Item 1. Business
We are a blank check company
incorporated in Delaware on February 12, 2021. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or other similar business combination with one or more businesses, which we refer to throughout this Annual
Report as our “initial business combination.” We have reviewed a number of opportunities to enter into an initial business
combination; however, we have neither engaged in any operations nor have we generated any revenue to date. Based on our business activities,
we are a “shell company,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
because we have no operations and nominal assets consisting almost entirely of cash. Further, we are an early stage and emerging growth
company and, as such, we are subject to all of the risks associated with early stage and emerging growth companies. For more information,
please see “Item 1A. Risk Factors - We are an emerging growth company within the meaning of the Securities Act, and if we take
advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less
attractive to investors and may make it more difficult to compare our performance with other public companies.”
Our executive offices are
located at 214 Brazilian Avenue, Suite 200-A, Palm Beach, Florida, 33480, and our telephone number is (561) 805-3588. Our corporate website
address is www.colombierspac.com. Our website and the information contained thereon or that can be accessed through the website
is not deemed to be incorporated by reference in, and is not considered part of, this Annual Report on Form 10-K. You should not rely
on any such information in making a decision whether to invest in our securities.
Company History
Initial Public Offering
On March 19, 2021, we filed
a Form S-1 with the SEC indicating our intent to offer three classes of securities: (1) units, each consisting of one share of Class A
common stock, par value $0.0001, and one-third of one redeemable warrant (the “Units”); (2) shares of Class A common stock
included as part of the Units (the “Public Shares”); and (3) redeemable warrants included as part of the Units (the “Warrants”).
Following a series of correspondence and amendments filed with the SEC on May 7, 2021 and June 3, 2021, the registration statement (as
amended) for this initial public offering was declared effective on June 8, 2021 (the “Initial Public Offering”).
On June 11, 2021, we consummated
the Initial Public Offering of 15,000,000 Units, generating gross proceeds of $150,000,000. Simultaneously with the closing of the Initial
Public Offering, we consummated the sale of 5,250,000 Warrants at a price of $1.00 per Warrant in a private placement to our sponsor,
Colombier Sponsor LLC (the “Sponsor”), generating gross proceeds of $5,250,000 (the “Private Placement Warrants”).
At the closing of the Initial
Public Offering on June 11, 2021, due to a clerical error, the Trust Account (as defined below) was overfunded by $1,240,000. The overfunded
amount was transferred to our operating account on June 14, 2021.
On July 1, 2021, the underwriters
exercised their over-allotment option related to the Initial Public Offering in full, resulting in the issuance of an additional 2,250,000
Units for an aggregate amount of $22,500,000. In connection with the underwriters’ exercise of their over-allotment option, we also
consummated the sale of an additional 450,000 Warrants at $1.00 per Warrant, generating total proceeds of $450,000. A total of $22,500,000
was deposited into a trust account (the “Trust Account”), bringing the aggregate proceeds held in the Trust Account to $172,500,000.
Total costs associated with
the Initial Public Offering accruing in the fiscal year ended December 31, 2021 amounted to $10,277,418, consisting of (1) $3,450,000
of underwriting fees payable on the date of the Initial Public Offering, (2) $6,037,500 of deferred underwriting fees payable from the
proceeds in the Trust Account solely in the event we effectuate an initial business combination, (3) $329,619 of costs associated with
the derivative warrant liabilities, and (4) $460,299 of other offering costs.
As of December 31, 2022,
we had not yet commenced any operations. All activity for the period beginning on February 12, 2021 (inception) through December 31, 2022
relates to our formation, Initial Public Offering, and, subsequent to the Initial Public Offering, identifying a target company for a
business combination. We will not generate any operating revenues until after the completion of a business combination, at the earliest.
We generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. We have elected
December 31 as our fiscal year end.
Our Units, Public Shares
and the Warrants are listed on the New York Stock Exchange (“NYSE”) under the symbols “CLBR.U,” “CLBR,”
and “CLBR.WS,” respectively. Our Units began trading on June 11, 2021, and our Public Shares and Warrants began separate trading
on the NYSE on July 6, 2021.
Use of Proceeds of the Initial Public Offering
Following the closing of
the Initial Public Offering on June 11, 2021, an amount of $150,000,000 ($10.00 per Unit) representing the net proceeds from the sale
of the Units in the Initial Public Offering and the sale of the Warrants in the private placement to the Sponsor was placed in the Trust
Account, which is and will be invested in either (1) U.S. government securities within the meaning set forth in Section 2(a)(16) of the
Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less, or (2) in
any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company
Act, as determined by us, until the earlier of: (i) the completion of an initial business combination or (ii) the distribution of the
funds in the Trust Account to our shareholders, as described below. Our management has broad discretion with respect to the specific application
of the net proceeds of the Initial Public Offering and the sale of the Warrants, although substantially all of the net proceeds are intended
to be applied generally toward completing a business combination. We must complete one or more initial business combinations with one
or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (net
of amounts disbursed to management for working capital purposes, if applicable, and excluding the amount of any deferred underwriting
discount) at the time of the signing a definitive agreement to enter a business combination. We will only complete a business combination
if the post-business combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act. There is no assurance that we will be able to successfully effect a business combination.
Founder Shares
On February 15, 2021, the
Sponsor purchased 4,312,500 shares of our Class B common stock (the “Founder Shares”) for an aggregate price of $25,000. At
the time of the purchase, the Founder Shares included an aggregate of up to 562,500 shares subject to forfeiture by the Sponsor to the
extent that the underwriter’s over-allotment option was not exercised in full or in part, so that the Sponsor would collectively
own, on an as-converted basis, 20% of our issued and outstanding shares after the Initial Public Offering (assuming the Sponsor did not
purchase any Public Shares in the Initial Public Offering). As a result of the underwriters’ election to fully exercise their over-allotment
option on July 1, 2021, 562,500 Founder Shares are no longer subject to forfeiture.
The Sponsor has agreed, subject
to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares (or shares of common stock issuable upon conversion
thereof) until the earlier of: (1) one year after the completion of our initial business combination or (2) subsequent to an initial business
combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after a business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange or
other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock for cash,
securities or other property.
Initial Business Combination
NYSE rules require that an
initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of
the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if applicable, and excluding
the amount of any deferred underwriting discount). We refer to this as the “80% of net assets test.” The fair market value
of the target or targets will be determined by our Board of Directors (the “Board”) based upon one or more standards generally
accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our Board is not able
to independently determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment
banking firm that is a member of the Financial Industry Regulatory Authority (“FINRA”) or from an independent accounting firm
with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination, although there is no assurance that will be the case. Subject to this requirement,
our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although
we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal
operations.
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 business 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 valued for purposes of the 80%
of net assets 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
target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent
management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal, and other
information which will be made available to us.
We cannot currently ascertain
with any degree of certainty the amount of time and associated costs required to select and evaluate a target business and to structure
and complete our initial business combination. 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 us incurring losses, which will reduce
the funds we can use to attempt to complete another business combination.
We will have until June 11,
2023 to complete a business combination (the “Completion Window” or “Combination Period”) (or until September
11, 2023 if we have executed a letter of intent, agreement in principle or definitive agreement for an initial business combination prior
to June 11, 2023). If we are unable to complete a business combination within the Combination Period, we will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem
the Public Shares at a per share price payable in cash equal to the aggregate amount then on deposit in the Trust Account, including interest
earned on the funds held in the Trust Account (net of $100,000 of interest to pay dissolution expenses, and any amounts used to fund working
capital requirements, subject to an annual limit of $1,000,000, and/or to pay our taxes (“Permitted Withdrawals”)), divided
by the number of then-outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and the Board, dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable laws. There will be no redemption rights
or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete a business combination within
the Combination Period.
Our Amended and Restated
Certificate of Incorporation (our “Charter”) requires the affirmative vote of a majority of our Board, which must include
a majority of our independent directors, to approve our initial business combination (or such other vote as the applicable law or stock
exchange rules then in effect may require). We are not limited to a particular industry or sector for purposes of consummating a business
combination. There is no assurance that we will be able to successfully effect or complete a business combination.
We do not believe we will
need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimates of the
costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than
the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination.
Moreover, we may need to obtain additional financing either (i) to complete our initial business combination or (ii) because we become
obligated to redeem a significant number of our Public Shares in connection with our initial business combination or a stockholder vote
to make certain amendments to our Charter, in which case we may issue additional securities or incur debt in connection with our initial
business combination. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the
net proceeds of our Initial Public Offering and the sale of the Private Placement Warrants, and, as a result, if the cash portion of the
purchase price exceeds the amount available to us, including from the Trust Account (net of amounts needed to satisfy redemptions by public
stockholders), we may be required to seek additional financing to complete such a proposed initial business combination. We may also obtain
financing prior to the closing of our initial business combination to fund our working capital needs and transaction costs in connection
with our search for and completion of our initial business combination. There is no limitation on our ability to raise funds through the
issuance of equity or equity-linked securities or through loans, advances, or other indebtedness in connection with our initial business
combination, including pursuant to forward purchase agreements or backstop arrangements into which we may enter. Subject to compliance
with the applicable securities laws, we would only complete such financing simultaneously with the completion of our 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 upon expiration of the Combination Period. In addition, following our initial business
combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
The terms of our Charter provide a Completion Window of 24 months from the date of closing of our Initial Public Offering (the “IPO
Date”), or 27 months from the IPO Date if we have entered into a letter of intent, agreement in principle or definitive agreement
for an initial business combination within 24 months from the IPO Date. As a result of our entering into the Agreement and Plan of Merger
(the “Merger Agreement”) with PSQ Holdings, Inc. on February 27, 2023 (prior to the 24-month anniversary of the IPO Date),
our Completion Window has been automatically extended from June 11, 2023 to September 11, 2023 in accordance with the terms of our Charter.
Lack of Business Diversification
For an indefinite period
of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business.
Unlike other entities that
have the resources to complete business combinations with multiple entities in one or several industries, it is probable that we will
not have the resources to diversify our operations and mitigate the risks of being in a single line of business. By completing our initial
business combination with only a single entity, our lack of diversification may:
| ● | subject
us to negative economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact on the particular industry in which we operate after our
initial business combination; and |
| | | |
| ● | cause
us to depend on the marketing and sale of a single product or limited number of products
or services. |
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.
Limited Ability to Evaluate the Target’s
Management Team
Although we intend to closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of
our management team (if any) in the target business cannot presently be stated with any certainty. While it is possible that one or more
of our directors will remain associated with us in some capacity following our initial business combination, it is highly unlikely that
any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure you
that members of our management team will have significant experience or knowledge relating to the operations of the particular target
business. Please see “Item 1A. Risk Factors - Risks Relating to Our Business Operations and Our Search for and Consummation of,
or Inability to Consummate, an Initial Business Combination - We may seek acquisition opportunities in acquisition targets that may
be outside of our management’s areas of expertise.”
