial stockholders will receive additional shares of Class A common stock if we issue shares to consummate
an initial business combination.
The founder shares will automatically
convert into Class A common stock at the time of our initial business combination, or earlier at the option of the holders, on a
one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities
convertible or exercisable for Class A common stock, are issued or deemed issued in excess of the amounts offered in our initial
public offering and related to the closing of the initial business combination, the ratio at which founder shares shall convert into
Class A common stock will be adjusted so that the number 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 all outstanding shares of common stock upon completion
of the initial business combination, excluding the shares of Class A common stock underlying the private placement units and any shares
or equity-linked securities issued, or to be issued, to any seller in the business combination and any private placement-equivalent units
issued upon conversion of loans made to us. This is different from most other similarly structured blank check companies in which the
initial stockholder will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to the initial business
combination. Additionally, the aforementioned adjustment will not take into account any shares of Class A common stock redeemed
in connection with the business combination. Accordingly, the holders of the founder shares could receive additional shares of Class A
common stock even if the additional shares of Class A common stock, or equity-linked securities convertible or exercisable
for Class A common stock, are issued or deemed issued solely to replace those shares that were redeemed in connection with the business
combination. The foregoing may make it more difficult and expensive for us to consummate an initial business combination.
Our public warrants, founder shares and
private placement units (including the securities contained therein) may have an adverse effect on the market price of our Class A common
stock and make it more difficult to effectuate our initial business combination.
We issued an aggregate of
(i) 7,880,925 public warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share, subject to adjustment,
as part of the units sold in our initial public offering, and (ii) 297,618 private warrants, each exercisable to purchase one share of
Class A common stock at $11.50 per share, subject to adjustment, and 595,237 private shares as part of the private placement units sold
in the private placements. Our initial stockholders currently own an aggregate of 3,940,462 founder shares. The founder shares are convertible
into shares of Class A common stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor,
an affiliate of our sponsor, or certain of our officers and directors make any working capital loans to us, up to $1,500,000 of such
loans may be converted into units, at the price of $10.00 per unit at the option of the lender. Such units would be identical to the
private placement units. To the extent we issue shares of Class A common stock to effectuate an initial business combination, the potential
for the issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants and conversion
rights could make us a less attractive business combination vehicle to a target business. Any such issuance will increase the number
of issued and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete
the initial business combination. Therefore, our warrants and founder shares may make it more difficult to effectuate an initial business
combination or increase the cost of acquiring the target business.
A provision of our warrant agreement may
make it more difficult for us to complete an initial business combination.
Unlike most blank check companies,
if (i) 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 sponsor or its affiliates, without taking into account any founder shares held by our initial stockholders or their
affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (ii) the aggregate gross proceeds from such
issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business
combination on the date of the completion of our initial business combination (net of redemptions), and (iii) the volume-weighted average
trading price of our Class A common stock during the 20 trading day period starting on the trading day prior to the day on which we complete
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 be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00
per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value
and the Newly Issued Price, respectively. This may make it more difficult for us to consummate an initial business combination with a
target business.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy rules require
that a proxy statement with respect to a vote on an initial business combination meeting certain financial significance tests include
historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure
in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements
may be required to be prepared in accordance with, or be reconciled to, 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 acquire because some targets may be unable to provide such financial statements
in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within
the prescribed time frame.
If we effect our initial business combination
with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that
may negatively impact our operations.
If we effect our initial
business combination with a company with operations or opportunities outside of the United States, we would be subject to any special
considerations or risks associated with companies operating in an international setting, including any of the following:
| ● | higher costs
and difficulties inherent in managing cross-border business operations and complying
with different commercial and legal requirements of overseas markets; |
| ● | rules and regulations
regarding currency redemption; |
| ● | complex corporate
withholding taxes on individuals; |
| ● | laws governing
the manner in which future business combinations may be effected; |
| ● | tariffs and
trade barriers; |
| ● | regulations
related to customs and import/export matters; |
| ● | longer payment
cycles and challenges in collecting accounts receivable; |
| ● | tax issues,
including but not limited to tax law changes and variations in tax laws as compared to the
United States; |
| ● | currency fluctuations and exchange controls; |
| ● | cultural and language differences; |
| ● | changes in industry, regulatory or environmental standards within the jurisdictions where we operate; |
| ● | public health or safety concerns and governmental restrictions, including those caused by outbreaks of
pandemic disease such as the COVID-19 pandemic; |
| ● | crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars, such as the
recent invasion of Ukraine by Russia; |
| ● | deterioration of political relations with the United States; and |
| ● | government appropriations of assets. |
We may not be able to adequately
address these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact our results of operations
and financial condition.
We may face risks related to businesses
in the Consumer industry.
