Item 1. Business.
Our Company
We are a blank check
company formed as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one or more businesses. Throughout this Report we will refer to
this as our initial business combination. In November 2019, we closed our initial public offering for the sale of an aggregate
of 17,250,000 units at a price of $10.00 per unit, yielding gross proceeds of $172,500,000. Simultaneous with the closing of such
offering, SRAC consummated the sale of 545,000 private placement units at a price of $10.00 per unit ($5,450,000 in the aggregate)
in a private placement. Such proceeds have been deposited in our trust account.
Proposed Business Combination with Momentus
On October 7, 2020,
we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among SRAC, Project Marvel First
Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of SRAC (“First Merger Sub”), Project Marvel
Second Merger Sub, LLC, a Delaware limited liability company and wholly-owned subsidiary of SRAC (“Second Merger Sub”),
and Momentus Inc., a Delaware corporation (“Momentus”), pursuant to which, among other things: (a) First Merger
Sub will merge with and into Momentus (“First Merger”), with Momentus being the surviving corporation of the First
Merger and (b) immediately following the First Merger and as part of the same overall transaction as the First Merger, Momentus
will merge with and into Second Merger Sub (the “Second Merger” and, together with the First Merger, the “Mergers”),
with Second Merger Sub being the surviving company of the Second Merger. The Merger Agreement, the Mergers and the other transactions
contemplated by the Merger Agreement are referred to herein as the “Proposed Transaction.”
Pursuant to the Merger
Agreement, the aggregate merger consideration payable to the equityholders of Momentus will be paid in equity consideration equal
to $1,131,000,000, minus Momentus’ indebtedness for borrowed money as of the closing of the Mergers (the “Closing”),
plus the amount of Momentus’ cash and cash equivalents (excluding restricted cash as determined in accordance with GAAP,
any cash being held on behalf of Momentus’ customers and any security deposits for leases) as of the Closing, plus the aggregate
exercise price of all outstanding options and warrants (the “Merger Consideration”). The Merger Consideration payable
to the stockholders of Momentus will be paid in shares of newly issued Class A common stock of SRAC, with a deemed value of $10
per share. In addition, SRAC will pay off, or cause to be paid off, on behalf of Momentus and in connection with the Closing,
Momentus’ outstanding indebtedness for borrowed money.
In connection with
the Proposed Transaction, each share of Momentus’ capital stock (subject to limited exceptions) will be cancelled and automatically
deemed for all purposes to represent the right to receive a portion of the Merger Consideration in accordance with Momentus’
organizational documents. In addition, the Merger Consideration that is paid with respect to any shares of Momentus’ capital
stock that is subject to any vesting restrictions or other conditions shall continue to be subject to such vesting restrictions
and conditions after the Closing.
Each option of Momentus
that is outstanding and unexercised immediately prior to the Closing (whether vested or unvested) will be automatically assumed
by SRAC and converted into an option to acquire an adjusted number of shares of Class A common stock at an adjusted exercise price
per share and will continue to be governed by substantially the same terms and conditions (including vesting and exercisability
terms) as were applicable to the corresponding former option.
Each warrant to purchase
shares of capital stock of Momentus that is outstanding and unexercised immediately prior to the Closing will be automatically
converted into a warrant to acquire an adjusted number of shares of Class A common stock at an adjusted exercise price per share
and will continue to be governed by substantially the same terms and conditions (including applicable vesting conditions) as were
applicable to the corresponding former warrant.
Consummation of the
Proposed Transaction is subject to customary closing conditions for special purpose acquisition companies, including the following
conditions to each party’s obligations, among others: (a) approval by SRAC’s stockholders and Momentus’ stockholders,
(b) SRAC having at least $5,000,001 of net tangible assets as of the effective time of the consummation of the Mergers, and (c)
the approval of the listing of the shares of Class A common stock to be issued in connection with the Closing on The Nasdaq Stock
Market LLC and the effectiveness of a Registration Statement on Form S-4. The Merger Agreement may be terminated under certain
customary and limited circumstances prior to the consummation of the Mergers.
On October 7, 2020,
we entered into Subscription Agreements with certain investors pursuant to which the investors have agreed to purchase an aggregate
of 17,500,000 shares of Class A common stock in a private placement for $10.00 per share (the “Private Placement”).
The proceeds from the Private Placement will be partially used to fund the Repurchase (as defined below) and for general working
capital purposes following the closing. The closing of the transactions contemplated by the Subscription Agreements is contingent
upon, among other customary closing conditions, the substantially concurrent consummation of the Proposed Transaction.
Concurrently with
the execution of the Merger Agreement, Prime Movers Lab (“PML”), SRAC and Momentus entered into a repurchase agreement
(the “Repurchase Agreement”) pursuant to which, amongst other things, SRAC has agreed to repurchase a certain number
of shares of Class A common stock from PML, at a purchase price of $10.00 per share, immediately following the Closing (the “Repurchase”).
The Repurchase is contingent on the amount of available cash SRAC has at the Closing from (a) the Private Placement (and any alternative
financing arranged by SRAC and Momentus in the event the Private Placement becomes unavailable) and (b) the funds in SRAC’s
trust account (after taking into account payments required to satisfy SRAC’s stockholder redemptions), after further deducting
the amount of SRAC’s transaction expenses and Momentus’ transaction expenses (“Net Proceeds”) being in
excess of $265 million. If Net Proceeds exceed $265,000,000 but are less than $280,000,000, the number of shares of Class A common
stock subject to the Repurchase will be equal to the amount by which Net Proceeds exceed $250 million, divided by $10.00.
In the event Net Proceeds are in excess of $280,000,000, the number of shares of Class A common stock subject to the Repurchase
will be equal to $30,000,000, divided by $10.00. At the closing of the Repurchase, SRAC will be entitled to deduct
from such cash payment an amount equal to 3.3% of such cash payment (representing PML’s obligation to pay Momentus a portion
of its transaction expenses).
For additional information
regarding the Proposed Transaction, Momentus, the Merger Agreement, the Subscription Agreements, the Repurchase Agreement and
the other agreements entered into in connection with the Proposed Transaction, including risk and uncertainties with respect to
Momentus and the parties’ ability to consummate the Proposed Transaction, see the Registration Statement on Form S-4, including
a proxy statement/consent solicitation statement/prospectus included therein, initially filed by SRAC with the SEC on November
2, 2020, as subsequently amended.
Other than as specifically
discussed, this Report does not assume the Closing of the Proposed Transaction.
Our Management Team
Our management team
has broad experience in identifying targets and acquiring businesses through different economic cycles and under diverse market
conditions. We believe our management team is well positioned to identify and evaluate businesses that would benefit from their
skills and access to the public markets. We believe our management team offers extensive experience in growing and operating companies,
as well as a deep network of contacts.
Our management team
has over 60 years of combined professional experience and is led by Brian Kabot, the chief investment officer of Stable Road Capital,
and Juan Manuel Quiroga, the chief investment officer of NALA Investments. Stable Road Capital is a single-family office managing
a portfolio of investments across public securities, private credit, private equity, real estate and venture capital. NALA Investments
is a single-family office with investment interests across various industries including communications, transportation, consumer
products, real estate, technology and media. Stable Road Capital and NALA Investments manage, in the aggregate, over $1.0 billion
of investment capital.
Brian Kabot
Mr. Kabot, our Chairman
and Chief Executive Officer, has over 19 years of principal investing experience and has served as Chief Investment Officer
of Stable Road Capital, a single-family office investment vehicle based in Los Angeles, California, since July 2017. In July 2019,
Mr. Kabot was named a Strategic Advisor to The Cannabis ETF (NYSE: THCX), a newly-launched cannabis-oriented exchange-traded fund
managed by Innovation Shares LLC. Since December 2018, Mr. Kabot has been a director of the Treehouse Real Estate Investment
Trust, a private real estate investment trust, where he currently serves as the Chairman of the Investment Committee. Mr. Kabot
has also served on the board of directors of Old Pal, LLC, a private cannabis brand company, since June 2018, and on the
board of directors of Grenco Science LLC, a private developer of vape pens and portable vaporizers, since July 2019. From
May 2016 to July 2017, Mr. Kabot was the Director of Research at Eschaton Opportunities Fund Management LP, a management
company for two global value hedge funds. From January 2011 to April 2016, Mr. Kabot served as a partner and Deputy
Portfolio Manager of Riverloft Capital Management L.P., or Riverloft Capital, a management company for an event-driven hedge fund.