We cannot assure you that
any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following our initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure
you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve
our Initial Business Combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if such approval
is required by applicable law or stock exchange rules, or we may decide to seek stockholder approval for business or other reasons. Presented
in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval
is currently required under Delaware law for each such transaction.
| Type of Transaction |
|
Whether Stockholder Approval is Required |
| Purchase of assets |
|
No |
| Purchase of stock of target not involving a merger with the company |
|
No |
| Merger of target into a subsidiary of the company |
|
No |
| Merger of the company with a target |
|
Yes |
Under the NYSE’s listing
rules, stockholder approval would be required for our initial business combination if, for example:
| ● | we
issue (other than in a public offering for cash) shares of common stock that will either
(a) be equal to or in excess of 20% of the number of shares of common stock then outstanding
or (b) have voting power equal to or in excess of 20% of the voting power then outstanding; |
| | | |
| ● | any
of our directors, officers or substantial security holders (as defined by the NYSE rules)
has a 5% or greater interest, directly or indirectly, in the target business or assets to
be acquired and if the number of shares of common stock to be issued, or if the number of
shares of common stock into which the securities may be convertible or exercisable, exceeds
either (a) 1% of the number of shares of common stock or 1% of the voting power outstanding
before the issuance in the case of any of our directors and officers or (b) 5% of the number
of shares of common stock or 5% of the voting power outstanding before the issuance in the
case of any substantial security holders; or |
| | | |
| ● | the
issuance or potential issuance will result in our undergoing a change of control. |
The
decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval
is not required by law will be made by us solely in our discretion. We will base this decision on business and legal rationales, which
include a variety of factors, such as:
| ● | the
timing of the transaction, including in the event we determine stockholder approval would
require additional time and there is either not enough time to seek stockholder approval
or doing so would place the company at a disadvantage in the transaction or result in other
additional burdens on the company; |
| | | |
| ● | the
expected cost of holding a stockholder vote; |
| | | |
| ● | the
risk that the stockholders would fail to approve the proposed business combination; |
| | | |
| ● | other
time and budget constraints of the company; and |
| | | |
| ● | additional
legal complexities of a proposed business combination that would be time-consuming
and burdensome to present to stockholders. |
Redemption Rights for Public Stockholders upon
Completion of our Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of our initial business combination
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 (net of Permitted Withdrawals), divided by the number of then-outstanding
Public Shares, subject to the limitations described herein. The amount in the Trust Account is initially anticipated to be $10.00 per
Public Share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred
underwriting commissions we will pay to the underwriters. The redemption right will include the requirement that any beneficial owner
on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its Public Shares. Each public stockholder
may elect to redeem its Public Shares without voting, and if it does vote, irrespective of whether it votes for or against the proposed
transaction. There will be no redemption rights upon the completion of our initial business combination with respect to our Warrants.
Our Sponsor, officers, and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption
rights with respect to any Founder Shares and any Public Shares that they hold 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 Public Shares upon the completion of our initial business combination
either: (1) in connection with a stockholder meeting called to approve the business combination or (2) by means of a tender offer. The
decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by
us solely in our discretion and will be based on a variety of factors, such as the timing of the transaction and whether the terms of
the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirements. Asset acquisitions
and stock purchases would not typically require stockholder approval, while direct mergers with our company where we do not survive and
any transactions where we issue more than 20% of our outstanding common stock or seek to amend our Charter would typically require stockholder
approval. If we structure a business combination transaction with a target company in a manner that requires stockholder approval, we
will not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We currently intend to
conduct redemptions pursuant to a stockholder vote unless stockholder approval is not required by applicable law or stock exchange listing
requirements or we choose to conduct redemptions pursuant to the tender offer rules of the SEC for business or other reasons.
If a stockholder vote is
not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our Charter:
| ● | conduct
redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate
issuer tender offers; and |
| | | |
| ● | file
tender offer documents with the SEC prior to completing our initial business combination
which contain substantially the same financial and other information about the initial
business combination and the redemption rights as is required under Regulation 14A of the
Exchange Act, which regulates the solicitation of proxies. |
Upon the public announcement
of our initial business combination, if we elect to redeem our Public Shares through a tender offer, to comply with Rule 14e-5 under the
Exchange Act, we and our Sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase Public Shares in the open
market.
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer
period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of Public
Shares, which number will be based on the requirement that we may not redeem Public Shares in an amount that would cause our net tangible
assets to be less than $5,000,001 (so that we do not then become 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 Public Shares than we have offered to purchase, we will withdraw the tender offer and will not complete such
initial business combination.
If, however, stockholder
approval of the transaction is required by applicable law or stock exchange listing requirements, or we decide to obtain stockholder approval
for business or other reasons, we will, pursuant to our Charter:
| ● | conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the
Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender
offer rules; and |
| | | |
| ● | file
proxy materials with the SEC. |
In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public stockholders with the redemption rights described above. We expect that a final proxy statement would be mailed to public stockholders
at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would be made available to such stockholders
well in advance of such time, thus providing additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation.
Although we are not required to do so, we currently intend to comply with the substantive and procedural requirements of Regulation 14A
in connection with any stockholder vote, even if we are not able to maintain our NYSE listing or Exchange Act registration.
If we seek stockholder approval,
unless otherwise required by applicable law, regulation, or stock exchange rules, we will complete our initial business combination only
if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting
will consist of the holders present in person or by proxy of shares of outstanding capital stock of the Company representing a majority
of the voting power of all outstanding shares of capital stock of the Company entitled to vote at such meeting. Our initial stockholders,
officers, and directors will count towards this quorum, and all have agreed to vote any Founder Shares and any Public Shares held by them
in favor of our initial business combination. These quorum and voting thresholds and agreements may make it more likely that we will consummate
our initial business combination. Each public stockholder may elect to redeem its Public Shares without voting, and if it does vote, irrespective
of whether it votes for or against the proposed transaction. In addition, our Sponsor, officers and directors have entered into letter
agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to any Founder Shares and any Public
Shares held by them in connection with the completion of a business combination.
Our Charter provides that
in no event will we redeem our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001 (so that
we do not then become 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. Redemptions of our Public Shares may also be subject
to a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example,
the proposed business combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred
to the target for working capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance
with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all
Public Shares that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the
proposed business combination exceeds the aggregate amount of cash available to us, we will not complete the business combination or redeem
any shares, and all Public Shares 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 Charter 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 our shares without our prior
consent, which we refer to as the “Excess Shares.” We believe this restriction will discourage stockholders from accumulating
large blocks of shares and/or subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed
business combination as a means to force us or our affiliates to purchase their shares at a significant premium to the then-current market
price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of our shares could
threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our affiliates 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 our
shares, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete
our initial business combination, particularly in connection with a business combination with a target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’ ability to
vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection
with a Tender Offer or Redemption Rights
We may require our public
stockholders seeking to exercise their redemption rights—whether they are record holders or hold their shares in “street name”—to
either (1) tender their certificates to our transfer agent (a) prior to the date set forth in the tender offer documents or proxy materials
mailed to such holders or (b) up to two business days prior to the vote on the proposal to approve the business combination, in the event
we distribute proxy materials; or (2) to deliver their shares to the transfer agent electronically using The Depository Trust Company’s
Deposit/Withdrawal At Custodian (“DWAC”) System, rather than simply voting against the initial business combination at the
holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our Public Shares in connection
with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements,
which will include the requirement that any beneficial owner on whose behalf a redemption right is being exercised must identify itself
in order to validly redeem its shares. Accordingly, a public stockholder would have from the time we send out our tender offer materials
until the close of the tender offer period, or up to two business days prior to the vote on the business combination if we distribute
proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant to the tender offer
rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final proxy statement
would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement
would be made available to such stockholders well in advance of such time, thus providing additional notice of redemption if we conduct
redemptions in conjunction with a proxy solicitation. 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 Depository Trust Company’s
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 Public Shares. The need to deliver Public Shares is a requirement of exercising redemption
rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different
from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations,
many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a
holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking
to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder to arrange
for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window”
after the completion of the business combination during which he or she could monitor the price of the company’s stock in the market.
If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his
or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit
before the stockholder meeting, would become “option” rights surviving past the completion of the business combination until
the redeeming holder delivered its certificates. The requirement for physical or electronic delivery prior to the meeting ensures that
a redeeming holder’s election to redeem is irrevocable once the business combination is approved.
Once made, any request to
redeem such shares may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder
meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a Public Share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such
holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our Public Shares electing to redeem their shares will be distributed promptly after the completion of
our initial business combination.
If our initial business combination
is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the Trust Account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our proposed initial business
combination is not completed, we may continue to try to complete a business combination with a different target until the end of the Combination
Period.
Redemption of Public Shares and Liquidation
if no Initial Business Combination
Our Charter provides
that we will have only the time of the Completion Window (the date that is 24 months from the closing of the Initial Public
Offering, or the date that is 27 months from the closing of the Initial Public Offering if we have executed a letter of intent,
agreement in principle or definitive agreement for an initial business combination prior to the date that is 24 months from the closing of the Initial Public Offering to complete our initial
business combination. If we are unable to complete our initial business combination within such period, we will: (1) cease all
operations (except for the purpose of winding up); (2) 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 (net of Permitted Withdrawals and up to $100,000 of interest to pay dissolution expenses), divided
by the number of then-outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as
promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to our Warrants,
which will expire worthless if we fail to complete our initial business combination within the Completion Window.
The underwriters have agreed
to waive their rights to their deferred underwriting commission held in the Trust Account in the event we do not complete a business combination
within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will
be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of
the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
Our initial stockholders,
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 held by them if we fail to complete our initial business combination within
the Completion Window. However, if our initial stockholders or any of our officers, directors, or any of their respective affiliates then
hold any Public Shares, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if
we fail to complete our initial business combination within the Combination Period.
Our Sponsor, officers, and
directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our Charter to modify the
substance or timing of our obligation to provide for the redemption of our Public Shares in connection with an initial business combination
or to redeem 100% of our Public Shares if we do not complete our initial business combination within the Completion Window, unless we
provide our public stockholders with the opportunity to redeem their Public Shares upon approval of any such amendment at a per share
price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of Permitted Withdrawals),
divided by the number of then-outstanding Public Shares. However, we may not redeem our Public Shares in an amount that would cause our
net tangible assets to be less than $5,000,001 (so that we do not then become 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.