Business combinations with
businesses in the Consumer industry 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:
| ● | an inability to compete effectively in a highly competitive environment with many incumbents having substantially
greater resources; |
| ● | an inability to manage rapid change, increasing customer or subscriber expectations and growth; |
| ● | an inability to build strong brand identity and improve customer or subscriber satisfaction and loyalty; |
| ● | limitations on a target business’ ability to protect its intellectual property rights, including
its trade secrets, that could cause a loss in revenue and any competitive advantage; |
| ● | a reliance on proprietary technology to provide services and to manage our operations, and the failure
of this technology to operate effectively, or our failure to use such technology effectively; |
| ● | the high cost or unavailability of materials, equipment, supplies and personnel that could adversely affect
our ability to execute our operations on a timely basis; |
| ● | an inability to attract and retain customers or subscribers; |
| ● | an inability to license or enforce intellectual property rights on which our business may depend; |
| ● | any significant disruption in our computer systems or those of third-parties that we would utilize
in our operations; |
| ● | seasonality and weather conditions that may cause our operating results to vary from quarter to quarter; |
| ● | an inability by us to successfully anticipate changing consumer preferences and buying trends and manage
our product line and inventory commensurate with customer demand; |
| ● | an inability by us, or a refusal by third parties, to license content to us upon acceptable terms; |
| ● | potential liability for negligence, copyright, or trademark infringement or other claims based on the
nature and content of materials that we may distribute or services we perform; |
| ● | dependence of our operations upon third-party suppliers or service providers whose failure to perform
adequately could disrupt our business; |
| ● | our operating results may be adversely affected by changes in the cost or availability of raw materials
and energy; |
| ● | we may be subject to production-related risks which could jeopardize our ability to realize anticipated
sales and profits; |
| ● | changes in the retail industry and markets for consumer products affecting our customers or retailing
practices could negatively impact customer relationships and our results of operations; |
| ● | our business could involve the potential for product recalls, product liability and other claims against
us, which could affect our earnings and financial condition; |
| ● | competition for advertising revenue; |
| ● | 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; |
| ● | disruption or failure of our networks, systems or technology as a result of computer viruses, “cyber
attacks,” misappropriation of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases
of information or similar events; |
| ● | an inability to obtain necessary hardware, software and operational support; and |
| ● | our inability to comply with governmental regulations or obtain governmental approval of our products. |
Any of the foregoing could
have an adverse impact on our operations following a business combination. However, our efforts in identifying prospective target businesses
are not limited to the Consumer industry. Accordingly, if we acquire a target business in another industry, these risks 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.
Subsequent to the completion of our initial
business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have
a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some
or all of your investment.
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that
may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these
factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other
charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may
arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges
may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute
to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other
covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining
debt financing to partially finance the initial business combination. Accordingly, any stockholders who choose to remain stockholders
following the initial business combination could suffer a reduction in the value of their securities.
Our management may not be able to maintain
control of a target business after our initial business combination.
We may structure an initial
business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of
the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction
that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target, our
stockholders prior to the initial business combination may collectively own a minority interest in the post business combination company,
depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction
in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a
target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of
new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares
of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting
in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make
it more likely that our management will not be able to maintain our control of the target business. We cannot provide assurance that,
upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the
value of our stockholders’ investment in us.
When evaluating the desirability
of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore,
may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s
management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability
of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following
the initial business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy
for such reduction in value.
Our ability to successfully effect our initial
business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may
join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target
business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management
or advisory positions following our initial business combination, it is likely that some or all of the management of the target business
will remain in place. While we intend to closely scrutinize any individuals we employ after our initial business combination, we cannot
assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with
such requirements. In addition, the officers and directors of an initial business combination candidate may resign upon completion of
our initial business combination. The departure of an initial business combination target’s key personnel could negatively impact
the operations and profitability of our post-combination business. The role of an initial business combination candidate’s
key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that
certain members of an initial business combination candidate’s management team will remain associated with the initial business
combination candidate following our initial business combination, it is possible that members of the management of an initial business
combination candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Risks Relating to Conflicts of Interest of
our Officers, Directors and Others
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for
them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Our key personnel may be able
to remain with the company after the completion of our initial business combination only if they are able to negotiate employment or consulting
agreements in connection with the initial business combination. Such negotiations would take place simultaneously with the negotiation
of the initial business combination and could provide for such individuals to receive compensation in the form of cash payments and/or
our securities for services they would render to us after the completion of the initial business combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability
of such individuals to remain with us after the completion of our initial business combination will not be the determining factor in our
decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our
key personnel will remain with us after the completion of our initial business combination. We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with
us will be made at the time of our initial business combination.
Our officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their
time between our operations and our search for an initial business combination and their other businesses. We do not intend to have any
full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in other business
endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number
of hours per week to our affairs. Our independent directors may also serve as officers or board members for other entities. If our officers’
and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current
commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete
our initial business combination.
Certain of our officers and directors are
now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be
conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular
business opportunity should be presented.
Following the completion of
our initial public offering and until we consummate our initial business combination, we have engaged and will continue to engage in the
business of identifying and combining with one or more businesses. Our sponsor and officers and directors are, and may in the future become,
affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business.
Our officers and directors
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe
certain fiduciary or contractual duties.
Accordingly, they may have
conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be
resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended
and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director
or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company
and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue,
and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our officers, directors, security holders
and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy
that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial
interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact,
we may enter into an initial business combination with a target business that is affiliated with our sponsor, our directors or officers,
although we do not intend to do so. We do not have a policy that expressly prohibits any such persons from engaging for their own account
in business activities of the types conducted by us, including the formation or participation in one or more other blank check companies.
Accordingly, such persons or entities may have a conflict between their interests and ours.
We may engage in an initial business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers, directors
or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our sponsor, officers, directors and initial stockholders with other entities, we may decide to acquire one or more businesses affiliated
with our sponsor, officers, directors or initial stockholders. Our directors also serve as officers and board members for other entities.
Our sponsor and our directors and officers may sponsor, form or participate in other blank check companies similar to ours during the
period in which we are seeking an initial business combination. Such entities may compete with us for business combination opportunities.