From March 2009 to December 2010, he served as a managing director at Gulf Coast Capital, a single-family office investment
vehicle. From August 2006 to January 2009, Mr. Kabot ran the industrials, materials, and energy vertical for Sun Capital
Partners’ cross cap structure/activist hedge fund. From February 2005 to July 2006, he served as a senior analyst
at Reservoir Capital Group. Mr. Kabot also worked as an associate at Questor Management Company from May 2003 to February 2005,
where he focused on acquiring distressed and bankrupt companies in the industrials, materials and energy sectors. From June 2000
to April 2003, Mr. Kabot served as an analyst in the merchant banking partners group at Donaldson, Lufkin & Jenrette.
James Norris
Mr. Norris, our Chief
Financial Officer, has more than 18 years of experience in the investment management industry. Since November 2018, Mr. Norris
has served as the Chief Financial Officer of Stable Road Capital. Mr. Norris previously served as the Chief Financial Officer
of Cycad Management LLC, a single family investment office, Chief Financial Officer and Chief Compliance Officer of Blue Jay Capital
Management LLC, a SEC-registered investment management firm focused on equity investments in the healthcare sector, the Controller
and Chief Compliance Officer of Expo Capital Management LLC, a SEC-registered investment management firm, and a Manager at PriceWaterhouseCoopers.
Juan Manuel Quiroga
Mr. Quiroga, our Chief
Investment Officer, has over 20 years of experience in the financial sector, including 14 years of principal investing experience.
Since August 2015, Mr. Quiroga has served as Chief Investment Officer of Nala Investments. From September 2007 to August 2015,
Mr. Quiroga served as Senior Vice President of Darby Private Equity. From August 2005 to August 2007, Mr. Quiroga served as a
Vice President of Market Intelligence at General Electric Capital Solutions. Prior to that, from 1996 to 1998 and from 2000 to
2003, Mr. Quiroga worked for Grupo Financiero Banorte in Mexico City and New York City, where he collaborated on the creation
of an asset management and financial derivatives division. Mr. Quiroga currently serves on the board of directors of Acrecent
Financial Corporation, Cobiscopr and Good Media Company.
Past performance of
our management team, Stable Road Capital or NALA Investments is not a guarantee either (i) of success with respect to any business
combination we may consummate, including the Mergers, or (ii) that we will be able to identify a suitable candidate for our initial
business combination. You should not rely on the historical performance record of our management team, Stable Road Capital or
NALA Investments as indicative of our future performance. Additionally, in the course of their respective careers, members of
our management team have been involved in businesses and deals that were unsuccessful. Our officers and directors have no other
experience with blank check companies or special purpose acquisition companies. In addition, our executive officers and directors
may have conflicts of interest with other entities to which they owe fiduciary or contractual obligations with respect to initial
business combination opportunities.
Business Strategy
Our strategy is to
pursue one or more business combinations with companies that have an aggregate enterprise value in excess of $300 million, although
target entities with a smaller enterprise value may be considered. We are seeking potential targets which we believe can materially
grow revenue and earnings both organically and inorganically through the efforts of our management team. These may include targets
that can benefit from access to capital in order to: (i) increase spending on strategic initiatives that are expected to generate
favorable returns and which can accelerate revenue and earnings growth; (ii) invest in infrastructure or technology; or (iii)
fundamentally restructure their business operations.
Acquisition Criteria
We have identified
the following general criteria and guidelines that we believe are consistent with our acquisition philosophy and our management’s
experience, and that we believe are important in evaluating prospective target businesses. We use these criteria and guidelines
to evaluate 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 are seeking a business
combination with one or more companies that we believe possess some or all of the following characteristics:
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Is highly scalable;
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Has strong intellectual property including
brands, technology, software, methods, etc.;
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Has an institutional mindset/infrastructure;
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Has a strong professional
management team with deep networks within its industry and the ability to adapt to a quickly changing business environment;
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Has potential to achieve significant
growth in revenue and earnings;
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Has potential
to generate attractive returns on invested capital, with incremental investment opportunities that will allow the company
to increase earnings;
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Has strong intellectual
property, a defensible business model, a strong competitive position established customer relationships, and sustainable margins;
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Has potential
to grow via add-on acquisitions or is viewed as an appropriate platform for a future roll-up strategy;
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Can benefit from
additional managerial guidance and strategic initiatives to reposition the company, accelerate growth or refocus the business
on strategies that will result in value creation;
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Will be well received by financial
markets as a public company; and
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Has the potential to generate risk-adjusted
returns that are attractive for our stockholders.
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These criteria are
not intended to be exhaustive. We initially intended to focus our search for target businesses within the cannabis industry as
described in the prospectus for our initial public offering, however, our efforts were not limited to that industry and spanned
companies in various industries that had the potential to meet the other criteria and guidelines set forth in the prospectus.
After initially evaluating several companies operating in the cannabis industry, we expanded our search to include companies operating
in other high growth industries. In considering the Proposed Transaction with Momentus, our board of directors determined that
the business combination was an attractive business opportunity that met the vast majority of the criteria and guidelines above,
although not weighted or in any order of significance.
Competitive Strengths
We have leveraged
and will continue to leverage the following competitive strengths in seeking to achieve our business strategy:
Experienced management team with proven
expertise in deploying capital within numerous industries
We believe that our
management team’s long and diverse transaction experience provides us with a competitive advantage. Our Chairman and Chief
Executive Officer has over 19 years of principal investing experience across a number of industries as an owner or financier and
our Chief Investment Officer has over 14 years of principal investing experience. Stable Road Capital and NALA Investments manage,
in the aggregate, over $1.0 billion of investment capital. Our management team also has extensive experience acquiring companies
for private equity investors. Their transaction history includes control private equity investments, distressed debt for control
transactions, and a hostile takeover of a public company.
Leveraging management’s extensive
experience in capital markets
Our management team
has substantial cross capital structure experience in both the private and public markets. Their transaction experience includes
private and public companies as well as debt and equity investments across various stages of a company’s lifecycle. In addition,
our management team has also overseen portfolios that invested in a wide variety of transactions, including private equity, public
equities, private and public credit, real estate, and venture capital. We view this broad experience in capital markets to be
a competitive advantage in sourcing a prospective business combination.
Implementing operational best practices
and financial structuring opportunities post-closing
We have leveraged
and will continue to leverage our management team’s principal investing experience to develop and implement strategies to
improve the operational and financial performance of the business combination target to create a platform for growth. Specifically,
our management team intends to evaluate opportunities for industry consolidation in the target’s core lines of business
as well as opportunities to vertically or horizontally integrate with other industry participants. We also intend to structure
and execute a business combination that will provide the target business with a capital structure that provides flexibility to
grow organically and through strategic acquisitions or divestitures to drive shareholder value.
Our Business Combination Process
We believe our management
team’s operational and investment track record provides us with a deep understanding of challenges faced by operators and
owners of high growth businesses. Our diligence includes an assessment of the company’s competitive advantage through meetings
with management and key employees, key customers, interactions with consultants and experts within our network, visits of key
operating facilities and a review of financial, legal and operational documents. We also have the ability to bring creative solutions
from a capital structure, growth, vision and operational standpoint to unlock shareholder value. In addition, we have retained
and worked with financial advisors and legal counsel as well as industry consultants to conduct due diligence, develop strategic
plans, and implement operational strategies.
We are not prohibited
from pursuing an initial business combination with a company that is affiliated with Stable Road Capital, NALA Investments, or
our sponsor, officers or directors. In the event we seek to complete our initial business combination with a company that is affiliated
with Stable Road Capital, NALA Investments or our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation
opinions that our initial business combination is fair to our company from a financial point of view.
Members of our management
team directly or indirectly own our founders shares, common stock 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, each of our officers and directors may have a conflict of interest with respect to evaluating
a particular business combination if the retention or resignation of any such officers and directors were to be included by a
target business as a condition to any agreement with respect to our initial business combination.
Certain of our officers
and directors presently have fiduciary or contractual obligations to other entities, including Stable Road Capital and NALA Investments,
pursuant to which such officer or director is or will be required to present a business combination opportunity. Accordingly,
if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which
he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers
or directors will not materially affect our ability to complete our initial business combination. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and
such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue,
and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
We may need to obtain
additional financing either to complete our initial business combination or because we become obligated to redeem a significant
number of our public shares upon completion of our initial business combination. We intend to acquire a company with an enterprise
value significantly above the net proceeds of our initial public offering and the sale of the placement units. Depending on the
size of the transaction or the number of public shares we become obligated to redeem, we may potentially utilize several additional
financing sources, including but not limited to the issuance of additional securities to the sellers of a target business, debt
issued by banks or other lenders or the owners of the target, a private placement to raise additional funds, or a combination
of the foregoing. 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. In addition, following our initial business combination,
if cash on hand is insufficient to meet our obligations or our working capital needs, we may need to obtain additional financing.