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 held
outside the Trust Account, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds
are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any
interest accrued in the Trust Account not required to pay taxes or make other Permitted Withdrawals, 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 funds held outside of the Trust Account, and without taking into account interest, if any, earned on the Trust Account and any Permitted
Withdrawals or expenses for the dissolution of the trust, the per share redemption amount received by stockholders upon our dissolution
would be $10.00. The proceeds deposited in the Trust Account could, however, become subject to the claims of our creditors, which would
have higher priority than the claims of our public stockholders. We cannot assure you that the actual per share redemption amount received
by stockholders will not be substantially less than $10.00. Please see “Item 1A. Risk Factors - Risks Relating
to Our Business Operations and Our Search for and Consummation of, or Inability to Consummate, an Initial Business Combination - 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 Section 281(b) of the Delaware General Corporation Law (“DGCL”),
our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full, as
applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining
assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay
or provide for all creditors’ claims.
Although we will seek to
have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses, or
other entities with which we do business execute agreements with us waiving any right, title, interest, or claim of any kind in or to
any monies held in the Trust Account for the benefit of our public stockholders, there is no guarantee that such entities 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 we are 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. In order to protect the amounts held in the Trust Account, our Sponsor has agreed that it will be liable to us if and
to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we
have discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share
in the aggregate or (2) the actual amount per Public Share held in the Trust Account, if less than $10.00 per share due to reductions
in the value of the Trust Account assets, net of Permitted Withdrawals, except as to any claims by a third party that executed a waiver
of any and all rights to the monies held in the Trust Account (whether any such waiver is enforceable) and except as to any claims under
our indemnity of the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the
“Securities Act”). We have not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations
and believe that our Sponsor’s only assets are securities of our company; therefore, our Sponsor may not be able to satisfy those
obligations. We have not asked our Sponsor to reserve for such obligations. Therefore, we cannot assure you that our Sponsor would be
able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the funds available
for our initial business combination and redemptions could be reduced to less than $10.00 per Public Share. In such event, we may not
be able to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption
of your Public Shares. None of our officers 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: (1) $10.00 per Public Share in the aggregate; or (2) the actual amount per Public Share held in
the Trust Account, if less than $10.00 per share due to reductions in the value of the Trust Account assets, net of Permitted Withdrawals,
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 in exercising their business judgment, our independent directors may choose
not to do so in certain instances. For example, the independent directors may deem the cost of such legal action to be too high relative
to the amount recoverable, or the independent directors may determine that a favorable outcome is not likely. Accordingly, we cannot assure
you that due to claims of creditors the actual value of the per share redemption price will not be substantially less than $10.00 per
share. Please see “Item 1A. Risk Factors - Risks Relating to Our Business Operations and Our Search for and Consummation
of, or Inability to Consummate, an Initial Business Combination - 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.”
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 (other than our independent registered public accounting firm), prospective target businesses, or other entities with which
we do business execute agreements with us waiving any right, title, interest, or claim of any kind in or to monies held in the Trust Account.
Our Sponsor will also not be liable as to any claims under our indemnity of the underwriters against certain liabilities, including liabilities
under the Securities Act. As of March 23, 2023, we had access to approximately $175.0 million in the Trust Account with which to
pay any such potential claims (including costs and expenses incurred in connection with our liquidation, which is 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 within the Completion Window may be considered a liquidating distribution under Delaware
law. If we comply with certain procedures set forth in Section 280 of the DGCL intended to ensure that we make reasonable provision for
all claims against us, including a 60-day notice period during which any third-party claims can be brought against us, a 90-day period
during which we may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made
to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution.
Furthermore, if the pro rata
portion of our Trust Account distributed to our public stockholders upon the redemption of our Public Shares in the event we do not complete
our initial business combination within the Completion Window is not considered a liquidating distribution under Delaware law,
and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims
of creditors could then be six years after the unlawful redemption distribution instead of three years (as in the case of a liquidating
distribution). If we are unable to complete our initial business combination within the Completion Window, we will: (1) cease all operations,
except for the purpose of winding up; (2) 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
(net of Permitted Withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then-outstanding Public
Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under
Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem
our Public Shares as soon as reasonably possible following the expiration of the Completion Window and, therefore, we do not intend to
comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received
by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying
with Section 280, Section 281(b) of the DGCL requires us to adopt a plan—based on facts known to us at such time—that will
provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent
ten years. However, because we are a blank check company rather than an operating company, and because our operations will be limited
to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers
and investment bankers, among others) or prospective target businesses. As described above, we will seek to have all vendors, service
providers (other than our independent registered public accounting firm), prospective target businesses, or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust
Account. As a result of this obligation, the claims that could be made against us are significantly limited, and the likelihood that any
claim that would result in any liability extending to the Trust Account is remote. Further, our Sponsor may be liable only to the extent
necessary to ensure that the amounts in the Trust Account are not reduced below: (1) $10.00 per Public Share; or (2) 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 value of the Trust Account assets, net of Permitted Withdrawals, and will not be liable as to any claims under our indemnity
of the underwriters against certain liabilities, including liabilities under the Securities Act.
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 laws 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 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. Please see “Item 1A. Risk Factors - Risks Relating to Our Business Operations
and Our Search for and Consummation of, or Inability to Consummate, an Initial Business Combination - If, after we distribute
the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our Board may be viewed as
having breached their fiduciary duties to our creditors, thereby exposing the members of our Board and us to claims of punitive damages.”
Our public stockholders will
be entitled to receive funds from the Trust Account only upon the earlier to occur of: (1) the completion of our initial business combination,
and then only in connection with those Public Shares that such stockholder properly elected to redeem, subject to the limitations described
herein; (2) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend our Charter to modify
the substance or timing of our obligation to provide for the redemption of our Public Shares in connection with an initial business combination
or to redeem 100% of our Public Shares if we do not complete our initial business combination within the Completion Window; and (3) the
redemption of all of our Public Shares if we are unable to complete our initial business combination within the Completion Window, subject
to applicable law and as further described herein. 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 our 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 described above.
Competition
In identifying, evaluating,
and selecting a target business for our initial business combination, we may encounter intense competition from other entities having
a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public
companies, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience
identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors may possess greater
financial, technical, human, and other resources than we have. Our ability to acquire larger target businesses will be limited by our
available financial resources. This inherent limitation may provide others an advantage in pursuing the acquisition of a target business.
Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the
resources available to us for our initial business combination, and our outstanding warrants, and the future dilution they potentially
represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage
in successfully negotiating an initial business combination.
Employees
We currently have two officers
and do not intend to have any full-time employees prior to the completion of our initial business combination. Members of our management
team are not obligated to devote any specific number of hours to our matters, but they intend to devote as much of their time as they
deem necessary to our affairs until we have completed our business combination. The amount of time that any such person will devote in
any time period to our company will vary based on whether a target business has been selected for our business combination and the current
stage of the business combination process.
Facilities
We currently maintain our
executive offices at 214 Brazilian Avenue, Suite 200-A, Palm Beach, Florida, 33480. We consider our current office space adequate for
our current operations.
Regulation
Emerging Growth Company Status
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that
are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being
required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (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 have and intend
to continue to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company for up to five years following the completion of our Initial Public Offering or until the earliest of: (1) the last day
of the first fiscal year in our annual gross revenue exceeds of $1.235 billion; (2) December 31 of the fiscal year that we become a “large
accelerated filer,” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held
by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter and we have
been publicly reporting for at least 12 months; or (3) the date on which we have issued more than $1.0 billion in non-convertible debt
securities during the preceding three-year period. References herein to “emerging growth company” shall have the meaning associated
with it in the Securities Act, as modified by the JOBS Act.
Periodic Reporting and Financial Information
Our Units, Public Shares
and Warrants are registered under the Exchange Act, and we have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. The SEC maintains an internet site at www.sec.gov that contains such reports, proxy
and information statements and other information regarding issuers that file electronically with the SEC. In accordance with the requirements
of the Exchange Act, our annual reports contain financial statements audited and reported on by our independent registered public accounting
firm.
We will provide stockholders
with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials
sent to shareholders to assist them in assessing the target business. These financial statements may be required to be prepared in accordance
with, or be reconciled to United States generally accepted accounting principles (“GAAP”) or international financial reporting
standards as promulgated by the international accounting standards board (“IFRS”), depending on the circumstances and the
historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight
Board (“PCAOB”). These financial statement requirements may limit the pool of potential target businesses we may acquire because
some targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance with
federal proxy rules and complete our initial business combination within the Completion Window. We cannot assure you that any particular
target business identified by us as a potential business combination candidate will have financial statements prepared in accordance with
GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements outlined
above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may
limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
Under the Sarbanes-Oxley
Act, we are required to evaluate our internal control procedures for the fiscal year ending December 31, 2022. Only in the event we are
deemed to be a large accelerated filer or an accelerated filer and no longer an emerging growth company will we be required to have our
internal control procedures audited. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such acquisition.
Our Sponsor: Colombier Sponsor LLC
Sponsor Indemnity
In order to protect the amounts
held in the Trust Account, the Sponsor has agreed to be liable to us if and to the extent any claims by a third party for services rendered
or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the
amount of funds in the Trust Account to below (1) $10.00 per Public Share in the aggregate or (2) the actual amount per Public Share held
in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in
the value of the Trust Account assets, less Permitted Withdrawals; 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 monies held in the Trust Account, nor will it apply
to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities
under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor
will not be responsible to the extent of any liability for such third-party claims. We will seek to reduce the possibility that the Sponsor
will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except our
independent registered public accounting firm), prospective target businesses, or other entities with which we do business execute agreements
with us waiving any right, title, interest, or claim of any kind in or to monies held in the Trust Account.
Sponsor Redemption Rights
The Sponsor has agreed (a)
to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of an
initial business combination, (b) to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete
an initial business combination within 24 months from the closing of the Initial Public Offering (or 27 months, under certain circumstances)
and (c) not to propose an amendment to the Charter (i) to modify the substance or timing of our obligation to allow redemption in connection
with our initial business combination or to redeem 100% of its Public Shares if we do not complete a business combination or (ii) with
respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide
the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
Sponsor Liquidation Rights
The Sponsor has agreed to
waive its liquidation rights with respect to the Founder Shares if we fail to complete a business combination within the Combination Period.
However, if the Sponsor acquires Public Shares, such Public Shares will be entitled to liquidating distributions from the Trust Account
if we fail to complete a business combination within the Combination Period.
Item 1A. Risk Factors.
An investment in our securities
involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained
in this Annual Report on Form 10-K, the prospectus associated with our Initial Public Offering and the registration statement of which
such prospectus form a part before making a decision to invest in our securities. If any of the following events occurs, our business,
financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could
decline, and you could lose all or part of your investment.