Although we are not specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction
if we determined that such affiliated entity met our criteria for an initial business combination and such transaction was approved by
a majority of our disinterested directors. Despite our agreement to obtain an opinion from an independent investment banking firm that
is a member of FINRA or from an independent accounting firm, regarding the fairness to our company from a financial point of view of an
initial business combination with one or more domestic or international businesses affiliated with our officers, directors or existing
holders, potential conflicts of interest still may exist and, as a result, the terms of the initial business combination may not be as
advantageous to our public stockholders as they would be absent any conflicts of interest.
We may engage one or more of the underwriters
of our initial public offering or one of their respective affiliates to provide additional services to us, which may include acting as
financial advisor in connection with an initial business combination or as placement agent in connection with a related financing transaction.
Such underwriters are entitled to receive deferred commissions that will be released from the trust account only on a completion of an
initial business combination. These financial incentives may cause them to have potential conflicts of interest in rendering any such
additional services to us, including, for example, in connection with the sourcing and consummation of an initial business combination.
We may engage one or more of
the underwriters of our initial public offering or one of their respective affiliates to provide additional services to us, including,
for example, identifying potential targets, providing financial advisory services, acting as a placement agent in a private offering or
arranging debt financing. We may pay such underwriter or its affiliate fair and reasonable fees or other compensation that would be determined
at that time in an arm’s length negotiation. Such underwriters are also entitled to receive deferred commissions that are conditioned
on the completion of an initial business combination. Such underwriters’ or their respective affiliates’ financial interests
tied to the consummation of a business combination transaction may give rise to potential conflicts of interest in providing any such
additional services to us, including potential conflicts of interest in connection with the sourcing and consummation of an initial business
combination.
Since our sponsor, officers and directors
will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
On July 7, 2020, we issued
an aggregate of 5,750,000 founder shares to our sponsor and our independent directors for an aggregate price of $25,000, or approximately
$0.004 per share. On July 23, 2021, our sponsor forfeited 1,437,500 founder shares, resulting in an aggregate of 4,312,500 founder shares
outstanding. Our sponsor subsequently transferred to certain of the underwriters of our initial public offering and certain of their employees
an aggregate of 240,001 founder shares at the original purchase price. On August 25, 2021, in connection with the underwriters’
election to partially exercise their over-allotment option and the forfeiture of the remaining portion of such over-allotment option,
an aggregate of 372,038 founder shares were forfeited to us at no cost, and 3,940,462 founder shares remain outstanding. The number of
founder shares issued was determined based on the expectation that such founder shares would represent approximately 20% of the outstanding
shares after our initial public offering (not including the shares of Class A common stock underlying the private placement units). The
founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor and certain of the underwriters
of our initial public offering and certain of the underwriters’ employees purchased an aggregate of 595,237 private placement units
for a purchase price of $5,952,370, or $10.00 per unit, that will also be worthless if we
do not complete an initial business combination. Holders of founder shares have agreed (A) to vote any shares owned by them in favor of
any proposed initial business combination and (B) not to redeem any founder shares in connection with a stockholder vote to approve a
proposed initial business combination. In addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer or director,
and we may reimburse our sponsor, officers, directors and any of their respective affiliates fees and expenses in connection with identifying,
investigating and completing an initial business combination. The personal and financial interests of our officers and directors may influence
their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing
the operation of the business following the initial business combination.
Since our anchor investors will acquire
founder shares from our sponsor upon consummation of the initial business combination, a conflict of interest may arise in determining
whether a particular target business is appropriate for our initial business combination.
Our anchor investors have an
indirect interest in founder shares controlled by our sponsor, which are expected to be distributed to our anchor investors after the
completion of an initial business combination. Provided that we successfully complete a business combination, these anchor investors will
share in any appreciation of the founder shares and, accordingly, our anchor investors’ interests in the founder shares may provide
them with an incentive to vote any public shares they own in favor of a business combination, and make a substantial profit on such interests,
even if the business combination is with a target that ultimately declines in value and is not profitable for other public stockholders.
Our initial stockholders initially paid
an aggregate of $25,000 for the founder shares, or approximately $0.004 per share. As a result of this low initial price, our initial
stockholders could make a substantial profit even if an initial business combination subsequently declines in value or is unprofitable
for our public stockholders.
As a result of the low acquisition
cost of our founder shares, our initial stockholders could make a substantial profit even if we select and consummate an initial business
combination with an acquisition target that subsequently declines in value or is unprofitable for our public stockholders. Thus, such
parties may have more of an economic incentive for us to enter into an initial business combination with a riskier, weaker-performing or
financially unstable business, or an entity lacking an established record of revenues or earnings, than would be the case if our initial
stockholders had initially paid the full offering price for the founder shares.
The nominal purchase price paid by our initial
stockholders for the founder shares may significantly dilute the implied value of the public shares in the event we consummate an initial
business combination, and our initial stockholders are likely to make a substantial profit on their investment in us in the event we consummate
an initial business combination, even if the business combination causes the trading price of our Class A common stock to materially decline.
Our initial stockholders invested
an aggregate of $5,977,370 in our company in connection with our initial public offering, comprised of the $25,000 purchase price for
the founder shares and the $5,952,370 purchase price for the private placement units. The amount held in the trust account was $157,618,500
as of December 31, 2021, implying a value of approximately $10.00 per public share. The value of the public shares may be significantly
diluted as a result of the automatic conversion of the founder shares into shares of Class A common stock upon our completion of an initial
business combination.