After the initial
business combination, our management team intends to apply a rigorous approach to enhancing shareholder value, including evaluating
the experience and expertise of incumbent management and making changes when appropriate, examining growth, cost savings and acquisition
opportunities, and accessing the financial markets to optimize the company’s capital structure. Subsequent to the closing
of the initial business combination we expect to pursue initiatives through participation on the board of directors, through direct
involvement with company operations or contacting former managers and advisors when necessary.
Status as a Public Company
We believe our structure
makes 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 underwriter’s ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Following an initial business
combination, we believe the target business would then have greater access to capital and an additional means of providing management
incentives consistent with stockholders’ interests and the ability to use its shares as currency for acquisitions. Being
a public company can offer further benefits by augmenting a company’s profile among potential new customers and vendors
and aid in attracting talented employees.
While we believe that
our structure and our management team’s backgrounds will make us an attractive business partner, some potential target businesses
may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval
of any proposed initial business combination, negatively.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies” including, but not limited to, not being required to comply with the independent
registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our
securities and the prices of our securities may be more volatile.
In addition, Section
107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words,
an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following November 13, 2024,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the
prior June 30th, and (2) the date on which we have issued
more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Financial Position
With funds available
in the trust account for an initial business combination in the amount of $166,207,749 (as of December 31, 2020), after payment
of $6,900,000 of deferred underwriting fees, before fees and expenses associated with our initial business combination, we offer
a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are
able to complete our initial business combination using our cash, debt or equity securities, or a combination of the foregoing,
we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the
target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can
be no assurance it will be available to us.
Effecting Our Initial Business Combination
We are not presently
engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial business
combination using cash from the proceeds of our initial public offering and the private placement of the placement units, the
proceeds of the sale of our shares in connection with our initial business combination (pursuant to backstop agreements we may
enter into), shares issued to the owners of the target, debt issued by banks 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 sale of the 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 additional funds privately, or through loans in
connection with our initial business combination. At this time, we are not a party to any arrangement or understanding with any
third party with respect to raising any additional funds through the sale of securities or otherwise.
Selection of a Target Business and Structuring
of our Initial Business Combination
Nasdaq rules require
that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of
the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned
on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The
fair market value of our initial business combination will be determined by our board of directors based upon one or more standards
generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples
of comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses.
If our board of directors is not able to independently determine the fair market value of our initial business combination, we
will obtain an opinion from an independent investment banking firm 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 intend to satisfy the 80% requirement even if our securities are not
listed on Nasdaq at the time of our initial business combination. We do not intend to purchase multiple businesses in unrelated
industries in conjunction with our initial business combination. Subject to this requirement, our management has virtually unrestricted
flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate
our initial business combination with another blank check company or a similar company with nominal operations.
In any case, we will
only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the
target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business
or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what will
be taken into account for purposes of Nasdaq’s 80% fair market value test. There is no basis for investors to evaluate the
possible merits or risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect
our initial business combination with a company or business that may be financially unstable or in its early stages of development
or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to
evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all
significant risk factors.
In evaluating a prospective
business target, we conduct a thorough due diligence review, which encompasses, among other things, meetings with incumbent management
and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial
and other information that will be made available to us.
The time required
to select and evaluate a target business and to structure and complete our initial business combination, and the costs associated
with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result
in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite
period of time after the completion of our initial business combination, the prospects for our success may depend entirely on
the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for an initial business
combination in a single industry. By completing our initial business combination with only a single entity, our lack of diversification
may:
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subject us to negative
economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular
industry in which we operate after our initial business combination, and
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cause us to depend on the marketing
and sale of a single product or limited number of products or services.
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Limited Ability to Evaluate the Target’s
Management Team
Although we closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business
combination with that business, our assessment of the target business’ management may not prove to be correct. In addition,
the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore,
the future role of members of our management team, if any, in the target business cannot presently be stated with any certainty.
The determination as to whether any of the members of our management team will remain with the combined company will be made at
the time of our initial business combination. While it is possible that one or more of our directors will remain associated in
some capacity with us following our initial business combination, it is unlikely that any of them will devote their full efforts
to our affairs subsequent to our initial business combination. Moreover, there is no assurance that members of our management
team will have significant experience or knowledge relating to the operations of the particular target business.
There is no assurance
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.
There is no assurance that we will have the ability to recruit additional managers, or that additional managers will have the
requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to
Approve Our Initial Business Combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is
required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons.
Under Nasdaq’s
listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common
stock then outstanding;
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any of our directors,
officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively
have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and
the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power
of 5% or more; or
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the issuance or
potential issuance of common stock will result in our undergoing a change of control.
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The Proposed Transaction
with Momentus will require the approval of our 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 sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase
shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers,
advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However,
they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession
of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the
Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however,
if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will
comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent
such purchasers are subject to such reporting requirements. None of the funds held in the trust account will be used to purchase
shares or public warrants in such transactions prior to completion of our initial business combination.
The purpose of any
such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood
of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could
be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the 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 may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify
and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share
of the trust account or vote against our initial business combination, whether or not such stockholder has already submitted a
proxy with respect to our initial business combination. Our sponsor, officers, directors, advisors or their affiliates will only
purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our
sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will
only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability
for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that
must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their
affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange
Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases
are subject to such reporting requirements.
Redemption Rights for Public Stockholders
upon Completion of our Initial Business Combination
We will provide our
public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion
of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account as of two business days prior to the consummation of the initial business combination including interest earned
on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding
public shares, subject to the limitations described herein. The amount in the trust account is, as of December 31, 2020, approximately
$10.04 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced
by the deferred underwriting commissions we will pay to the underwriter. Our sponsor, officers and directors have entered into
a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares
and (along with Cantor Fitzgerald & Co. (“Cantor”)) placement 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 legal
reasons. So long as we maintain a listing for our securities on Nasdaq, we are required to comply with such rules.
If a stockholder vote
is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our
amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file
tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same
financial and other information about the initial business combination and the redemption rights as is required under Regulation
14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement
of our initial business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase
shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply
with Rule 14e-5 under the Exchange Act.
In the event we conduct
redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance
with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until the
expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering
more than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement
that we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001
either immediately prior to or upon consummation of our initial business combination and after payment of underwriter’s
fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible
asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders
tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder
approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval
for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the
solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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In the event that
we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith,
provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder
approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted
are voted in favor of the 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 and placement
shares and any public shares purchased (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 placement shares, we would need only 6,196,251, or approximately 35.9%, of
the 17,250,000 public shares sold in our initial public offering to be voted in favor of an initial business combination (assuming
all outstanding shares are voted) in order to have our initial business combination approved. We intend to give approximately
30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote
shall be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our
initial stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder
may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction.
Our amended and restated
certificate of incorporation provides that we will only redeem our public shares so long as (after such redemption) our net tangible
assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after
payment of underwriter’s fees and commissions (so that we are not subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. For example, the proposed initial business combination may require: (i) cash consideration to be paid to the target
or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination. In the
event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination
exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares,
and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption upon Completion
of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding the
foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking
redemption rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer
to as the “Excess Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction
will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability
to exercise their redemption rights against a proposed initial business combination as a means to force us or our management to
purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision,
a public stockholder holding an aggregate of 15% or more 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 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 up to two business days prior to the vote on the proposal
to approve the initial business combination, or to deliver their shares to the transfer agent electronically using the Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The proxy materials that we
will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are
requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have up to two days
prior to the vote on the initial business combination to tender its shares if it wishes to seek to exercise its redemption rights.
Given the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal
cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether
or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require
holders seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising
redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different
from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business
combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business
combination, and a holder could simply vote against a proposed initial business combination and check a box on the proxy card
indicating such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved,
the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As
a result, the stockholder then had an “option window” after the completion of the initial business combination during
which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price,
he or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation.
As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would
become “option” rights surviving past the completion of the initial business combination until the redeeming holder
delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the initial business combination is approved.
Any request to redeem
such shares, once made, may be withdrawn at any time up to the date of the stockholder meeting. 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.
Redemption of Public Shares and Liquidation if no Initial
Business Combination
Our amended and restated certificate
of incorporation provides that we will have until August 13, 2021, to complete our initial business combination, including the proposed
business combination with Momentus, unless we obtain stockholder approval to further amend our amended and restated certificate of incorporation
to extend the date by which we must complete our initial business combination (the “extension date”). If we are unable to
complete our initial business combination by August 13, 2021 or the extension date, as applicable, 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 the case of clauses (ii) and (iii) above, to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect
to our warrants, which will expire worthless if we fail to complete our initial business combination by August 13, 2021 or the extension
date, as applicable.