SUMMARY OF RISK FACTORS
Our business is subject to
numerous risks and uncertainties, including those highlighted below, that represent challenges that we may face in connection with the
successful implementation of our strategy. The occurrence of one or more of the events or circumstances described this section-either
alone or in combination with other events or circumstances-may adversely affect our ability to effect a business combination, and may
have an adverse effect on our business, cash flows, financial condition and results of operations. This summary only highlights the more
detailed information appearing elsewhere in this Annual Report. You should read this entire report carefully, including the information
contained in this “Item 1A. Risk Factors” and our financial statements and the related notes included elsewhere in this Annual
Report, before investing.
| ● | We
are an early stage company with no operating history and, accordingly, you have no basis
on which to evaluate our ability to achieve our business objective. |
| | | |
| ● | Our
search for a business combination, and any target business with which we may ultimately consummate
a business combination, may be materially adversely affected by ongoing volatility in the
capital markets. |
| | | |
| ● | Our
public shareholders may not be afforded an opportunity to exercise their redemption rights. |
| | | |
| ● | The
NYSE 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. |
| | | |
| ● | If
we are unable to complete our initial business combination during the Combination Period,
our Sponsor may decide not to extend the term we have to consummate such a business combination,
in which case we would cease all operations (except for the purpose of winding up) and we
would redeem our Public Shares and liquidate, thus rendering the rights and warrants worthless. |
| | | |
| ● | We
may be declared an investment company under the Investment Company Act, thus subjecting us
to a complex regulatory regime. |
| | | |
| ● | We
are subject to the inherent risks associated with operating under a constantly changing legal
and regulatory regime. |
| | | |
| ● | We
may suffer risks associated with our ability to select an appropriate target business or
businesses, including limitations in the pool of prospective target businesses available
to us and the ability of our officers and directors to generate a number of potential business
combination opportunities. |
| | | |
| ● | We
may suffer risks associated with the performance of the prospective target business or businesses. |
| | | |
| ● | We
may issue additional shares of our Public Shares to complete our initial business combination,
which would dilute the equity interest of our existing shareholders. |
| ● | We
may issue notes or other debt securities or otherwise incur substantial debt to complete
a business combination, which may adversely affect our leverage and financial condition and
thus negatively impact the value of our shareholders’ investment in us. |
| | | |
| ● | Our
officers and directors may allocate their time to other businesses, or may potentially have
conflicts of interest with our business or in approving an initial business combination. |
| | | |
| ● | We
may not have sufficient working capital to cover our operating expenses. |
| | | |
| ● | We
may engage in a business combination with one or more target businesses that have relationships
with entities that may be affiliated with our executive officers, directors or insiders,
which may raise potential conflicts of interest. |
| | | |
| ● | Our
Sponsor, officers, and directors may have incentives to complete a business combination on
unfavorable terms to avoid the alternative result of losing their entire investment in us,
which would occur should such an initial business combination otherwise remain incomplete
upon the termination of the Combination Period. |
| | | |
| ● | We
may have difficulty obtaining additional financing to complete our initial business combination. |
| | | |
| ● | We
may suffer risks associated with our ability to recruit and retain our officers, key employees,
and directors following our initial business combination. |
| | | |
| ● | We
retain the ability to amend the terms of our warrants, and such amendment may be adverse
to the holders of our public warrants. |
| | | |
| ● | We
retain the ability to redeem our warrant holders’ unexpired warrants prior to their
exercise. |
| | | |
| ● | Volatility
in the capital markets, as well as other factors, may inhibit the potential liquidity and
trading activity of our public securities. |
| | | |
| ● | Provisions
in our Charter, bylaws, 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 common stock; such
items could also discourage lawsuits against our directors and officers, thus lending to
the possibility that management could become entrenched. |
Risks Relating to Our Business Operations and
Our Search for and Consummation of, or Inability to Consummate, an Initial Business Combination
We are an early stage company with no operating
history and, accordingly, 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, which is to complete our initial business combination with one or more target businesses. If we fail to complete our business
combination, we will never generate any operating revenues.
Our public stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our Founder Shares will participate
in such vote, which means we may complete our initial business combination even though a majority of our public stockholders do not support
such a combination.
We may not hold a stockholder
vote to approve our initial business combination unless the business combination would require stockholder approval under applicable law
or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other reasons. For instance, the NYSE
rules currently allow us to engage in a tender offer in lieu of a stockholder meeting, but would still require us to obtain stockholder
approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination.
Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek
stockholder approval of such business combination. However, except as required by applicable law or stock exchange rules, the decision
as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to
us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the
transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Even if we seek stockholder
approval, the holders of our Founder Shares will participate in the vote on such approval. Accordingly, we may consummate our initial
business combination even if holders of a majority of our outstanding Public Shares do not approve of the business combination we consummate.
Please see “Item 1. Business - Initial Business Combination - Stockholders May Not Have the Ability to Approve our
Initial Business Combination” for additional information.
If we seek stockholder approval of our initial
business combination, our Sponsor, officers and directors have agreed to vote in favor of such initial business combination, regardless
of how our public stockholders vote.
Our Sponsor, officers and
directors have agreed (and their permitted transferees will agree) to vote any Founder Shares and any Public Shares held by them in favor
of our initial business combination. As a result, in addition to our Sponsor’s Founder Shares, we would need 6,425,625, or 37.5%
(assuming all issued and outstanding shares are voted), or 3,281,251, or 37.5% (assuming only the minimum number of shares representing
a quorum are voted) of the 17,250,000 Public Shares to be voted in favor of a transaction in order to have such initial business combination
approved. We expect that our Sponsor and its permitted transferees will own at least 20% of our outstanding shares of common stock at
the time of any such stockholder vote. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely
that the necessary stockholder approval will be received than would be the case if our Sponsor and its permitted transferees agreed to
vote their Founder Shares in accordance with the majority of the votes cast by our public stockholders.
Your only opportunity to affect the investment
decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash,
unless we seek stockholder approval of such business combination.
At the time of your investment
in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Additionally, since
our Board may complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity
to vote on the business combination. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment
decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which
will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our
initial business combination.
The ability of our public stockholders to
redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it
difficult for us to enter into a business combination with a target.
We may seek to enter into
a business combination transaction agreement with a prospective target that requires as a closing condition that we have a minimum net
worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such
closing condition and, as a result, would not be able to proceed with the business combination. The amount of the deferred underwriting
commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with a business combination
and such amount of deferred underwriting discount is not available for us to use as consideration in an initial business combination.
Furthermore, in no event will we redeem our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001
(so that we do not then become 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 as described above, we would not proceed with such redemption and the related business combination and may instead search for
an alternate business combination. Prospective targets will be aware of these risks and thus may be reluctant to enter into a business
combination transaction with us.
The ability of our public stockholders to
exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
At the time we enter into
an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights and, therefore,
we will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption.
If our initial business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the Trust Account to meet
such requirements or arrange for third party financing. In addition, if a larger number of shares is submitted for redemption than we
initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or arrange
for third party financing. Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness
at higher-than-desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Founder
Shares results in the issuance of Public Shares on a greater than one-to-one basis upon conversion of the Founder Shares at the time of
our initial business combination. In addition, the amount of deferred underwriting commissions payable to the underwriters is not required
to be adjusted for any shares that are redeemed in connection with an initial business combination. The above considerations may limit
our ability to complete the most desirable business combination available to us or optimize our capital structure.
The ability of our public stockholders to
exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our initial business combination
agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, the probability that our initial business combination would be unsuccessful increases. If our initial business combination
is unsuccessful, you would not receive your pro rata portion of the Trust Account until we liquidate the Trust Account. If you are in
need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time, our stock may trade at a
discount to the pro rata amount per share in the Trust Account. In either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open
market.
The requirement that we complete our initial
business combination within the Completion Window may give potential target businesses leverage over us in negotiating a business combination
and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach
our dissolution deadline-which could undermine our ability to complete our initial business combination on terms that would produce value
for our stockholders.
Any potential target business
with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination
within the Completion Window (that is, before June 11, 2023, or until September 11, 2023 if we have executed a letter of intent, agreement
in principle or definitive agreement for an initial business combination prior to June 11, 2023). Consequently, such target business may
obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with
that particular target business, we may be unable to complete our initial business combination with any target business. This risk will
increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter
into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be able to complete our initial
business combination within the Completion Window, in which case we would cease all operations (except for the purpose of winding up)
and redeem our Public Shares and liquidate, in which case our public stockholders may receive only $10.00 per share (or less than such
amount in certain circumstances) and our Warrants will expire worthless.
Our Sponsor, officers and
directors have agreed that we must complete our initial business combination within the Completion Window. We may not be able to find
a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial
business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets, and the other
risks described herein, including risks associated with the ongoing COVID-19 pandemic.
If we have not completed
our initial business combination within such time period, we will: (1) cease all operations except for the purpose of winding up; (2)
as promptly as reasonably possible (but not more than 10 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 (net of Permitted Withdrawals and up to
$100,000 of interest to pay dissolution expenses), divided by the number of then-outstanding Public Shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),
subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our Board, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. In such case, our public stockholders may receive only $10.00 per share, or less
than $10.00 per share, on the redemption of their shares, and our Warrants will expire worthless. Please see “Item 1A. Risk Factors
- Risks Relating to Our Business Operations and Our Search for and Consummation of, or Inability to Consummate, an Initial Business Combination
- If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per share redemption amount
received by stockholders may be less than $10.00 per share” and “-Our search for a business combination, and any target
business with which we ultimately consummate a business combination, may be materially adversely affected by the COVID-19 pandemic.”
The securities in which we invest the funds
held in the Trust Account could bear a negative rate of interest, which could reduce the aggregate value of the assets held in the Trust
Account such that the per share redemption amount received by public stockholders may be less than your anticipated per share redemption
amount.
The funds in the Trust Account
may only be invested in U.S. government treasury bills with a maturity of 185 days or less, or in money market funds that meet certain
conditions under Rule 2a-7 under the Investment Company Act and that invest only in direct U.S. government obligations. While short-term
U.S. government treasury bills currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent
years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal
Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we
are unable to complete our initial business combination or make certain amendments to our Charter, our public stockholders are entitled
to receive their pro rata share of the proceeds held in the Trust Account, including interest (net of Permitted Withdrawals and up to
$100,000 of interest to pay dissolution expenses). Negative interest rates could affect the per share redemption amount that may be received
by public stockholders.
If we seek stockholder approval of our initial
business combination, our Sponsor, directors, officers, advisors or any of their respective affiliates may elect to purchase shares or
warrants from the public, which may influence a vote on a proposed business combination and reduce the public “float” of our
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 any of their respective affiliates may purchase Public Shares or
public Warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination, although they are under no obligation or other duty to do so. Such a purchase may include a contractual
acknowledgement that such public 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 any of their respective affiliates purchase Public Shares in privately negotiated transactions from
public stockholders who have already elected to exercise their redemption rights, such selling public stockholders would be required to
revoke their prior elections to redeem their shares. The price per share paid in any such transaction may be different from the amount
per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination. The
purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining
stockholder approval of our 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 Public Shares and the number of beneficial holders of our securities may be reduced, possibly
making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for
tendering its shares, such shares may not be redeemed.