The following table shows the
public stockholders’ and our initial stockholders’ investment per share and how these compare to the implied value of one
share of Class A common stock upon the completion of our initial business combination. The following table (i) assumes that (a) our valuation
is $157,618,500 (which is the amount held in the trust account as of December 31, 2021), (b) no additional interest is earned on the funds
held in the trust account, (c) no public shares are redeemed in connection with our initial business combination and (d) all founder shares
are held by our initial stockholders upon completion of our initial business combination, and (ii) does not take into account other potential
impacts on our valuation at the time of our initial business combination such as (a) the value of the public warrants and private warrants,
(b) the trading price of our shares of Class A common stock, (c) business combination transaction costs (including payment of $5,516,648
of deferred underwriting commissions), (d) any equity issued or cash paid to the target’s sellers, (e) any equity issued to other
third party investors or (f) the target’s business itself, including its assets, liabilities, management and prospects.
Public shares | |
| 15,761,850 shares | |
Founder shares | |
| 3,940,462 shares | |
Private shares | |
| 595,237 shares | |
Total shares | |
| 20,297,549 shares | |
Total funds in trust(1) | |
$ | 157,618,500 | |
Public stockholders’ investment per public share(2) | |
$ | 10.00 | |
Initial stockholders’ investment per founder share(3)(4) | |
$ | 0.006 | |
Implied value per share of Class A common stock upon completion of the initial business combination | |
$ | 7.77 | |
(1) |
Amount held in the trust account as of December 31, 2021.
|
(2) |
While the public stockholders’ investment is in both the public shares and the public warrants, for purposes of this table the full investment amount is ascribed to the public shares only.
|
(3) |
Investment per founder share reflects the forfeiture by our initial stockholders of 1,809,538 founder shares in the aggregate prior to our initial public offering and in connection with the partial forfeiture of the underwriters’ over-allotment option.
|
(4) |
Our initial stockholders’ total investment in the equity of our company, inclusive of the founder shares and the $5,952,370 investment in the private placement units, is $5,977,370. |
Note that redemptions of public
shares in connection with our initial business combination would further reduce the implied value of our Class A common stock. For instance,
in the example above, if 50% of the public shares were redeemed in connection with our initial business combination, the implied value
per share would be approximately $6.35.
While the implied value of
our public shares may be diluted, the implied value of $7.77 per share in the example above would represent a significant implied profit
for our initial stockholders relative to the initial purchase price of the founder shares. At $7.77 per share, the 3,940,462 founder shares
would have an aggregate implied value of approximately $30,617,390. As a result, even if the trading price of our Class A common stock
significantly declines (whether because of a substantial amount of redemptions of our public shares or for any other reason), our initial
stockholders will stand to make significant profit on their investment in us. In addition, our initial stockholders could potentially
recoup their entire investment in us even if the trading price of our Class A common stock were as low as $1.52 per share and even if
the private warrants are worthless. As a result, our initial stockholders are likely to make a substantial profit on their investment
in us even if we select and consummate an initial business combination that causes the trading price of our Class A common stock to decline,
while our public stockholders who purchased their units in our initial public offering could lose significant value in their public shares.
Our initial stockholders may therefore be economically incentivized to consummate an initial business combination with a riskier, weaker-performing
or less-established target business than would be the case if our initial stockholders had paid the same per share price for the founder
shares as our public stockholders paid for their public shares.
This dilution would increase
to the extent that the anti-dilution provisions of the founder shares result in the issuance of shares of Class A common stock on a greater
than one-to-one basis upon conversion of the founder shares at the time of our initial business combination and would become exacerbated
to the extent that public stockholders seek redemptions from the trust account. In addition, because of the anti-dilution protection in
the founder shares, any equity or equity-linked securities issued in connection with our initial business combination would be disproportionately
dilutive to our Class A common stock.
Risks Relating to Our Securities
Concentration of ownership among our sponsor
and the anchor investors may prevent other investors from influencing significant corporate decisions or adversely affect the trading
price of our securities.
Our anchor investors purchased
an aggregate of 13,365,000 units in our initial public offering, or approximately 84.8% of the aggregate 15,761,850 units sold. As a result,
immediately following the consummation of our initial public offering, our sponsor and the anchor investors collectively beneficially
owned approximately 86.1% of our outstanding shares of common stock. There can be no assurance as to the amount of units the anchor investors
will retain, if any, prior to or upon the consummation of our initial business combination. So long as the anchor investors hold a substantial
portion of the public shares included in the units purchased, our sponsor and the anchor investors would collectively have substantial
control over us and be able to exercise significant influence over all matters requiring stockholder approval (although we have no knowledge
of any affiliation or other agreement or arrangement, as to voting of our securities or otherwise, among any such persons). For example,
in the event that the anchor investors continue to hold such public shares included in the units and vote such shares in favor of our
initial business combination (although they are not contractually obligated to, their interest in certain of our founder shares may provide
an incentive for them to do so), we would not need any additional public shares sold in our initial public offering to be voted in favor
of our initial business combination to have our initial business combination approved. This potential concentration of influence could
be disadvantageous to other stockholders with interests different from those of our sponsor, underwriters and the anchor investors. In
addition, this potential significant concentration of share ownership may adversely affect the trading price of securities because investors
often perceive disadvantages in owning shares in companies with principal stockholders and might make it more difficult to complete a
business combination with targets that would prefer to enter into a transaction with a SPAC with less concentrated ownership.
If the anchor investors continue to hold
a substantial portion of the units sold in our initial public offering, the available public float for our securities may be limited,
which could affect the trading volume, liquidity and volatility of our securities, and could result in our inability to satisfy Nasdaq
continued listing requirements.