Our sponsor, officers and
directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from
the trust account with respect to any founder shares and (along with Cantor) placement shares held by them if we fail to complete our
initial business combination by August 13, 2021 or the extension date, as applicable. However, if our sponsor, officers or directors acquire
public shares after our initial public offering, they will be entitled to liquidating distributions from the trust account with respect
to such public shares if we fail to complete our initial business combination by August 13, 2021 or the extension date, as applicable.
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 redemptions in connection with our initial business
combination or to redeem 100% of our public shares if we do not complete our initial business combination , or until August 13, 2021 or
the extension date, as applicable, 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 will only redeem our public shares so long as (after such redemption) our net tangible
assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of underwriter’s fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this optional
redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset
requirement (described above), we would not proceed with the amendment or the related redemption of our public shares at such time.
We expect that all
costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded
from amounts remaining out of the approximately $214,811 of proceeds held outside the trust account (as of December 31, 2020),
although there is no assurance that there will be sufficient funds for such purpose. We will depend on sufficient interest being
earned on the proceeds held in the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient
to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest
accrued in the trust account not required to pay taxes on interest income earned on the trust account balance, we may request
the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend
all of the net proceeds of our initial public offering and the sale of the 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.
There is no assurance 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, there is no assurance that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we have sought
and will continue to seek to have all vendors, service providers, prospective target businesses or other entities with which we
do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even
if they execute such agreements that they would be prevented from bringing claims against the trust account including but not
limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the
enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including
the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held
in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an
agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party
that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where
management is unable to find a service provider willing to execute a waiver. WithumSmith+Brown, PC, our independent registered
public accounting firm, and the underwriter of the offering, will not execute agreements with us waiving such claims to the monies
held in the trust account.
In addition, there
is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. 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 underwriter 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.
None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses.
In the event that
the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held
in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in
each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy
its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently
expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so
if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable
or if the independent directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for
such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy those obligations. Accordingly,
we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than
$10.00 per public share.
We will seek to reduce
the possibility that our sponsor 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 underwriter of this offering against certain liabilities, including liabilities
under the Securities Act. We have access to approximately $214,810 of proceeds held outside the trust account (as of December
31, 2020) from the proceeds of our initial public offering with which to pay any such potential claims (including costs and expenses
incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that
we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received
funds from our trust account could be liable for claims made by creditors.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination by August 13, 2021 or the extension date, as applicable, may be considered a liquidating
distribution under Delaware law. Delaware law provides that 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.
Furthermore, if the pro rata
portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination by August 13, 2021 or the extension date, as applicable, is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that
a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of
limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in
the case of a liquidating distribution. If we are unable to complete our initial business combination by August 13, 2021 or the extension
date, as applicable, 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 the case of clauses
(ii) and (iii) above, 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 13, 2021 or the extension
date, as applicable, and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be
liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well
beyond the third anniversary of such date.
Because we will not
be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations 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 our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited
and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor
may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per
public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust
account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and
will not be liable as to any claims under our indemnity of the underwriter 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 redemptions 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
13, 2021 or the extension date, as applicable, or (B) with respect to any other provision relating to stockholders’ rights or pre-initial
business combination activity, and (iii) the redemption of all of our public shares if we are unable to complete our business combination
by August 13, 2021 or the extension date, as applicable, 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. In particular, our amended and restated certificate
of incorporation may be amended with the affirmative vote of the holders of at least 65% of all then outstanding shares of our common
stock to extend the August 13, 2021 deadline by which we must have completed our business combination.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we may have encountered and may continue to encounter intense
competition from other entities having a business objective similar to ours, including other blank check companies, private equity
groups and leveraged buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are
well established and have extensive experience identifying and effecting business combinations directly or through affiliates.
Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to
acquire larger target businesses is limited by our available financial resources. This inherent limitation gives others an advantage
in pursuing the initial business combination of a target business. Furthermore, our obligation to pay cash in connection with
our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business
combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain
target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business
combination.
Employees
We currently have
three 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, in the exercise of their respective business judgment, to our affairs and intend
to continue doing so until we have completed our initial business combination. The amount of time they 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. We do not have an employment agreement with any member of our management team.
Periodic Reporting and Financial Information
Our units, Class A common
stock and warrants are registered under the Exchange Act and have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, this Report contains consolidated
financial statements audited and reported on by our independent registered public accountants.
We will provide stockholders
with audited consolidated 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 consolidated financial statements
will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical consolidated
financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements
may limit the pool of potential targets we may conduct an initial business combination with because some targets may be unable to provide
such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination
within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination
candidate will have consolidated financial statements prepared in accordance with GAAP or that the potential target business will be
able to prepare its consolidated financial statements in accordance with the requirements outlined above. To the extent that these requirements
cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combination
candidates, we do not believe that this limitation will be material.
We are required to
evaluate our internal control procedures for the fiscal year ending December 31, 2020 as required by the Sarbanes-Oxley Act. Only
in the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to have our internal control
procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such business combination. We have filed a Registration Statement
on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are subject
to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our
reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following November 13, 2024,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our shares of Class A common stock that are held by non-affiliates exceeds $700 million
as of the prior June 30th, and (2) the date on which we
have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Item 1A. Risk Factors
You should carefully
consider all of the following risk factors and all other information contained in this Report, including the consolidated financial statements.
If any of the following risks occur, our business, financial condition or results of operations may be materially and adversely affected.
In that event, the trading price of our securities could decline, and you could lose all or part of your investment. The risk factors
described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect to us and our business.
In addition to
the risks and uncertainties set forth below, we face certain material risks and uncertainties related to the Proposed Transaction
with Momentus. In addition, if we succeed in effecting the Proposed Transaction with Momentus, we will face additional and different
risks and uncertainties related to the business of Momentus. Such material risks are set forth in the Registration Statement on
Form S-4, including a proxy statement/consent solicitation statement/prospectus included therein, initially filed by SRAC with
the SEC on November 2, 2020, as subsequently amended.
Summary Risk Factors
The following is a summary of certain material risks of which
we are aware. You should carefully consider this summary, together with the more detailed description of each risk factor contained
below.
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We are an early stage company
with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business
objective.
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If we seek stockholder
approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business
combination, regardless of how our public stockholders vote.
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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.
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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.
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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.
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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.
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We may not be
able to complete our initial business combination within the prescribed time frame.
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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.
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You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances.
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You
will not be entitled to protections normally afforded to investors of certain other blank check companies.
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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.
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If the net proceeds of our initial public offering and the sale of the placement units not being held in the trust account are insufficient to allow us to operate until August 13, 2021 or the extension date, as applicable, 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.
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If
the net proceeds of our initial public offering and the sale of the 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.
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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.
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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.
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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 at this time, and such registration may not be in place when an investor desires to exercise warrants,
thus precluding such investor from being able to exercise its warrants except on a cashless basis.
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Past
performance by our management team may not be indicative of future performance of an investment in us.
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We
may seek business combination opportunities in industries or sectors which may or may not be outside of our management’s
area of expertise.
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We
may seek business combination opportunities with a financially unstable business or an entity lacking an established record
of revenue, cash flow or earnings, which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining
key personnel.
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We
are not required to obtain a fairness opinion 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.
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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.
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Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict
with our interests.
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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.
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We have identified a material weakness in our internal controls over financial reporting and may
identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which
could affect our ability to report our results of operations and financial condition accurately and in a timely manner.
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The restatement of our consolidated financial statements in May 2021 has subjected us to additional
risks and uncertainties, including increased professional costs and the increased possibility of legal proceedings.
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We
may only be able to complete one business combination with the proceeds of our initial public offering, and the sale of the
placement units, which will cause us to be solely dependent on a single business which may have a limited number of services
and limited operating activities.
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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.
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Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that
you do not support.
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We
are an emerging growth company and a “smaller reporting company” within the meaning of the Securities Act, and
if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller
reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare
our performance with other public companies.
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Risks Related to our Business
We are an early stage 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 an early stage
company with no operating results. Because we lack an operating history, you have no basis upon which to evaluate our ability
to achieve our business objective of completing our initial business combination 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.
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. However, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq
in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our
initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain
a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally
300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance
with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements,
in order to continue to maintain the listing of our securities on Nasdaq. For instance, our stock price would generally be required
to be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and we
would be required to have a minimum of 300 round lot holders (with at least 50% of such round lot holders holding securities with
a market value of at least $2,500) of our securities. We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If Nasdaq delists
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange,
we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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a limited availability
of market quotations for our securities;
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reduced liquidity for our
securities;
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a
determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class
A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary
trading market for our securities;
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a limited amount of news
and analyst coverage; and
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a decreased ability to
issue additional securities or obtain additional financing in the future.