We will comply with the tender
offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our
compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may
not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that
we will furnish to holders of our Public Shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly tender or redeem Public Shares. For example, we may require our public stockholders seeking
to exercise their redemption rights—whether they are record holders or hold their shares in “street name”—to either
tender their certificates to our transfer agent prior to the date set forth in the tender offer or proxy materials 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 procedures, its shares may not be redeemed. Please see “Item 1. Business - Initial Business Combination
- Tendering Stock Certificates in Connection with a Tender Offer or Redemption Rights.” 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 earlier to occur of: (1) the completion of our initial business combination,
and then only in connection with those Public Shares that such stockholder properly elected to redeem, subject to the limitations described
herein; (2) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend our Charter to modify
the substance or timing of our obligation to provide for the redemption of our Public Shares in connection with an initial business combination
or to redeem 100% of our Public Shares if we do not complete our initial business combination within the Completion Window; and (3) the
redemption of all of our Public Shares if we are unable to complete our initial business combination within the Completion Window, subject
to applicable law and as further described herein. In addition, if we are unable to complete an initial business combination within the
completion window for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders
for approval prior to the distribution of the proceeds held in our Trust Account. In that case, public stockholders may be forced to wait
beyond the completion window before they receive funds from our Trust Account. In no other circumstances will a public stockholder have
any right or interest of any kind in the Trust Account. Holders of warrants will not have any right to the proceeds held in the trust
account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares or Warrants,
potentially at a loss.
Our public stockholders do not have any
rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate their investment, therefore,
public stockholders may be forced to sell their Public Shares or Warrants, potentially at a loss.
Our public stockholders will
be entitled to receive funds from the Trust Account only upon the earlier to occur of: (1) the completion of our initial business combination,
and then only in connection with those Public Shares that such stockholder properly elected to redeem, subject to the limitations described
herein; (2) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend our Charter to modify
the substance or timing of our obligation to provide for the redemption of our Public Shares in connection with an initial business combination
or to redeem 100% of our Public Shares if we do not complete our initial business combination within the Completion Window; and (3) the
redemption of all of our Public Shares if we are unable to complete our initial business combination within the Completion Window, subject
to applicable law and as further described herein. In addition, if we are unable to complete an initial business combination within the
Completion Window for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders
for approval prior to the distribution of the proceeds held in our Trust Account. In that case, public stockholders may be forced to wait
beyond the Completion Window before they receive funds from our Trust Account. In no other circumstances will a public stockholder have
any right or interest of any kind in the Trust Account. Holders of Warrants will not have any right to the proceeds held in the Trust
Account with respect to the Warrants. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares or Warrants,
potentially at a loss.
If the funds not being held in the Trust
Account are insufficient to allow us to operate for at least the duration of the Completion Window, we may not be able to complete our
initial business combination.
The funds available to us
outside of the Trust Account may not be sufficient to allow us to operate at least the Completion Window, assuming that our initial business
combination is not completed during that time. We expect to incur significant costs in pursuit of our acquisition plans. However, our
affiliates are not obligated to make loans to us in the future, and we may not be able to raise additional financing from unaffiliated
parties necessary to fund our expenses. Any such event in the future may negatively impact the analysis regarding our ability to continue
as a going concern at such time.
We believe that the funds
available to us outside of the Trust Account will be sufficient to allow us to operate at least for the Completion Window; 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 commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment, or to
fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from
“shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with
respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into an 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 prospective target business. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account, and our Warrants will
expire worthless. Please see “Item 1A. Risk Factors - If third parties bring claims against us, the proceeds held in the Trust
Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and
other risk factors herein.
Because of our limited resources and the
significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on our redemption of their stock, and our Warrants will expire worthless.
We expect to encounter intense
competition from other entities having a business objective similar to ours, including private investors (which may be individuals or
investment partnerships), other blank check companies, and other entities (both domestic and international) competing for the types of
businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience in identifying
and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these
competitors possess greater technical, human, and other resources or more local industry knowledge than we do, and our financial resources
will be relatively limited when contrasted with those of many of these competitors. While we believe there will be numerous target businesses
we could potentially acquire with the net proceeds of our Initial Public Offering and the sale of the Private Placement Warrants, our
ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial
resources. Our Sponsor, any of its affiliates, or any of their respective clients may make additional investments in us, although our
Sponsor and its affiliates have no obligation or other duty to do so.
This inherent competitive
limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, in the event we seek stockholder
approval of our initial business combination and we are obligated to pay cash for Public Shares that are redeemed, doing so will potentially
reduce the resources available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage
in successfully negotiating and completing a business combination. If we are unable to complete our initial business combination, our
public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our Trust
Account, and our Warrants will expire worthless. Please see “Item 1A. Risk Factors - Risks Relating to Our Business Operations and
Our Search for and Consummation of, or Inability to Consummate, an Initial Business Combination - If third parties bring claims against
us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors herein.
Our management concluded that there is substantial
doubt about our ability to continue as a “going concern.”
As of December 31, 2022,
we had $195,339 in cash held outside our Trust Account. As of December 31, 2022, approximately $2,448,027 of the amount on deposit in
the Trust Account represented interest income, which is available to pay our tax obligations and, on an annual basis, up to $1,000,000
in working capital requirements. If we are unable to raise additional capital, we may be required to take additional measures to conserve
liquidity, which could include, but not necessarily be limited to, suspending the pursuit of a business combination. We cannot provide
any assurance that new financing will be available to us on commercially acceptable terms, if at all. Further, our plans to raise capital
and to consummate our initial business combination may not be successful. These factors, among others, raise substantial doubt about our
ability to continue as a going concern through our liquidation date. The financial statements contained elsewhere in this Annual Report
do not include any adjustments that might result from our inability to consummate a business combination or our inability to continue
as a going concern.
We will depend on Permitted Withdrawals
and loans from our Sponsor or management team to fund our search, to pay our taxes and to complete our initial business combination. If
we are unable to obtain such loans, we may be unable to complete our initial business combination.
We fund our working capital
requirements prior to the time of our initial business combination with Permitted Withdrawals from the interest earned on the Trust Account,
subject to an annual limit of $1,000,000. In addition, our Sponsor, an affiliate of our Sponsor, or our officers and directors may (without
obligation) loan us funds as may be required to fund our working capital requirements. Based upon current interest rates, we expect the
Trust Account to generate approximately $12,000 of interest annually (assuming an interest rate of 0.08% per year); however, we can provide
no assurances regarding this amount. If we are required to seek additional capital, we would need to borrow funds from our sponsor, management
team, or other third parties to operate-or we may be forced to liquidate. Neither our Sponsor nor members of our management team or any
of their respective affiliates is under any obligation or other duty to loan funds to us in such circumstances. Any such loans would be
repaid only from funds held outside the Trust Account or from funds released to us upon completion of 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. In such case, our public stockholders may receive only $10.00 per share (or less
in certain circumstances) and our warrants will expire worthless. Please see “Item 1A. Risk Factors - Risks Relating to Our Business
Operations and Our Search for and Consummation of, or Inability to Consummate, an Initial Business Combination - If third parties bring
claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.00 per share” and other risk factors herein.
Subsequent to our completion of our initial
business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have
a significant negative effect on our financial condition, results of operations, and the price of our securities, which could cause you
to lose some or all of your investment.
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that
may be present with a particular target business, that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result, we may
be forced to later write down or write off assets, restructure our operations, or incur impairment or other charges that could result
in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise, and previously known
risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and
not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions
about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be
subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing.
Accordingly, any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination
could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such
reduction in value.
If third parties bring claims against us,
the proceeds held in the Trust Account could be reduced and the per share redemption amount received by stockholders may be less than
$10.00 per share.
Our placing of funds in the
Trust Account may not protect those funds from third party claims against us. Although we will seek to have all vendors, service providers
(other than our independent registered public accounting firm), prospective target businesses, or other entities with which we do business
execute agreements with us waiving any right, title, interest, or claim of any kind in or to any monies held in the Trust Account for
the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may
not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary
responsibility, or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain
advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such
third party’s engagement would be significantly more beneficial to us than any alternative. Making such a request of potential target
businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute
such a waiver, it may limit the field of potential target businesses that we might pursue. 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 we are 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 Completion Window, 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, due to claims of such creditors, the per share redemption amount received
by public stockholders could be less than the per share amount initially held in the Trust Account.
Our Sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm)
for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share in the aggregate or (2) the actual amount
per Public Share held in the Trust Account, if less than $10.00 per share due to reductions in the value of the Trust Account assets,
net of Permitted Withdrawals, except as to any claims by a third party that executed a waiver of any and all rights to the monies held
in the Trust Account (whether any such waiver is enforceable) and except as to any claims under our indemnity of the underwriters against
certain liabilities, including liabilities under the Securities Act. We have not independently verified whether our Sponsor has sufficient
funds to satisfy its indemnity obligations and we have not asked our Sponsor to reserve for such indemnification obligations. We have
not asked our Sponsor to reserve for such obligations. As a result, if any such claims were successfully made against the Trust Account,
the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per Public Share. In such
event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection
with any redemption of your Public Shares. None of our officers or directors will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target businesses.
Our independent directors may decide not
to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available
for distribution to our public stockholders.
In the event that the proceeds
in the trust account are reduced below the lesser of: (1) $10.00 per Public Share in the aggregate or (2) the actual amount per Public
Share held in the Trust Account, if less than $10.00 per share due to reductions in the value of the Trust Account assets, net of Permitted
Withdrawals, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related
to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification
obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce
its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose
not to do so in certain instances. For example, the cost of such legal action may be deemed by the independent directors to be too high
relative to the amount recoverable or the independent directors may 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.
If, after we distribute the proceeds in
the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us
that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our Board may be viewed as having breached
their fiduciary duties to our creditors, thereby exposing the members of our Board and us to claims of punitive damages.
If, after we distribute the
proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek
to recover some or all amounts received by our stockholders. In addition, our Board may be viewed as having breached its fiduciary duty
to our creditors and/or having acted in bad faith by paying public stockholders from the Trust Account prior to addressing the claims
of creditors, thereby exposing the members of the Board and us to claims of punitive damages.
If, before distributing the proceeds in
the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us
that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per share
amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the
proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included
in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any
bankruptcy claims deplete the Trust Account, the per share amount that would otherwise be received by our public stockholders in connection
with our liquidation would be reduced.
We identified a material weakness in our
internal control over financial reporting. If we are unable to develop and maintain an effective system of internal control over financial
reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence
in us and materially and adversely affect our business and operating results.