Our anchor investors purchased
an aggregate of 13,365,000 units in our initial public offering, or approximately 84.8% of the aggregate 15,761,850 units sold. There
can be no assurance as to the amount of units the anchor investors will retain, if any, prior to or upon the consummation of our initial
business combination. So long as the anchor investors continue to hold a substantial portion of the units sold in our initial public offering,
the available public float for our securities may be limited. Any such limitation in our available public float may consequently reduce
the trading volume and liquidity, and increase the volatility, of our securities relative to what they would have been had such units
been purchased by other public investors. Further, the anchor investors are not required to hold any units, public shares or warrants,
whether purchased in our initial public offering or thereafter, for any amount of time. Accordingly, the anchor investors may sell any,
or up to all, of the units, public shares or public warrants they purchased in our initial public offering or thereafter at any time.
The sale of material amounts of our units, public shares or warrants, or the perception that such sales may occur, could reduce the market
prices of those securities and may encourage short sales. In addition, in order to continue to satisfy Nasdaq’s continued listing
requirements, among other requirements, we must have a minimum of 300 round lot holders of our securities. To the extent our public float
is limited due to the anchor investors’ holdings, we may be more likely than other companies to fall below the required public holder
threshold in the future, which could ultimately result in Nasdaq delisting our securities from trading on its exchange.
The ability of our public stockholders to
exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our initial business combination
agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business
combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. This
risk may be increasingly prevalent given recent high levels of redemptions among other SPACs completing their initial business combinations.
If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may
trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your
investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock
in the open market.
We may not be able to complete our initial
business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up
and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.00 per share, or less
than such amount in certain circumstances, and our warrants will expire worthless.
Our amended and restated certificate
of incorporation provides that we must complete our initial business combination by August 17, 2023. We may not be able to find a suitable
target business and complete our initial business combination within such time period. Our ability to complete our initial business combination
may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein.
For example, the COVID-19 pandemic persists both in the U.S. and globally and, while the extent of the impact of the COVID-19 pandemic
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. The recent invasion of Ukraine by Russia and resulting sanctions may also have similar effects, and the impact of such effects
on us will depend on future developments that cannot be predicted with any degree of certainty. Additionally, the COVID-19 pandemic, the
invasion of Ukraine by Russia and resulting sanctions, and other events (such as terrorist attacks, geopolitical unrest, natural disasters
or a significant outbreak of other infectious diseases) may negatively impact businesses we may seek to acquire.
If we have not completed our
initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account
and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject
in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In
such case, our public stockholders may only receive $10.00 per share, and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share on the redemption of their shares. See “— If third parties
bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by
stockholders may be less than $10.00 per share” and other risk factors herein.
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. 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 earliest to occur of: (i) our completion of an initial business combination,
and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the
limitations described herein, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend
our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection
with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by
August 17, 2023 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity and (iii) the redemption of our public shares if we do not complete an initial business combination by August 17, 2023, subject
to applicable law and as further described herein. In no other circumstances will a public stockholder have any right or interest of any
kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants.
Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
A market for our securities may not fully
develop or be sustained, which would adversely affect the liquidity and price of our securities.
The price of our securities
may vary significantly due to one or more potential business combinations and general market or economic conditions, including as a result
of the COVID-19 pandemic, the invasion of Ukraine by Russia and resulting sanctions, and other events (such as terrorist attacks, geopolitical
unrest, natural disasters or a significant outbreak of other infectious diseases). An active trading market for our securities may not
fully develop or be sustained. Additionally, if our securities become delisted from Nasdaq for any reason, and are quoted on the OTC Pink
Sheets, an inter-dealer automated quotation system for equity securities not listed on a national exchange, the liquidity and price of
our securities may be more limited than if we were listed on Nasdaq or another national exchange. You may be unable to sell your securities
unless a market can be fully developed and sustained.
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 securities are currently
listed on Nasdaq, a national securities exchange. 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 stock price levels. Generally, we must maintain a minimum amount in
stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally,
in connection with our initial business combination, we will be required to demonstrate compliance with Nasdaq’s initial listing
requirements, which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the listing
of our securities on Nasdaq. For instance, our stock price would generally be required to be at least $4.00 per share, our stockholders’
equity would generally be required to be at least $5.0 million and we would be required to have a minimum of 300 round lot holders
of our Class A common stock. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists our securities
from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities
could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a determination that our Class A common stock is a “penny stock” which will require brokers
trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the
secondary trading market for our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets
Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as “covered securities.” Because our units, Class A common stock and warrants are listed on Nasdaq, our units, Class
A common stock and warrants are covered securities. Although the states are preempted from regulating the sale of covered securities,
the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having
used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain
state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder
the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would
not be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection
with our initial business combination.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders
are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15%
of our Class A common stock.
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the
shares sold in our initial public offering without our prior consent, which we refer to as the “Excess Shares.” However, we
would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial
business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business
combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally,
you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as
a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to
sell your stock in open market transactions, potentially at a loss.
If third parties bring claims against us,
the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share.
Our placing of funds in the
trust account may not protect those funds from third-party claims against us. Although we have sought and will continue to seek to
have all vendors, service providers (other than 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 perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed
a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Making such a request of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective
target businesses refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue.
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 share initially held in the trust account, due to claims of such creditors. Our sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm)
for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent,
confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser
of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation
of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that
such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights
to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity
of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. However,
we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor
has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company.
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 public share and (ii) the actual amount per share held in the trust
account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance
if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable
or if the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce these
indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced
below $10.00 per share.
We may not have sufficient funds to satisfy
indemnification claims of our directors and officers.