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The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as “covered securities.” Because our units, Class A common stock and warrants are
listed on Nasdaq, our units, Class A common stock and warrants are covered securities. Although the states are preempted from
regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion
of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities
in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities
issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies
unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies
in their states. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be
subject to regulation in each state in which we offer our securities, including in connection with our initial business combination.
You will not be entitled to protections
normally afforded to investors of certain other blank check companies.
Since the net proceeds
of our initial public offering and the sale of the placement units are intended to be used to complete an initial business combination
with a target business that has not been identified, we may be deemed to be a “blank check” company under the United
States securities laws. However, because we have net tangible assets in excess of $5,000,000, we are exempt from rules promulgated
by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors are not afforded the benefits
or protections of those rules. Moreover, if our initial public offering were subject to Rule 419, that rule 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.
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
beneficially own shares representing approximately 21.8% of our issued and outstanding shares of common stock. Accordingly, they
may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including
amendments to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial
stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would
increase their control. Factors that would be considered in making such additional purchases would include consideration of the
current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our initial
stockholders, is divided into three classes, each of which generally serves for a term of three years with only one class of directors
being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of
our initial business combination, in which case all of the current directors will continue in office until at least the completion
of the initial business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors,
only a minority of the board of directors will be considered for election and our initial stockholders, because of their ownership
position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert
control at least until the completion of our initial business combination.
Our sponsor paid an aggregate of $25,000
for the founder shares, or approximately $0.006 per founder share. As a result of this low initial price, our sponsor, its affiliates
and our management team stand to make a substantial profit even if an initial business combination subsequently declines in value
or is unprofitable for our public stockholders.
As a result of the
low acquisition cost of our founder shares, our sponsor, its affiliates and our management team could make a substantial profit
even if we select and consummate an initial business combination with an acquisition target that subsequently declines in value
or is unprofitable for our public stockholders. Thus, such parties may have more of an economic incentive for us to enter into
an initial business combination with a riskier, weaker-performing or financially unstable business, or an entity lacking an established
record of revenues or earnings, than would be the case if such parties had paid the full offering price for their founder shares.
Unlike 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 as provided herein. 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 placement shares
and any shares or equity-linked securities issued, or to be issued, to any seller in the business combination and any private
placement-equivalent warrants issued to our sponsor or its affiliates upon conversion of loans made to us. This is different from
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.
Because each unit contains one-half
of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check
companies.
Each unit contains
one-half of one redeemable warrant. No fractional warrants will be issued upon separation of the units and only whole warrants
will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant. This
is different from other offerings similar to ours whose units include one share of common stock and one warrant to purchase one
whole share. We have established the components of the units in this way in order to reduce the dilutive effect of the warrants
upon completion of an initial business combination since the warrants will be exercisable in the aggregate for one-half of the
number of shares compared to units that each contain a warrant to purchase one whole share, thus making us, we believe, a more
attractive merger partner for target businesses. Nevertheless, this unit structure may cause our units to be worth less than if
they included a warrant to purchase one whole share.
A provision of our warrant agreement
may make it more difficult for use to consummate an initial business combination.
Unlike most blank
check companies, if
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we
issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with
the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share;
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the
aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of our initial business combination on the date of the consummation of our initial business combination (net
of redemptions), and
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the Market Value is below
$9.20 per share,
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then the exercise price of the warrants
will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption
trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price. This may make it more difficult for us to consummate an initial business combination with a target business.
We are an emerging growth company and
a “smaller reporting company” within the meaning of the Securities Act, and if we take advantage of certain exemptions
from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities
less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before
that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether
investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities
less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise
would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as
an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This
may make comparison of our consolidated financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accountant standards used.
Additionally, we are a
“smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage
of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We
will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares held by non-affiliates
exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during such completed fiscal year and
the market value of our shares held by non-affiliates exceeds $700 million as of the prior June 30. To the extent we take advantage of
such reduced disclosure obligations, it may also make comparison of our consolidated financial statements with other public companies
difficult or impossible.
Risks Related to the Initial 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 if a majority of our public stockholders do not support such a combination.
We may choose not
to hold a stockholder vote to approve our initial business combination unless the initial business combination would require stockholder
approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or
other legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval of a proposed initial
business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our
discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction
would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial business combination even if
holders of a majority of our public shares do not approve of the initial business combination we complete.
If we seek stockholder approval of our
initial business combination, our initial stockholders 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 placement shares, as well as any public
shares purchased 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 placement
shares, we would need only 6,196,251, or approximately 35.9%, of the 17,250,000 public shares sold in our initial public offering
to be voted in favor of an initial business combination (assuming all outstanding shares are voted) in order to have our initial
business combination approved. Our initial stockholders beneficially own shares representing approximately 21.8%of our outstanding
shares of common stock. Accordingly, if we seek stockholder approval of our initial business combination, the agreement by our
initial stockholders to vote in favor of our initial business combination will increase the likelihood that we will receive the
requisite stockholder approval for such initial business combination.
The 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 within by August 13, 2021 or the extension date, as applicable. 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.
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 shares or public
warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the
completion of our initial business combination, although they are under no obligation to do so. However, they have no current
commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions.
None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
Such a purchase may
include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial
owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, officers,
advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected
to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their
shares. The purpose of such purchases could be to vote such shares in favor of the initial business combination and thereby increase
the likelihood of obtaining stockholder approval of the initial business combination, or to satisfy a closing condition in an
agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial
business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of
public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted
to the 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 maintain the quotation, listing or trading of our securities
on a national securities exchange.
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may
be forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders will
be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion of an initial business combination,
and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the
limitations described herein, (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend
our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemptions 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 13, 2021 or the extension date, as applicable, or (B) with respect to any other provision relating to stockholders’ rights
or pre-initial business combination activity and (iii) the redemption of our public shares if we are unable to complete an initial business
combination by August 13, 2021 or the extension date, as applicable, subject to applicable law and as further described herein. In no
other circumstances will a public stockholder have any right or interest of any kind in the trust account. Holders of warrants will not
have any right to the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you
may be forced to sell your public shares or warrants, potentially at a loss.
If the net proceeds of our initial public offering
and the sale of the placement units not being held in the trust account are insufficient to allow us to operate until August 13, 2021
or the extension date, as applicable, 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 until August 13, 2021 or the extension date, as applicable,
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 as of December 31, 2020 of $214,811 and the additional $600,000 of funds loaned to us by Stable Road Capital, LLC and
DIBALYD Investments, an affiliate of Nala Investments, in February 2021 (which funds are held outside of the trust account) are sufficient
to allow us to operate until August 13, 2021 or the extension date, as applicable; 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 are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share
on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may
receive less than $10.00 per share upon our liquidation.
If the net proceeds of our initial public
offering and the sale of the 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.
Of the net proceeds
of our initial public offering and the sale of the placement units, only approximately $214,811 (as of December 31, 2020) is available
to us outside the trust account to fund our working capital requirements. In February 2021, Stable Road Capital, LLC and DIBALYD
Investments, an affiliate of Nala Investments, loaned us $600,000 pursuant to non-interest bearing promissory notes, which funds
are available to be used for working capital expenses. 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 to be 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 units, at a price of $10.00 per unit
at the option of the lender, upon consummation of our initial business combination. The units would be identical to the placement
units. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our
sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver
against any and all rights to seek access to funds in our trust account. If we 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.
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. Although 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 shares. 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 initial business combination constituted an actionable material misstatement
or omission.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available
for distribution to our public stockholders.
In the event that
the proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share held
in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions in
the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that
it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently
expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary
duties may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the
trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
We may not have sufficient funds to
satisfy indemnification claims of our directors and executive officers.
We have agreed to
indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to
waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against
the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only
if (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation
to indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors
for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation
against our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage
awards against our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to
claims of punitive damages.
If, after we distribute
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result,
a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be
viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us
to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders
and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law,
and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
We may not hold an annual meeting of
stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders
to elect directors.
In accordance with
Nasdaq corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our
first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an
annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made
by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to
the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which
requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our
initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery
in accordance with Section 211(c) of the DGCL.
We may seek business combination opportunities
in industries or sectors which may or may not be outside of our management’s area of expertise.
We may consummate
a business combination with a company in any industry we choose and are not limited to any particular industry or type of business.
Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot
assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an
investment in our units will not ultimately prove to be less favorable to investors 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 herein 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.