Disclosure controls and procedures
are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized,
and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal financial officer or persons performing similar functions,
as appropriate to allow timely decisions regarding required disclosure. As required by Rules 13a-15 and 15d-15 under the Exchange Act,
our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of December 31, 2022. Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures were not effective, due solely to the material weakness in our internal
control over financial reporting related to the Company’s accounting for complex financial instruments. As a result, we performed
additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with GAAP. Accordingly, management
believes that the financial statements included in this Annual Report on Form 10-K present fairly in all material respects our financial
position, results of operations and cash flows for the period presented.
A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely
basis.
Management intends to implement
remediation steps to improve our disclosure controls and procedures and our internal control over financial reporting. Specifically, we
intend to expand and improve our review process for complex securities and related accounting standards. We plan to further improve this
process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex
accounting applications, and consideration of additional staff with the requisite experience and training to supplement existing accounting
professionals.
Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material
weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately
have the intended effects.
If we identify any new material
weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of
our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case,
we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable
stock exchange listing requirements, investors may lose confidence in our financial
reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures
we may take in the future, will be sufficient to avoid potential future material weaknesses.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements
and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
| ● | restrictions
on the nature of our investments; and |
| ● | restrictions
on the issuance of securities; |
each
of which may make it difficult for us to complete our initial business combination. In addition, we may have imposed upon us burdensome
requirements, including:
| ● | registration
as an investment company with the SEC; |
| ● | adoption
of a specific form of corporate structure; and |
| ● | reporting,
record keeping, voting, proxy and disclosure requirements and compliance with other rules
and regulations that we are currently not subject to. |
In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities
do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and
complete a business combination and thereafter to operate the post-transaction business or assets for the long-term. We do not plan to
buy businesses or assets with a view to resale or profit from their resale.
We do not plan to buy unrelated businesses or assets or to be
a passive investor.
We do not believe that our
anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account may
only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company
Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment
Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted
to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business
plan targeted at acquiring and growing businesses for the long-term (rather than on buying and selling businesses in the manner of a merchant
bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment
Company Act.
The Trust Account is intended
as a holding place for funds pending the earliest to occur of: (i) the completion of our primary business objective, which is a business
combination; (ii) the redemption of any Public Shares properly submitted in connection with a stockholder vote to amend our Charter to
modify the substance or timing of our obligation to provide for the redemption of our Public Shares in connection with an initial business
combination or to redeem 100% of our Public Shares if we do not complete our initial business combination within the Completion Window;
and (iii) absent a business combination, our return of the funds held in the Trust Account to our public stockholders as part of our redemption
of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act.
If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional
expenses for which we have not allotted funds and may hinder our ability to consummate our initial business combination. If we are unable
to complete our initial business combination within the Completion Window, 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 if we are unable to complete our initial business combination
within the Completion Window. Please see “Item 1A. Risk Factors - Risks Relating to Our Business Operations and Our Search for and
Consummation of, or Inability to Consummate, an Initial Business Combination - If third parties bring claims against us, the proceeds
held in the Trust Account could be reduced and the per share redemption amount received by stockholders may be less than $10.00 per share”
and other risk factors herein.
Changes in laws or regulations, or a failure
to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial
business combination, and results of operations.
We are subject to laws and
regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other
legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations,
as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our
initial business combination, and results of operations.
Because we are neither limited to evaluating
target businesses in a particular industry nor have we selected any specific target businesses with which to pursue our initial business
combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
We may seek to complete a
business combination with an operating company in any industry or sector. However, we will not, under our Charter, be permitted to effect
our initial business combination with another blank check company or similar company with nominal operations. Because we have not yet
selected or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible
merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition
or prospects. To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business
operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established
record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development
stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot
assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete
due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances
that those risks will adversely impact a target business. We also cannot assure you that an investment in our Units will ultimately prove
to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly,
any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could
suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction
in value.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter
into our initial business combination will not have all of these positive attributes. If we complete our initial business combination
with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights,
which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or
a certain amount of cash. In addition, if stockholder approval of the transaction is required by applicable law or stock exchange rules,
or we decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete
our initial business combination, our public stockholders may receive only approximately $10.00 per share (or less in certain circumstances)
on the liquidation of our Trust Account, and our warrants will expire worthless.
We may seek acquisition opportunities in
acquisition targets that may be outside of our management’s areas of expertise.
We will consider a business
combination in sectors which may be outside of our management’s areas of expertise if such business combination candidate is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our company. In the event we elect to pursue
an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable
to its evaluation or operation, and the information contained in this prospectus regarding the areas of our management’s expertise
would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately
ascertain or assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholders or warrant holders
who choose to remain a stockholder or warrant holder following our initial business combination could suffer a reduction in the value
of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value.
We may seek acquisition opportunities with
an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings, which could
subject us to volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel.
To the extent we complete
our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record
of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks
include investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings,
intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors
and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave
us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion
from an independent investment banking firm or from an independent accounting firm regarding fairness. Consequently, you may have no assurance
from an independent source that the price we are paying for the business is fair to our company—and, by extension, the stockholders—from
a financial point of view.
Unless we complete our initial
business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that
is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our stockholders from a financial
point of view.
In
addition, if our Board is not able to determine the fair market value of the target business or businesses, in connection with the NYSE
rules that require that an initial business combination be with one or more operating businesses or assets with a fair market value equal
to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if
applicable, and excluding the amount of any deferred underwriting discount), we will obtain an opinion from an independent investment
banking firm that is a member of FINRA or from an independent accounting firm with respect to the satisfaction of such criteria.
Other
than the two circumstances described above, we are not required to obtain an opinion from an independent investment banking firm that
is a member of FINRA or from an independent accounting firm. 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 tender offer documents or proxy solicitation materials, as applicable, related to our initial
business combination.
We
may issue additional shares of Class A common stock or preferred stock to complete our initial business combination or under an employee
incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion
of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution
provisions described herein. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our
Charter authorizes the issuance of up to 80,000,000 shares of Class A common stock, par value $0.0001 per share; 20,000,000 shares of
Class B common stock, par value $0.0001 per share; and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share.
There are 62,750,000 and 15,687,500 authorized but unissued shares of Class A and Class B common stock, respectively, available for issuance,
which amount takes into account shares reserved for issuance upon exercise of outstanding warrants but not upon the conversion of the
Class B common stock. Shares of Class B common stock are automatically convertible into shares of our Class A common stock at the time
of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein. There are no shares
of preferred stock issued and outstanding.
We
may issue a substantial number of additional shares of Class A common stock, and may issue shares of preferred stock, in order to complete
our initial business combination or under an employee incentive plan after completion of our initial business combination (although our
Charter provides that we may not issue additional securities that can vote on amendments to our Charter or on our initial business combination
or that would entitle holders thereof to receive funds from the Trust Account). We may also issue shares 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
described herein. However, our Charter 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 (1) receive funds from the Trust Account or (2) vote on
any initial business combination. The issuance of additional shares of common or preferred stock:
| ● | may
significantly dilute the equity interest of our investors; |
| ● | may
subordinate the rights of holders of common stock if preferred stock is issued with rights
senior to those afforded our common stock; |
| ● | could
cause a change in control if a substantial number of shares of common stock are issued, which
may affect, among other things, our ability to use our net operating loss carry forwards,
if any, and could result in the resignation or removal of our present officers and directors;
and |
| ● | may
adversely affect prevailing market prices for our Units, Public Shares and/or Warrants. |
Resources
could be wasted in researching initial 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 and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the
proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we
may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will
result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only
approximately $10.00 per share (or less in certain circumstances) on the liquidation of our Trust Account and our warrants will expire
worthless. Please see “Item 1A. Risk Factors - Risks Relating to Our Business Operations and Our Search for and Consummation of,
or Inability to Consummate, an Initial Business Combination - If third parties bring claims against us, the proceeds held in the Trust
Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and
other risk factors herein.
We
may only be able to complete one business combination with the proceeds of our Initial Public Offering and the sale of the Private Placement
Warrants, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This
lack of diversification may materially negatively impact our operations and profitability.
The
net proceeds from our Initial Public Offering and the sale of the Private Placement Warrants provided us with $172,500,000 that we may
use to complete our initial business combination (which includes $6,037,500 of deferred underwriting commissions being held in the Trust
Account). We may effectuate our initial business combination with a single target business or multiple target businesses simultaneously
or within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target
business because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file
pro forma financial statements with the SEC that present operating results and the financial condition of several target businesses as
if they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack of
diversification may subject us to numerous economic, competitive, and regulatory risks. Further, we would not be able to diversify our
operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources
to complete several business combinations in different industries or different areas of a single industry. Accordingly, the prospects
for our success may be:
| ● | solely
dependent upon the performance of a single business, property or asset; or |
| ● | dependent
upon the development or market acceptance of a single or limited number of products, processes
or services. |
This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial
adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete
our initial business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us and delay our ability to complete our initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which may
result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. Very little
public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial business combination on the basis of limited information, which may result in a business combination with a company that is not
as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance
that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We
may structure our initial business combination so that the post-transaction company in which our public stockholders own shares will
own less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling
interest in the target business 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 our 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 our initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares of 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
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
our initial business combination with which a substantial majority of our stockholders do not agree.
Our
Charter does not not provide a specified maximum redemption threshold, except that in no event will we redeem our Public Shares in an
amount that would cause our net tangible assets to be less than $5,000,001 (such that we do not then become subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating
to our initial business combination. As a result, we may be able to complete our initial business combination even though a substantial
majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval
of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the
tender offer rules, have entered into privately negotiated agreements to sell their shares to our Sponsor, officers, directors, advisors
or any of their respective affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of common
stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed
business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any
shares, all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an
alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their
charters and modified governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend
our Charter or governing instruments, including our warrant agreement, in a manner that will make it easier for us to complete our initial
business combination that some of our stockholders or warrant holders 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 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.
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.
Certain
provisions of our Charter that relate to our pre-business combination activity (and corresponding provisions of the agreement governing
the release of funds from our Trust Account) may be amended with the approval of holders of not less than 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 Charter
and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our
Charter provides that any of its provisions (other than amendments relating to the appointment of directors, which require the approval
by a majority of at least 90% of our common stock voting at a stockholder meeting) related to pre-business combination activity (including
the requirement to fund the Trust Account and not release such amounts except in specified circumstances and to provide redemption rights
to public stockholders as described herein) may be amended if approved by holders of at least 65% of our common stock, 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. In all other instances, our Charter provides that it may be amended by holders of a majority of our common stock,
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 Charter or on our initial business combination. Our Sponsor, who beneficially owns 20% of our common stock, may
participate in any vote to amend our Charter and/or trust agreement and will have the discretion to vote in any manner it chooses. As
a result, we may be able to amend the provisions of our Charter governing our pre-business combination behavior more easily than some
other blank check companies, and this may increase our ability to complete our initial business combination with which you do not agree.