We have agreed to indemnify
our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right,
title, interest or claim of any kind in or to any monies in the trust account and not to seek recourse against the trust account for any
reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside
of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may
discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action,
if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us
that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive
damages.
If, after we distribute the
proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek
to recover 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, thereby exposing itself and us to claims of punitive damages, by paying
public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us
that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share
amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the
proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included
in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any
bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection
with our liquidation may be reduced.
The securities in which we invest the funds
held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the
per-share redemption amount received by public stockholders may be less than $10.00 per share.
The proceeds held in the trust
account are invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations.
While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative
interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market
Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States.
In the event that we are unable to complete our initial business combination or make certain amendments to our amended and restated certificate
of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account,
plus any interest income, net of taxes payable (less, in the case we are unable to complete our initial business combination, up to $100,000
of interest to pay dissolution expenses). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption
amount received by public stockholders may be less than $10.00 per share.
If we have not completed an initial business
combination by August 17, 2023, our public stockholders may be forced to wait beyond August 17, 2023 before redemption from the trust
account.
If we have not completed an
initial business combination by August 17, 2023, the proceeds then on deposit in the trust account, including interest earned on the funds
held in the trust account and not previously released to us to pay our taxes, if any (less up to $100,000 of the interest to pay dissolution
expenses), will be used to fund the redemption of our public shares. Any redemption of public stockholders from the trust account will
be effected automatically by function of our amended and restated certificate of incorporation prior to any voluntary winding up. If we
are required to wind-up, liquidate the trust account and distribute such amount therein, pro rata, to our public stockholders, as part
of any liquidation process, such winding up, liquidation and distribution must comply with the applicable provisions of the DGCL. In that
case, investors may be forced to wait beyond August 17, 2023 before the redemption proceeds of the trust account become available to them,
and they receive the return of their pro rata portion of the proceeds from the trust account. We have no obligation to return funds to
investors prior to the date of our redemption or liquidation unless we complete our initial business combination or amend certain provisions
of our amended and restated certificate of incorporation prior thereto and only then in cases where investors have properly sought to
redeem their Class A common stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions if
we have not completed our initial business combination within the required time period and do not amend certain provisions of our amended
and restated certificate of incorporation prior thereto.
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 the trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination by August 17, 2023 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 August 17, 2023 in the event we do not complete our initial business combination and, therefore,
we do not intend to comply with the foregoing procedures.
Because we will not be complying
with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for
our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our
dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers,
etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution.
We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could
potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders
may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of the trust account distributed to our public
stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by August 17, 2023
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.
Holders of Class A common stock will not
be entitled to vote on any election of directors we hold prior to our initial business combination.
Prior to our initial business
combination, only holders of our founder shares will have the right to vote on the election of directors. Holders of our public shares
will not be entitled to vote on the election of directors during such time. Accordingly, you may not have any say in the management of
our company prior to the consummation of an initial business combination.
We have not registered the shares of Class
A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws, and such registration may
not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants
except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration
or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire
worthless.
We have not registered the
shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws. 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
for the registration under the Securities Act of the shares of Class A common stock issuable upon exercise of the warrants and thereafter
will use our commercially reasonable 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,
we will be required to permit holders to exercise their warrants on a cashless basis in which case the number of shares of our Class A
common stock that you will receive upon cashless exercise will be based on a formula subject to a maximum number of shares equal to 0.361 shares
of our Class A common stock per warrant (subject to adjustment). However, no warrant will be exercisable for cash or on a cashless basis,
and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon
such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration
is available. Notwithstanding the foregoing, if a registration statement covering the Class A common stock issuable upon exercise of the
warrants is not effective within a specified period following the consummation of our initial business combination, warrant holders may,
until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective
registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities
Act, provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to
exercise their warrants on a cashless basis. In no event will we be required to net cash settle any warrant, or issue securities or other
compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under
applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not
so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such
warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase
of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the units. If and when
the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise
of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such
registration or qualification. We will use our commercially reasonable efforts to register or qualify such shares of common stock under
the blue-sky laws of the state of residence in those states in which the warrants were offered by us in our initial public offering. However,
there may be instances in which holders of our public warrants may be unable to exercise such public warrants but holders of our private
warrants may be able to exercise such private warrants.
Our ability to require holders of our warrants
to exercise such warrants on a cashless basis after we call the warrants for redemption or if there is no effective registration statement
covering the shares of Class A common stock issuable upon exercise of these warrants will cause holders to receive fewer shares of Class
A common stock upon their exercise of the warrants than they would have received had they been able to pay the exercise price of their
warrants in cash.
If we call the warrants for
redemption, we will have the option, in our sole discretion, to require all holders that wish to exercise warrants to do so on a cashless
basis under certain circumstances. If we choose to require holders to exercise their warrants on a cashless basis or if holders elect
to do so when there is no effective registration statement, the number of shares of Class A common stock received by a holder upon exercise
will be fewer than it would have been had such holder exercised his or her warrant for cash. For example, if the holder is exercising
875 public warrants at $11.50 per share through a cashless exercise when the shares of Class A common stock have a fair market value of
$17.50 per share when there is no effective registration statement, then upon the cashless exercise, the holder will receive 300 shares
of Class A common stock. The holder would have received 875 shares of Class A common stock if the exercise price was paid in cash.
This will 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.
The warrants may become exercisable and
redeemable for a security other than the 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 15 business days of the closing of an initial business combination.
The grant of registration rights to our
initial stockholders may make it more difficult to complete our initial business combination, and the future exercise of such rights may
adversely affect the market price of our Class A common stock.