We may seek business combination opportunities
with a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings, which could
subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete
our initial business combination with a financially unstable business or an entity lacking an established record of revenues or
earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include
volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will
endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all
of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks
may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business.
We are not required to obtain a fairness
opinion 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 or another
independent entity that commonly renders valuation opinions that the price we are paying is fair to our company from a financial
point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will
determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
The grant of registration rights to
our initial stockholders may make it more difficult to complete our initial business combination, and the future exercise of such
rights may adversely affect the market price of our Class A common stock.
Pursuant to an agreement
entered into concurrently with our initial public offering, our initial stockholders and their permitted transferees can demand
that we register the placement units, the placement shares, the placement warrants, the shares of Class A common stock issuable
upon exercise of the placement warrants, the shares of Class A common stock issuable upon conversion of the founder shares and
holders of units that may be issued upon conversion of working capital loans may demand that we register such units, Class A common
stock, warrants or the Class A common stock issuable upon exercise of such units and warrants. We will bear the cost of registering
these securities. The registration and availability of such a significant number of securities for trading in the public market
may have an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration rights
may make our initial business combination more costly or difficult to conclude. This is because the stockholders of the target
business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative
impact on the market price of our Class A common stock that is expected when the securities owned by our initial stockholders
or holders of working capital loans or their respective permitted transferees are registered.
Resources could be wasted in researching
business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account
and our warrants will expire worthless.
We anticipate that
the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up
to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to
a specific target business, we may fail to complete our initial business combination for any number of reasons including those
beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely
affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and
our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on
the redemption of their shares.
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 prior to or 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.
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.
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’ 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 officers and directors allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our
affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors
are not required to, and do not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for an initial business combination and their other businesses. We do not intend
to have any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in
other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute
any specific number of hours per week to our affairs. Our 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 they may also participate in the formation of, or become officers or directors of, other special purpose
acquisition companies) and, accordingly, may have conflicts of interest in allocating their time and determining to which entity
a particular business opportunity should be presented.
Until we consummate
our initial business combination, we will continue to engage in the business of identifying and combining with one or more businesses.
Our sponsor and officers and directors are, and may in the future become, affiliated with entities (such as operating companies
or investment vehicles) that are engaged in a similar business, and they may also participate in the formation of, or become officers
or directors of, other special purpose acquisition companies.
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.
We may engage in an initial business
combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor,
officers, directors or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our
sponsor, officers or directors. Our directors also serve as officers and board members for other entities. Such entities may compete
with us for business combination opportunities. Despite our agreement to obtain an opinion from an independent investment banking
firm or another independent entity that commonly renders valuation opinions, regarding the fairness to our stockholders from a
financial point of view of an initial business combination with one or more 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.
Since our sponsor, officers and directors
will lose their entire investment in us if our initial business combination is not completed, a conflict of interest may arise
in determining whether a particular business combination target is appropriate for our initial business combination.
In June 2019, our
sponsor purchased an aggregate of 4,312,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.006
per share. The founder shares will be worthless if we do not complete an initial business combination. Our sponsor and Cantor
purchased an aggregate of 545,000 placement units at a price of $10.00 per unit, for a purchase price of $5,450,000. Each placement
unit consists of one share of Class A common stock and one-half of one warrant. Each whole warrant is exercisable to purchase
one whole share of common stock at $11.50 per share. These securities 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.
The personal and financial interests of our officers and directors may influence their motivation in identifying and selecting
a target business combination, completing an initial business combination and influencing the operation of the business following
the initial business combination.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete an initial business combination, which may adversely affect our leverage and
financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no
commitments as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our initial business combination. We have agreed that we will not incur
any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to
the monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from
the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our
debt obligations;
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain
covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain
such financing while the debt security is outstanding;
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our inability to pay dividends
on our common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund
other general corporate purposes;
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limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and
execution of our strategy; and
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other disadvantages compared
to our competitors who have less debt.
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We may only be able to complete one
business combination with the proceeds of our initial public offering, and the sale of the placement units, which will cause us
to be solely dependent on a single business which may have a limited number of services and limited operating activities. This
lack of diversification may negatively impact our operating results and profitability.
Of the net proceeds
from our initial public offering and the sale of the placement units, $172,500,000 is available to complete our initial business
combination and pay related fees and expenses (which includes $6,900,000 for the payment of deferred underwriting commissions).
We may effectuate
our initial business combination with a single target business or multiple target businesses simultaneously or within a short
period of time. However, we may not be able to effectuate our initial business combination with more than one target business
because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file
pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses
as if they had been operated on a combined basis. By completing our initial business combination with only a single entity, our
lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be
able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities
which may have the resources to complete several business combinations in different industries or different areas of a single
industry. In addition, we intend to focus our search for an initial business combination in a single industry. Accordingly, the
prospects for our success may be:
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solely dependent upon the
performance of a single business, property or asset, or
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination
and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to
simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree
that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us, and delay our ability, to complete our initial business combination. We do not, however, intend to purchase
multiple businesses in unrelated industries in conjunction with our initial business combination. With multiple business combinations,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and
due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in an initial business
combination with a company that is not as profitable as we suspected, if at all.
In pursuing our initial
business combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very
little public information generally exists about private companies, and we could be required to make our decision on whether to
pursue a potential initial business combination on the basis of limited information, which may result in an initial business combination
with a company that is not as profitable as we suspected, if at all.
Our management may not be able to maintain
control of a target business after our initial business combination.
We may structure an
initial business combination so that the post-transaction company in which our public stockholders own shares will own less than
100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will
not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to the initial business combination may collectively own a minority interest
in the post business combination company, depending on valuations ascribed to the target and us in the initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as
a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction
could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority
stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s
stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our
control of the target business. We cannot provide assurance that, upon loss of control of a target business, new management will
possess the skills, qualifications or abilities necessary to profitably operate such business.
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 our
amended and restated certificate of incorporation will require the approval of holders of 65% of our common stock, and amending our warrant
agreement will require a vote of holders of at least a majority of the public warrants (which may include public warrants acquired by
our sponsor or its affiliates in our initial public offering or thereafter in the open market). 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 redemptions 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 13, 2021, or (B) with respect to any other provision relating to stockholders’ rights
or pre-initial business combination activity. To the extent any such amendments would be deemed to fundamentally change the nature of
any securities offered through this registration statement, we would register, or seek an exemption from registration for, the affected
securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate
an initial business combination in order to effectuate our initial business combination.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement
governing the release of funds from our trust account), including an amendment to permit us to withdraw funds from the trust account
such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated,
may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that of some
other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation
and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not
support.
Our amended and restated
certificate of incorporation provides that any of its provisions related to pre-initial business combination activity (including
the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust account
and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein and including to permit us to withdraw funds from the trust account such that the per share amount investors will receive
upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our
common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from
our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances,
our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock
entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue additional
securities that can vote on amendments to our amended and restated certificate of incorporation. Our initial stockholders, who
collectively beneficially own up to approximately 21.8% of our common stock, 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 redemptions 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 13, 2021, or (ii)
with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide
our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account divided by the number of then outstanding public
shares. These agreements are contained in a letter agreement that we have entered into with our sponsor, officers and directors. Our stockholders
are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against
our sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders would need
to pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional
financing to complete our initial business combination or to fund the operations and growth of a target business, which could
compel us to restructure or abandon a particular business combination.
We are targeting businesses
larger than we could acquire with the net proceeds of our initial public offering and the sale of the 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 are unable to complete our initial business combination,
our public stockholders may receive only approximately $10.00 per share plus any pro rata interest earned on the funds held in
the trust account and not previously released to us to pay our taxes on the liquidation of our trust account and our warrants
will expire worthless. In addition, even if we do not need additional financing to complete our initial business combination,
we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing
could have a material adverse effect on the continued development or growth of the target business. None of our officers, directors
or stockholders is required to provide any financing to us in connection with or after our initial business combination. If we
are unable to complete our initial business combination, our public stockholders may only receive approximately $10.00 per share
on the liquidation of our trust account, and our warrants will expire worthless. Furthermore, as described in the risk factor
entitled “If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share
redemption amount received by stockholders may be less than $10.00 per share,” under certain circumstances our public stockholders
may receive less than $10.00 per share upon the liquidation of the trust account.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy
rules require that a proxy statement with respect to a vote on an initial business combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial
statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules.
These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally
accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International
Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to
be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These
financial statements may also be required to be prepared in accordance with GAAP in connection with our current report on Form
8-K announcing the closing of our initial business combination within four business days following such closing. These financial
statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to
provide such financial statements in time for us to disclose such statements in accordance with federal proxy rules and complete
our initial business combination within the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing an initial business combination.