Our stockholders may pursue remedies against us for any breach of our Charter.
Our
Sponsor, officers and directors have agreed, pursuant to a written agreement, that they will not propose any amendment to our Charter
to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial
business combination or to redeem 100% of our Public Shares if we do not complete our initial business combination within the Completion
Window, unless we provide our public stockholders with the opportunity to redeem their Public Shares upon approval of any such amendment
at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (net of
Permitted Withdrawals) divided by the number of then-outstanding Public Shares. These agreements are contained in a letter agreement
that we have entered into with our Sponsor, officers and directors. Our stockholders are not parties to or third-party beneficiaries
of these agreements and, as a result, will not have the ability to pursue remedies against our Sponsor, officers or directors for any
breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action,
subject to applicable law.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target
business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of our Initial Public Offering and the sale of the Private Placement Warrants will be sufficient to
allow us to complete our initial business combination, because we have not yet selected any prospective target business, we cannot ascertain
the capital requirements for any particular transaction. If the net proceeds of our Initial Public Offering and the sale of the Private
Placement Warrants prove to be insufficient, either because of the size of our initial business combination, the depletion of the available
net proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from stockholders who elect
redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in connection
with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination.
We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves
to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction
or abandon that particular business combination and seek an alternative target business candidate. 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 receive only approximately $10.00 per share (or less in certain circumstances) on the liquidation of our Trust Account, and our warrants
will expire worthless.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by volatility in the capital markets, including as a result of the COVID-19 pandemic.
As
of the filing date of this Annual Report on Form 10-K, there has been continued volatility in the capital markets, including as a result
of a continued outbreak of the COVID-19 pandemic. This outbreak has led and for an unknown period of time may continue to lead to disruptions
in local, regional, national and global markets and economies affected thereby. The COVID-19 pandemic and restrictive measures taken
to contain or mitigate its spread have caused, and may continue to cause, business shutdowns or the re-introduction of business shutdowns,
cancellations of events, restrictions on travel, significant reductions in demand for certain goods and services, reductions in business
activity and financial transactions, supply chain interruptions, and overall economic and financial market instability both globally
and in the United States. The impact of COVID-19 led to significant volatility and declines in the global public equity markets, and
it is uncertain how long this volatility will continue.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may
be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in
our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an initial business combination, and there are still many special
purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration.
As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify
a suitable target and to consummate an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available
targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause target
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate
targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and
consummate an initial business combination, and may result in our inability to consummate an initial business combination on terms favorable
to our investors altogether.
Our
initial business combination and our structure thereafter may not be tax-efficient to our stockholders and warrant holders. As a result
of our business combination, our tax obligations may be more complex, burdensome and uncertain.
Although
we will attempt to structure our initial business combination in a tax-efficient manner, tax structuring considerations are complex,
the relevant facts and law are uncertain and may change, and we may prioritize commercial and other considerations over tax considerations.
For example, in connection with our initial business combination and subject to any requisite stockholder approval, we may structure
our business combination in a manner that requires stockholders and/or warrant holders to recognize gain or income for tax purposes,
effect a business combination with a target company in another jurisdiction, or reincorporate in a different jurisdiction (including,
but not limited to, the jurisdiction in which the target company or business is located). We do not intend to make any cash distributions
to stockholders or warrant holders to pay taxes in connection with our business combination or thereafter. Accordingly, a stockholder
or a warrant holder may need to satisfy any liability resulting from our initial business combination with cash from its own funds or
by selling all or a portion of the shares received. In addition, stockholders and warrant holders may also be subject to additional income,
withholding or other taxes with respect to their ownership of us after our initial business combination.
In
addition, we may effect a business combination with a target company that has business operations outside of the United States, and possibly,
business operations in multiple jurisdictions. If we effect such a business combination, we could be subject to significant income, withholding
and other tax obligations in a number of jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions.
Due to the complexity of tax obligations and filings in other jurisdictions, we may have a heightened risk related to audits or examinations
by U.S. federal, state, local and non-U.S. taxing authorities. This additional complexity and risk could have an adverse effect on our
after-tax profitability and financial condition.
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and
complete an initial business combination.
In
recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed. Fewer
insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally
increased, and the terms of such policies have generally become less favorable. There can be no assurance that these trends will not
continue.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive
for us to negotiate an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage
as a result of becoming a public company, the post-business combination entity might need to incur greater expense, accept less favorable
terms or both. However, any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the
post-business combination’s ability to attract and retain qualified officers and directors.
In
addition, even after we were to complete an initial business combination, our directors and officers could still be subject to potential
liability from claims arising from conduct alleged to have occurred prior to the initial business combination. As a result, in order
to protect our directors and officers, the post-business combination entity may need to purchase additional insurance with respect to
any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business combination
entity, and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable to our investors.
Risks
Relating to Our Securities
The
NYSE may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our
Units, Class A common stock and Warrants are listed on the NYSE. Although we expect to continue to meet the minimum initial listing standards
set forth in the NYSE listing standards, we cannot assure you that our securities will continue to be listed on the NYSE in the future
or prior to our initial business combination. In order to continue listing our securities on the NYSE prior to our initial business combination,
we must maintain certain financial, distribution, and stock price levels. In general, we must maintain a minimum number of holders of
our securities. Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with
the NYSE’s initial listing requirements, which are more rigorous than the NYSE’s continued listing requirements, in order
to continue to maintain the listing of our securities on the NYSE. For instance, our stock price would generally be required to be at
least $4 per share. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If
the NYSE delists any of our securities from trading on its exchange and we are not able to list such securities on another national securities
exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
| ● | a
limited availability of market quotations for our securities; |
| ● | reduced
liquidity for our securities; |
| ● | a
determination that our Class A common stock is a “penny stock” which will require
brokers trading in our Class A common stock to adhere to more stringent rules and possibly
result in a reduced level of trading activity in the secondary trading market for our securities; |
| ● | a
limited amount of news and analyst coverage; and |
| ● | a
decreased ability to issue additional securities or obtain additional financing in the future. |
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because our units, Class A common stock, and warrants
are listed on the NYSE, they qualify as covered securities under such statute. Although the states are preempted from regulating the
sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if
there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While
we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies,
other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers,
or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer
listed on the NYSE, our securities would not qualify as covered securities under such statute and we would be subject to regulation in
each state in which we offer our securities.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
our proceeds are intended to be used to complete an initial business combination with a target business that has not been selected, we
may be deemed to be a “blank check” company under the U.S. 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 under the Securities Act. Accordingly, investors will not be afforded the benefits or protections of those rules.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the
ability to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our Charter provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange
Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our Initial
Public Offering without our prior consent, which we refer to as the “Excess Shares.” However, our Charter does not restrict
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; as a result,
you will continue to hold the Excess Shares and, in order to dispose of such shares, would be required to sell your Excess Shares in
open market transactions, potentially at a loss.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our Trust Account distributed to our public stockholders upon the redemption of our Public
Shares in the event we do not complete our initial business combination within the completion window may be considered a liquidating
distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure
that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can
be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day
waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder,
and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to
redeem our Public Shares as soon as reasonably possible following June 11, 2023 (or September 11, 2023 if we have executed a letter of
intent, agreement in principle or definitive agreement for an initial business combination prior to June 11, 2023) in the event we do
not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because
we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the 10 years following our dissolution. However, because we are a blank check company rather than an operating company and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, and consultants, among others) or prospective target businesses. If our plan of distribution complies
with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of
such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that
may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within the completion window is not considered a liquidating distribution under Delaware
law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for
claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating
distribution.
We
may not hold an annual meeting of stockholders until after we consummate our initial business combination and you will not be entitled
to any of the corporate protections provided by such a meeting.
We
may not hold an annual meeting of stockholders until after we consummate our initial business combination (unless required by the NYSE)
and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes
of electing directors in accordance with a company’s bylaws unless such election is made by written consent in lieu of such a meeting.
Therefore, if our stockholders want us to hold an annual meeting prior to our 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. Moreover, our Class B stockholders will be entitled to elect all of our directors prior to the completion of our initial
business combination and may elect to do so by written consent without a meeting.
We
are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor
from being able to exercise its warrants except on a “cashless basis” and potentially causing such warrants to expire worthless.
We
are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later
than 15 business days after the closing of our initial business combination, we will use our reasonable best efforts to file with the
SEC, and within 60 business days following our initial business combination to have declared effective, a registration statement covering
the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating
to those shares of Class A common stock until the warrants expire or are redeemed. 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, complete, or correct, or the
SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be
required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless
basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares
upon such exercise is registered or qualified under the securities laws of the state of the exercising holder or an exemption from registration
or qualification is available.
Notwithstanding
the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such
that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option,
require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section
3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement,
but we will use our reasonable best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange
for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities
laws and no exemption is 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 shall not be entitled to exercise such warrant and such warrant
may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid
the full unit purchase price solely for the shares of Class A common stock included in the units. If and when the warrants become redeemable
by us, we may exercise our redemption right even if we are unable to register or qualify the underlying shares of Class A common stock
for sale under all applicable state securities laws.
The
grant of registration rights to our Sponsor and its permitted transferees 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 we entered into concurrently with the issuance and sale of the securities in our Initial Public Offering, our Sponsor
and its permitted transferees can demand that we register the resale of their Founder Shares after those shares convert to shares of
our Class A common stock at the time of our initial business combination. In addition, our sponsor and its permitted transferees can
demand that we register the resale of the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of
the Private Placement Warrants, and holders of warrants that may be issued upon conversion of working capital loans may demand that we
register the resale of such warrants or the Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering
these securities. The registration and availability of such a significant number of securities for trading in the public market may have
an adverse effect on the market price of our Class A common stock. In addition, the existence of the registration rights may make our
initial business combination more costly or difficult to complete. This is because the stockholders of the target business may increase
the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price
of our Class A common stock that is expected when the common stock owned by our initial stockholders or their permitted transferees,
the Private Placement Warrants owned by our Sponsor, or warrants issued in connection with working capital loans are registered for resale.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments 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:
| ● | default
and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations; |
| ● | acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments
when due if we breach certain covenants that require the maintenance of certain financial
ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our
immediate payment of all principal and accrued interest, if any, if the debt is payable on
demand; |
| ● | our
inability to obtain necessary additional financing if the debt contains covenants restricting
our ability to obtain such financing while the debt security is outstanding; |
| ● | our
inability to pay dividends on our common stock; |
| ● | using
a substantial portion of our cash flow to pay principal and interest on our debt, which will
reduce the funds available for dividends on our common stock if declared, expenses, capital
expenditures, acquisitions and other general corporate purposes; |
| ● | limitations
on our flexibility in planning for and reacting to changes in our business and in the industry
in which we operate; |
| ● | increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and |
| ● | limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, execution of our strategy and other purposes and other disadvantages
compared to our competitors who have less debt. |
Our
initial stockholders will control the election of our Board until the consummation of our initial business combination and will hold
a substantial interest in us. As a result, they will elect all of our directors prior to the consummation of our initial business combination
and may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support. Similarly,
following the consummation of our initial business combination, one or more shareholders of the target may have a substantial interest
in the combined company and may require us to enter into agreements or other arrangements with respect to board composition and for designation
rights.