Pursuant to a registration
rights agreement entered into on August 12, 2021, our initial stockholders and their permitted transferees can demand that we register
the shares of Class A common stock issuable upon conversion of the founder shares, the private placement units, the private shares, the
private warrants, the shares of Class A common stock issuable upon exercise of the private warrants held, or to be held, by them and holders
of units that may be issued upon conversion of working capital loans may demand that we register such units, the private shares and private
warrants included in such units and the Class A common stock issuable upon exercise of the private warrants included in such units. We
will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading
in the public market may have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration
rights may make our initial business combination more costly or difficult to conclude. This is because the stockholders of the target
business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact
on the market price of our Class A common stock that is expected when the securities owned by our initial stockholders or holders of working
capital loans or their respective permitted transferees are registered.
We may issue additional shares of Class
A common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of
our initial business combination. We may also issue shares of Class A common stock upon the conversion of the Class B common stock at
a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained
in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely
present other risks.
Our amended and restated certificate of incorporation authorizes the
issuance of up to 100,000,000 shares of Class A common stock, par value $0.0001 per share, 10,000,000 shares of Class B common
stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. As of March 31, 2022, there
were 75,464,370 and 6,059,538 authorized but unissued shares of Class A common stock and Class B common stock, respectively, available
for issuance, which amount takes into account the shares of Class A common stock reserved for issuance upon exercise of outstanding warrants
but not the shares of Class A common stock issuable upon conversion of Class B common stock. As of March 31, 2022, there were no shares
of preferred stock issued and outstanding. Shares of Class B common stock are convertible into shares of our Class A common stock initially
at a one-for-one ratio but subject to adjustment as set forth herein, including in certain circumstances in which we issue Class
A common stock or equity-linked securities related to our initial business combination. Shares of Class B common stock are also convertible
at the option of the holder at any time.
We may issue a substantial
number of additional shares of 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 (although our amended and restated certificate of incorporation
provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial business combination
activity). We may also issue shares of Class A common stock to redeem the warrants as described in our final prospectus or upon conversion
of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the
anti-dilution provisions contained in our amended and restated certificate of incorporation. However, our amended and restated certificate
of incorporation provides, among other things, that prior to or in connection with our initial business combination, we may not issue
additional shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on
any initial business combination. These provisions of our amended and restated certificate of incorporation, like all provisions of our
amended and restated certificate of incorporation, may be amended with the approval of our stockholders. However, our officers and directors
have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination
or to redeem 100% of our public shares if we do not complete our initial business combination by August 17, 2023 or (B) with respect to
any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public
stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of
taxes payable), divided by the number of then outstanding public shares.
The issuance of additional
shares of Class A common stock or shares of preferred stock:
| ● | may significantly dilute the equity interest of our current security holders; |
| ● | may subordinate the rights of holders of common stock if preferred stock is issued with rights senior
to those afforded our common stock; |
| ● | could cause a change of control if a substantial number of shares of our common stock are issued, which
may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors; and |
| ● | may adversely affect prevailing market prices for our units, Class A common stock and/or warrants. |
We may amend the terms of the warrants in
a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding public
warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of
shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants were issued in
registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant
agreement provides that the terms of the warrants may be amended without the consent of any holder (i) to cure any ambiguity or correct
any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant
agreement set forth in our final prospectus, or to cure, correct or supplement any defective provision, (ii) to make any amendments that
are necessary in the good faith determination of our board of directors (taking into account then existing market precedents) to allow
for the warrants to be classified as equity in our financial statements or (iii) to add or change any other provisions with respect
to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and
that the parties deem to not adversely affect the interests of the registered holders of the warrants, 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; provided that, solely with respect to any amendment to the terms of the private warrants or any provision
of the warrant agreement with respect to the private warrants that does not adversely affect any of the terms of the public warrants,
such amendment will require only the written consent or vote of the registered holders of at least 50% of the then outstanding private
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, shorten the exercise period or decrease
the number of shares of our Class A common stock purchasable upon exercise of a warrant.
Our warrants are accounted for as derivative
liabilities and were recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have
an adverse effect on the market price of our Class A common stock or may make it more difficult for us to consummate an initial business
combination.
We issued an aggregate of (i)
7,880,925 public warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share, subject to adjustment,
as part of the units sold in our initial public offering, and (ii) 297,618 private warrants, each exercisable to purchase one share of
Class A common stock at $11.50 per share, subject to adjustment, as part of the private placement units sold in the private placements.
We accounted for both the public warrants and the private warrants as derivative liabilities. At each reporting period (1) the accounting
treatment of the warrants will be re-evaluated for proper accounting treatment as a liability or equity and (2) the fair value of
the liability of the public warrants and the private warrants will be remeasured and the change in the fair value of the liability will
be recognized in our statement of operations. If the classification changes as a result of events during the period, the warrants will
be reclassified as of the date of the event that causes the reclassification. The impact of changes in fair value on earnings may have
an adverse effect on the market price of our Class A common stock. In addition, potential targets may seek a SPAC that does not have warrants
that are accounted for as derivative liabilities, which may make it more difficult for us to consummate an initial business combination
with a target business.
Our warrant agreement designates the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders
to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides
that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement,
including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District
Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the
exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum.
Notwithstanding the foregoing,
these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act
or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person
or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented
to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions
of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the
Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed
to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with
any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of
process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign
action as agent for such warrant holder.
This choice-of-forum provision
may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company,
which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations
and result in a diversion of the time and resources of our management and board of directors.