Section 404 of the
Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with this Report. Only in
the event we are deemed to be a large accelerated filer or an accelerated filer will we be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long
as we remain an emerging growth company, we will not be required to comply with the independent registered public accounting firm
attestation requirement on our internal control over financial reporting. The fact that we are a blank check company makes compliance
with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a
target company with which we seek to complete our initial business combination may not be in compliance with the provisions of
the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
Provisions in our amended and restated
certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing
to pay in the future for our Class A common stock and could entrench management.
Our amended and restated
certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider
to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of preferred shares, which may make the removal of management more difficult and
may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
Our amended and restated certificate
of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against
our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought
only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit
will be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging
lawsuits against our directors, officers, other employees or stockholders.
Our amended and restated
certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions
against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be
brought only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the
suit will be deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which
the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction
of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within
ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court
of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising under the
Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent
jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed
to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice
of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such
claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules
and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in our amended and
restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and restated
certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by
applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty
or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will
not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal
courts have exclusive jurisdiction.
Risks Related to the Redemption of Shares
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.
Since our board of
directors may complete an initial business combination without seeking stockholder approval, public stockholders may not have
the right or opportunity to vote on the initial business combination, unless we seek such stockholder vote. Accordingly, if we
do not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination
may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth
in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
The ability of our public
stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets,
which may make it difficult for us to enter into an initial business combination with a target.
We may seek to enter
into an initial business combination agreement with a prospective target that requires as a closing condition that we have a minimum
net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able
to meet such closing condition and, as a result, would not be able to proceed with the initial business combination. Furthermore,
we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either
immediately prior to or upon consummation of our initial business combination and after payment of underwriter’s fees and
commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset
or cash requirement which may be contained in the agreement relating to our initial business combination. Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater amount
necessary to satisfy a closing condition, each as described above, we would not proceed with such redemption and the related business
combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and,
thus, may be reluctant to enter into an initial business combination with us.
The ability of our public
stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable
business combination or optimize our capital structure.
At the time we enter
into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights,
and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to
pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash
in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares
are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion
of the cash in the trust account or arrange for third party financing. Raising additional third party financing may involve dilutive
equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase
to the extent that the anti-dilution provision of the Class B common stock result in the issuance of Class A shares on a greater
than one-to-one basis upon conversion of the Class B common stock at the time of our business combination. The above considerations
may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The
amount of the deferred underwriting commissions payable to the underwriter 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 ability of our public
stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial
business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our initial business
combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us
to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we
liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market;
however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation,
you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until
we liquidate or you are able to sell your stock in the open market.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures
for tendering its shares, such shares may not be redeemed.
We will comply with
the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination.
Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable,
such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly tender or redeem public shares. For example, we may require
our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents
mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination
in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that
a stockholder fails to comply with these or any other procedures, its shares may not be redeemed.
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 15% or more 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% or more 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 seek to have all vendors, service
providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing
claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or
other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage
with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes
that such third party’s engagement would be significantly more beneficial to us than any alternative. WithumSmith+Brown,
PC, our independent registered public accounting firm, and the underwriter of our initial public offering, will not execute agreements
with us waiving such claims to the monies held in the trust account.
Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share
initially held in the trust account, due to claims of such creditors. 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 underwriter 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. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Risks Related to Class A Common Stock
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 at this time, and
such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being
able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered,
qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant
and such warrant may have no value and expire worthless.
We have not registered
the shares of Class A common stock issuable upon exercise of the warrants issued in our initial public offering under the Securities
Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon
as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use
our best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of
Class A common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become
effective within 60 business days following our initial business combination and to maintain a current prospectus relating to
the Class A common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions
of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which
represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements
contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable
upon exercise of the warrants issued in our initial public offering are not registered under the Securities Act, we will be required
to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless
basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of
the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an
exemption from registration is available. Notwithstanding the foregoing, if a registration statement covering the Class A common
stock issuable upon exercise of the warrants is not effective within a specified period following the consummation of our initial
business combination, 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. We will use our
best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. 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 issued in our initial public offering
under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the
warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be
entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired
their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common
stock included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right if the
issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable
state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or
qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were
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 placement warrants may be able to exercise such placement warrants.
If you exercise your public warrants on
a “cashless basis,” you will receive fewer shares of Class A common stock from such exercise than if you were to exercise
such warrants for cash.
There
are circumstances in which the exercise of the public warrants may be required or permitted to be made on a cashless basis. First,
if a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective
by the 60th business day after the closing of our initial
business combination, warrant holders may, until such time as there is an effective registration statement, exercise warrants
on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. Second, if 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. Third, if we call the public warrants for redemption, our management will have the option to require all holders
that wish to exercise warrants to do so on a cashless basis. In the event of an exercise on a cashless basis, a holder would pay
the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient
obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the
difference between the exercise price of the warrants and the “fair market value” (as defined in the next sentence)
by (y) the fair market value. The “fair market value” is the average reported last sale price of the Class A common
stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by
the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, you would
receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then
outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be
shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all
without your approval.
Our warrants are issued
in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us.
The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity
or correct any defective provision, but requires the approval by the holders of at least a majority of the then outstanding public
warrants to make any change that adversely affects the interests of the registered holders of public warrants (which may include
public warrants acquired by our sponsor or its affiliates in our initial public offering or thereafter in the open market). Accordingly,
we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding
public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of
at least a majority of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to,
among other things, increase the exercise price of the warrants, convert the warrants into cash or stock, shorten the exercise
period or decrease the number of shares of our Class A common stock purchasable upon exercise of a warrant.
Our warrants and founder shares may
have an adverse effect on the market price of our Class A common stock and make it more difficult to effectuate our initial business
combination.
We issued warrants
to purchase 8,625,000 shares of our Class A common stock as part of the units offered in our initial public offering and, simultaneously
with the closing of our initial public offering, we issued an aggregate of 272,500 placement warrants. Our initial stockholders
currently beneficially own an aggregate of 4,312,500 founder shares. The founder shares are convertible into shares of Class A
common stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor makes any working
capital loans, up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit at the option of the
lender, upon consummation of our initial business combination. The units would be identical to the 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.
The placement warrants
included in the placement units are identical to the warrants sold as part of the units in our initial public offering except
that, so long as they are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including
the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred,
assigned or sold by our sponsor until 30 days after the completion of our initial business combination and (iii) they may be exercised
by the holders on a cashless basis.
We may issue additional common stock or
preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial
business combination. We may also issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio
greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained
in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and
likely present other risks.
Our amended and restated
certificate of incorporation authorizes the issuance of up to 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. There are 73,307,500 and 5,687,500 authorized but unissued shares of Class A common stock and Class B common
stock, respectively, available for issuance as of December 31, 2020, 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. There are currently no shares of preferred stock issued and outstanding. Shares of Class B common stock
are convertible into shares of our Class A common stock initially at a one-for-one ratio but subject to adjustment as set forth
herein, including in certain circumstances in which we issue Class A common stock or equity-linked securities related to our initial
business combination.
We may issue a substantial
number of additional shares of common or preferred stock to complete our initial business combination or under an employee incentive plan
after completion of our initial business combination (although our amended and restated certificate of incorporation provides that we
may not issue securities that can vote with common stockholders on matters related to our pre-initial business combination activity).
We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one at the
time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate
of incorporation. However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial
business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (i) receive funds
from the trust account or (ii) vote on any initial business combination. These provisions of our amended and restated certificate of incorporation,
like all provisions of our amended and restated certificate of incorporation, may be amended with the approval of our stockholders. However,
our executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to
our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemptions 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 13, 2021 or the extension date, as applicable, or (B) with respect to any other provision relating to stockholders’ rights
or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares of
common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public
shares.
The issuance of additional
shares of common or preferred stock:
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may significantly dilute
the equity interest of investors in our initial public offering;
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may
subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common
stock;
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could
cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other
things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of
our present officers and directors; and
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may adversely affect prevailing
market prices for our units, Class A common stock and/or warrants.
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General Risks
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to
be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature
of our investments; and
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restrictions
on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
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In addition, we may
have imposed upon us burdensome requirements, including:
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registration as an investment
company;
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adoption of a specific
form of corporate structure; and
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reporting, record keeping,
voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be
regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that
we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not
include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify
and complete an initial business combination and thereafter to operate the post-transaction business or assets for the long term.
We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated
businesses or assets or to be a passive investor.