We may redeem your unexpired warrants prior
to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem
outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided
that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the
third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are met. If
and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon
exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect
such registration or qualification. We will use our commercially reasonable efforts to register or qualify such shares of common stock
under the blue sky laws of the state of residence in those states in which the warrants were offered by us in our initial public offering.
Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when
it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise
wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for
redemption, is likely to be substantially less than the market value of your warrants.
In addition, we have the ability
to redeem outstanding public warrants once they become exercisable and prior to their expiration, at a price of $0.10 per warrant if,
among other things, the last reported sale price of our Class A common stock equals or exceeds $10.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which we send the notice
of redemption to the warrant holders. In such a case, the holders will be able to exercise their warrants for cash or on a cashless basis
prior to redemption and receive that number of shares of Class A common stock determined by reference to the table set forth in our final
prospectus based on the redemption date and the “fair market value” of our Class A common stock, except as otherwise described
in our final prospectus. The value received upon exercise of the warrants (i) 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 (ii) may not compensate the holders
for the value of the warrants, including because the number of shares of Class A common stock 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 warrants
will be redeemable by us so long as they are held by the initial purchasers or their permitted transferees, except under limited circumstances
described in our final prospectus.
Provisions in our amended and restated certificate
of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future
for our Class A common stock and could entrench management.
Our amended and restated certificate
of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their
best interests. These provisions include a staggered board of directors and the ability of our board of directors to designate the terms
of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions
under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more
difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Our amended and restated certificate of
incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors,
officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery
in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors, officers, other
employees or stockholders.
Our amended and restated certificate
of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors,
officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery
in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines
that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent
to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction,
or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District
of Delaware shall have concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital
stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation.
This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such
claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations
thereunder. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of
incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in
other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and restated certificate
of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section
27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange
Act or the rules and regulations thereunder. As a result, the exclusive forum provision does not apply to suits brought to enforce any
duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
General Risk Factors
We are a newly formed company with no operating
history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check company
with no operating results to date. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve
our business objective of completing our initial business combination with one or more target businesses. We may be unable to complete
our initial business combination. If we fail to complete our initial business combination, we will never generate any operating revenues.
We have identified a material weakness in
our internal control over financial reporting. If we are unable to develop and maintain an effective system of internal control over financial
reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence
in us and materially and adversely affect our business and operating results.
In connection with the preparation
of our financial statements as of September 30, 2021, management determined that at the closing of our initial public offering we had
improperly valued our Class A common stock subject to possible redemption. After consultation with our independent registered public accounting
firm, our management and our audit committee concluded that it was appropriate to restate our previously issued audited balance sheet
as of August 17, 2021. As part of such process, we identified a material weakness in our internal control over financial reporting.
A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the identified
material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately
have the intended effects.
If we identify any new material
weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our
accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may
be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable
stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result.
We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential
future material weaknesses.
We, and following our initial business combination,
the post-business combination company, may face litigation and other risks as a result of the material weakness in our internal control
over financial reporting.
As part of the restatement
of our previously issued audited balance sheet as of August 17, 2021, we identified a material weakness in our internal control over financial
reporting. As a result of such material weakness, the restatement, the change in accounting for shares of our Class A common stock subject
to possible redemption and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other
disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising
from the restatement and material weakness in our internal control over financial reporting and the preparation of our financial statements.
As of the date of this report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such
litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse
effect on our business, results of operations and financial condition or our ability to complete a business combination.
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 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 aggregate
worldwide market value of our common stock held by non-affiliates equals or 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 or 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.
Our security holders are not entitled to
protections normally afforded to investors of many other blank check companies.
Because we had net tangible
assets in excess of $5,000,000 upon the successful completion of our initial public offering and the private placements and filed a Current
Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect
investors in blank check companies, such as Rule 419. Accordingly, our security holders are not afforded the benefits or protections of
those rules. Among other things, this means our units were immediately tradable and we have a longer period of time to complete our initial
business combination than do companies subject to Rule 419. Moreover, offerings subject to Rule 419 would prohibit the release of any
interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection
with our completion of an initial business combination.
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. In addition, the recent invasion of Ukraine by Russia, and the impact of sanctions against Russia and the potential
for retaliatory acts from Russia, could result in increased cyber-attacks against U.S. companies. We may not have sufficient resources
to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents or attacks. 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 are deemed to be an investment company
under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment
company under the Investment Company Act, our activities may be restricted, including:
| ● | restrictions on the nature of our investments; and |
| ● | restrictions on the issuance of securities, each of which may make it difficult for us to complete our
initial business combination. |
In addition, we may have imposed
upon us burdensome requirements, including:
| ● | registration as an investment company; |
| ● | adoption of a specific form of corporate structure; and |
| ● | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
In order not to be regulated
as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged
primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government
securities and cash items) on an unconsolidated basis. Our business is to identify and complete an initial business combination and thereafter
to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale
or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our
anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may
only be invested in 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. An investment in our securities is not intended for persons who are seeking a return on investments in government
securities or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of: (i)
the completion of our initial business combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder
vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination by August 17, 2023 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity; or (iii) absent an initial business combination by August 17, 2023, 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 were deemed to be subject to the Investment Company Act,
compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder
our ability to complete an initial business combination or may result in our liquidation. If we do not complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share on the liquidation of the trust account 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.
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, 2022. 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, would we be required to comply with the independent registered public accounting firm attestation
requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements
of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which
we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such business combination.