We do not believe that our
principal activities subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested
in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity
of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which
invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in
other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted
at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or
private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company
Act. The trust account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business
combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and
restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemptions 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
13, 2021 or the extension date, as applicable, 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 13, 2021 or the extension date, as applicable,,
our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do
not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject
to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have
not allotted funds and may hinder our ability to complete an initial business combination or may result in our liquidation. If we are
unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation
of our 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.
We are dependent upon our executive
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 executive officers and directors. We believe that
our success depends on the continued service of our executive officers and directors, at least until we have completed our initial
business combination. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or
executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental
effect on us.
The requirements of being a public company
may strain our resources and divert management’s attention.
As a public company,
we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes Oxley Act”),
the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities
rules and regulations, Compliance with these rules and regulations increase our legal and financial compliance costs, make some
activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are
no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we maintain effective
disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve
our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources
and management oversight may be required. As a result, management’s attention may be diverted from other business concerns,
which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside
consultants to comply with these requirements, which will increase our costs and expenses.
We have identified a material weakness in our
internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results
of operations and financial condition accurately and in a timely manner.
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our
management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes
and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in
this Annual Report, we identified a material weakness in our internal control over financial reporting related to the accounting for a
significant and unusual transaction related to the warrants we issued in connection with our initial public offering in November 2019.
As a result of this material weakness, our management, including our principal executive and financial officers, concluded that our internal
control over financial reporting was not effective as of December 31, 2020. This resulted in a material misstatement of our warrant liability,
change in fair value of warrant liability, additional paid-in capital and accumulated deficit as of and for the years ended December 31,
2020 and 2019.
To respond to this material
weakness, we have devoted, and plan to continue to devote, significant effort and resources to the remediation and improvement of our
internal control over financial reporting. While we have processes to identify and appropriately apply applicable accounting requirements,
we plan to enhance these processes to better evaluate our research and understanding of the nuances of the complex accounting standards
that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials
and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting
applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives
will ultimately have the intended effects. For a discussion of management’s consideration of the material weakness identified related
to our accounting for the warrants we issued in connection with the November 2019 Initial Public Offering, see “Note 2—Restatement
of Previously Issued Consolidated Financial Statements” to the accompanying consolidated financial statements, as well as the Explanatory
Note and Part II, Item 9A: Controls and Procedures included in this Annual Report.
Any failure to maintain
such internal control could adversely impact our ability to report our financial position and results from operations on a timely and
accurate basis. If our consolidated financial statements are not accurate, investors may not have a complete understanding of our operations.
Likewise, if our consolidated financial statements are not filed on a timely basis, we could be subject to sanctions or investigations
by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. In either case, there could result
a material adverse effect on our business. Failure to timely file will cause us to be ineligible to utilize short form registration statements
on Form S-3 or Form S-4, which may impair our ability to obtain capital in a timely fashion to execute our business strategies or issue
shares to effect an acquisition. Ineffective internal controls could also cause investors to lose confidence in our reported financial
information, which could have a negative effect on the trading price of our stock.
We can give no assurance
that the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional
material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate
internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening
our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or
errors or to facilitate the fair presentation of our consolidated financial statements.
Our warrants are required to be accounted
for as liabilities rather than as equity and such requirement resulted in a restatement of our previously issued consolidated financial
statements.
On April 12, 2021, the
staff of the SEC issued its Statement. In the Statement, the SEC staff expressed its view that certain terms and conditions common to
SPAC warrants may require the warrants to be classified as liabilities on the SPAC’s balance sheet as opposed to equity. Since
issuance, our warrants were accounted for as equity within our balance sheet, and after discussion and evaluation, including with our
independent auditors, we have concluded that our warrants should be presented as liabilities with subsequent fair value remeasurement.
Therefore we conducted a valuation of our warrants and restated our previously issued consolidated financial statements, which resulted
in unanticipated costs and diversion of management resources and may result in potential loss of investor confidence. Although we have
now completed the restatement, we cannot guarantee that we will have no further inquiries from the SEC or Nasdaq regarding our restated
consolidated financial statements or matters relating thereto.
Any future inquiries from
the SEC or Nasdaq as a result of the restatement of our historical consolidated financial statements will, regardless of the outcome,
likely consume a significant amount of our resources in addition to those resources already consumed in connection with the restatement
itself.
The restatement of our consolidated financial
statements in May 2021 has subjected us to additional risks and uncertainties, including increased professional costs and the increased
possibility of legal proceedings.
As a result of the Restatement,
we have become subject to additional risks and uncertainties, including, among others, increased professional fees and expenses and time
commitment that may be required to address matters related to the restatements, and scrutiny of the SEC and other regulatory bodies which
could cause investors to lose confidence in our reported financial information and could subject us to civil or criminal penalties or
shareholder litigation. We could face monetary judgments, penalties or other sanctions that could have a material adverse effect on our
business, financial condition and results of operations and could cause our stock price to decline.
Our warrants are accounted
for as a warrant liability and are recorded at fair value upon issuance with changes in fair value each period to be reported in earnings,
which may have an adverse effect on the market price of our Common Stock.
Following the Restatement
of our historical consolidated financial statements, we account for our warrants as a warrant liability recorded at fair value upon issuance
with any changes in fair value each period reported in earnings based upon a valuation report obtained from its independent third party
valuation firm. The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock.
A market for our securities may not
develop, which would adversely affect the liquidity and price of our securities.
The price of our securities
may vary significantly due to one or more potential business combinations and general market or economic conditions. Furthermore,
an active trading market for our securities may never develop or, if developed, it may not be sustained. You may be unable to
sell your securities unless a market can be established and sustained.
Past performance by our management team
may not be indicative of future performance of an investment in us.
Past performance by
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 our management team’s or advisors’ 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. Additionally, in the course of their
respective careers, members of our management team have been involved in businesses and deals that were unsuccessful. Our officers
and directors have not had experience with blank check companies or special purpose acquisition companies in the past.
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. Accordingly, such persons or entities
may have a conflict between their interests and ours.
Cyber incidents or attacks directed at
us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital
technologies, including information systems, infrastructure and cloud applications and services, including those of third parties
with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
If we effect our initial business combination
with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks
that may negatively impact our operations.
If we effect our initial
business combination with a company with operations or opportunities outside of the United States, we would be subject to any
special considerations or risks associated with companies operating in an international setting, including any of the following:
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higher
costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal
requirements of overseas markets;
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rules and regulations regarding
currency redemption;
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complex corporate withholding
taxes on individuals;
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complex corporate withholding
taxes on individuals;
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laws governing the manner
in which future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to
customs and import/export matters;
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longer payment cycles and
challenges in collecting accounts receivable;
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tax
issues, including but not limited to tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and
exchange controls;
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rates of inflation;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots,
civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration of political
relations with the United States; and
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government appropriations
of assets.
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We may not be able
to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact
our results of operations and financial condition.
We may not be able to obtain adequate insurance
coverage in respect of the risks our business faces, the premiums for such insurance may not continue to be commercially justifiable
or there may be coverage limitations and other exclusions which may result in such insurance not being sufficient to cover potential
liabilities that we face.
Although we expect
to have insurance coverage with respect to the assets and operations of our target business, such insurance coverage will be subject
to coverage limits and exclusions and may not be available for the risks and hazards to which we are exposed. In addition, no
assurance can be given that such insurance will be adequate to cover our liabilities, including potential product liability claims,
or will be generally available in the future or, if available, that premiums will be commercially justifiable. If we were to incur
substantial liability and such damages were not covered by insurance or were in excess of policy limits, we may be exposed to
material uninsured liabilities that could impede our liquidity, profitability or solvency.
Fraudulent or illegal activity by employees,
contractors and consultants may adversely affect our business, financial condition or results of operations.
A potential target
business may be exposed to the risk that any of its employees, independent contractors or consultants may engage in fraudulent
or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure
of unauthorized activities that violate (i) government regulations, (ii) manufacturing standards, (iii) federal, state and provincial
healthcare fraud and abuse laws and regulations, or (iv) laws that require the true, complete and accurate reporting of financial
information or data. It may not always be possible for the potential target business to identify and deter misconduct by its employees
and other third parties, and the precautions taken by the potential target business to detect and prevent this activity may not
be effective in controlling unknown or unmanaged risks or losses or in protecting the potential target business from governmental
investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any
such actions are instituted against the potential target business, and it is not successful in defending itself or asserting its
rights, those actions could have a significant impact on the business of the potential target business, including the imposition
of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits
and future earnings, and curtailment of the operations of the potential target business, any of which could have a material adverse
effect on the potential target’s business, financial condition and results of operations.