Our
Sponsor owns 20% of our outstanding common stock. In addition, the Founder Shares, all of which are held by our Sponsor and its permitted
transferees, will entitle the holders to elect all of our directors prior to the consummation of our initial business combination. Holders
of our Public Shares will have no right to vote on the election of directors during such time. These provisions of our Charter may only
be amended by a majority of at least 90% of our common stock voting at a stockholder meeting. As a result, you will not have any influence
over the election of directors prior to our initial business combination.
Neither
our Sponsor nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities, other
than as disclosed in this Annual Report. 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, as a result of their substantial ownership in our company, our
Sponsor may exert a substantial influence on other actions requiring a stockholder vote, potentially in a manner that you do not support,
including amendments to our Charter and approval of major corporate transactions. If our Sponsor purchases any additional shares of common
stock in the aftermarket or in privately negotiated transactions, this would increase their influence over these actions. Accordingly,
our Sponsor will exert significant influence over actions requiring a stockholder vote.
Our
Sponsor contributed $25,000, or approximately $0.006 per Founder Share, and, accordingly, you will experience immediate and substantial
dilution from the purchase of our Class A common stock.
Our
Sponsor acquired the Founder Shares at a nominal price, significantly contributing to the dilution of holders of our Class A common stock.
This dilution would increase to the extent that the anti-dilution provisions 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 initial business combination
and would become exacerbated to the extent that public stockholders seek redemptions from the trust. In addition, because of the anti-dilution
rights of the Founder Shares, any equity or equity-linked securities issued or deemed issued in connection with our initial business
combination would be disproportionately dilutive to our Class A common stock.
The
purchase price paid by our Sponsor for the Founder Shares may significantly dilute the value of our Public Shares in the event we consummate
an initial business combination, and our Sponsor may make a substantial profit on its investment in us in the event we consummate an
initial business combination, even if the trading price of our common stock were to materially decline following completion of an initial
business combination.
Our
Sponsor paid an aggregate purchase price of $25,000 for the Founder Shares, or approximately $0.006 per share. Additionally, our Sponsor
purchased an aggregate of 5,250,000 Private Placement Warrants at a price of $1.00 per warrant, for an aggregate purchase price of $5,250,000.
As a result, even if the trading price of our common stock significantly declines following a business combination, and assuming our
Sponsor does not agree to any lock-up or vesting terms for its Founder Shares in connection with our initial business combination, our
Sponsor, as well as our directors and officers that have an economic interest in our Sponsor, would be able to make significant profit
on its investment in us even if the trading price of our common stock at such time is substantially less than $10.00 per share. Accordingly,
our Sponsor, as well as our directors and officers that have an economic interest in our Sponsor, may be more willing to pursue an initial
business combination with a riskier, weaker-performing or less-established target business than would be the case if our Sponsor had
paid the same per share price for the Founder Shares as our public stockholders paid for their Public Shares.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of
at least 50% of the then-outstanding public warrants. As a result, the exercise price of your warrants could be increased, the warrants
could be converted into cash or stock (at a ratio different than initially provided), 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 shareholder approval.
The
warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct
any defective provision, but requires the approval by the holders of at least 50% of the then-outstanding public warrants to make any
change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the
public warrants in a manner adverse to a holder if holders of at least 50% of the then-outstanding public warrants approve of such amendment.
Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants
is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert
the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of
shares of our common stock purchasable upon exercise of a warrant. Our initial stockholders may purchase public warrants with the intention
of reducing the number of public warrants outstanding or to vote such warrants on any matters submitted to warrant holders for approval,
including amending the terms of the public warrants in a manner adverse to the interests of the registered holders of public warrants.
While our initial stockholders have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for such transactions, there is no limit on the number of our public warrants that our initial stockholders may
purchase and it is not currently known how many public warrants, if any, our initial stockholders may hold at the time of our initial
business combination or at any other time during which the terms of the public warrants may be proposed to be amended.
We
may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to warrant holders, thereby making the warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within a 30 trading-day period ending
on the third trading day prior to the date we send the notice of redemption to the warrant holders. If and when the warrants become redeemable
by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all
applicable state securities laws. Redemption of the outstanding warrants could force you to: (1) exercise your warrants and pay the exercise
price therefor at a time when it may be disadvantageous for you to do so (2) sell your warrants at the then-current market price when
you might otherwise wish to hold your warrants; or (3) accept the nominal redemption price which, at the time the outstanding warrants
are called for redemption, is likely to be substantially less than the market value of your warrants.
Our
warrants and Founder Shares may have an adverse effect on the market price of our Class A common stock and make it more difficult to
effectuate our initial business combination.
We
issued warrants to purchase 5,750,000 shares of our Class A common stock at a price of $11.50 per whole share (subject to adjustment
as provided herein), as part of the units offered in the Initial Public Offering (inclusive of the underwriters’ exercise of its
over-allotment option in full). Simultaneously with the closing of the Initial Public Offering, we also issued in a private placement
an aggregate of 5,250,000 Private Placement Warrants, each exercisable to purchase one share of Class A common stock at a price of $11.50
per share, subject to adjustment as provided herein. Our Sponsor currently holds 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, an
affiliate of our Sponsor or certain of our officers and directors make any working capital loans, up to $1,500,000 of such loans may
be converted into warrants, at the price of $1.00 per warrant, at the option of the lender. Such warrants would be identical to the Private
Placement Warrants.
To
the extent we issue shares of Class A common stock to effectuate a business transaction, the potential for the issuance of a substantial
number of additional shares of Class A common stock upon exercise of these warrants or conversion rights could make us a less attractive
acquisition vehicle to a target business. Any such issuance will increase the number of outstanding shares of our Class A common stock
and reduce the value of the Class A common stock issued to complete the business transaction. Therefore, our warrants and Founder Shares
may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business.
The
Private Placement Warrants are identical to the warrants sold as part of the Units in the Initial Public Offering except that, so long
as they are held by our Sponsor or its permitted transferees: (1) they will not be redeemable by us; (2) 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; (3) they may be exercised by the holders on a
cashless basis; and (4) the holders thereof (including with respect to the shares of common stock issuable upon exercise of these warrants)
are entitled to registration rights.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination include historical and/or pro forma
financial statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents,
whether or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance
with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be
audited in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential target
businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial
statements in accordance with federal proxy rules and complete our initial business combination within the completion window.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial
financial and management resources, and increase the time and costs of completing an initial business combination.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or an accelerated
filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting
firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company,
we will not be required to comply with the independent registered public accounting firm attestation requirement on our internal control
over financial reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act
particularly burdensome on us as compared to other public companies because a target business with which we seek to complete our initial
business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls.
The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and
costs necessary to complete any such initial business combination.
Provisions
in our Charter 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
Charter contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests.
These provisions include three-year director terms and the ability of the Board to designate the terms of and issue new series of preferred
shares, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment
of a premium over prevailing market prices for our securities.
Section
203 of the DGCL affects the ability of an “interested stockholder” to engage in certain business combinations for a period
of three years following the time that the stockholder becomes an “interested stockholder.” We have elected in our Charter
not to be subject to Section 203 of the DGCL. Nevertheless, our Charter contains provisions that have the same effect as Section 203
of the DGCL, except that it provides that affiliates of our Sponsor and their transferees will not be deemed to be “interested
stockholders,” regardless of the percentage of our voting stock owned by them, and therefore are not subject to such restrictions.
These Charter provisions may limit the ability of third parties to acquire control of our company.
In
connection with the recent restatement of our financial statements, our management has concluded that our disclosure controls and procedures
were not effective as of December 31, 2022 due to a material weakness in internal control over financial reporting solely related to
our accounting for complex financial instruments. If we are unable to maintain an effective system of disclosure controls and procedures
and internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which
may adversely affect investor confidence in us and materially and adversely affect our business and financial results.
As
previously disclosed in our Current Report on Form 8-K filed with the SEC on November 29, 2021 and in periodic reports on Forms 10-K
and 10-Q in each reporting period thereafter, after consultation with our independent registered public accounting firm, our management
team and our audit committee concluded that it was appropriate to restate our previously issued audited balance sheet as of June 11,
2021 included as Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on June 17, 2021 and our unaudited and interim financial
statements as of and for the three months ended June 30, 2021 contained in the Company’s Quarterly Report on Form 10-Q filed with
the SEC on August 12, 2021. As part of such process, we identified a material weakness in our internal control over financial reporting,
solely related to our accounting for complex financial instruments.
A
material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is
a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected
and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
We have taken steps to remediate the material weakness, but there is no assurance that any remediation efforts will ultimately have the
intended effects.
If
we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent
or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial
statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic
reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our
stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the
future, will be sufficient to avoid potential future material weaknesses.
Risks
Relating to Our Management Team
Our
officers and directors will allocate their time to other businesses, thereby causing conflicts of interest in their determination as
to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial
business combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a business combination and their other responsibilities. We do not
intend to have any full-time employees prior to the completion of our business combination. Each of our officers and directors is engaged
in several other business endeavors for which he or she may be entitled to substantial compensation and our officers and directors are
not obligated to contribute any specific number of hours per week to our affairs.
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. Please see “Item 10. Directors, Executive Officers, and Corporate
Governance - Conflicts of Interest” for a discussion of our officers’ and directors’ other business affairs.
We
are dependent upon our officers and directors, and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals. We believe that our success depends on the continued service of
our officers and directors, at least until we have completed our initial business combination. We do not have an employment agreement
with (or key-man insurance on the life of) any of our other directors or officers. The unexpected loss of the services of one or more
of our directors or officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts of
our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact
the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target
business in senior management or advisory positions following our initial business combination, we do not currently expect that any of
them will do so. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure
you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating
a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements.
In
addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The
departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be
ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain
associated with the acquisition candidate following our initial business combination, it is possible that members of the management of
an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination,
and a particular business combination may be conditioned on the retention or resignation of such key personnel. These agreements may
cause our key personnel to have conflicts of interest in determining whether to proceed with a particular business combination. However,
we do not expect that any of our key personnel will remain with us after the completion of our initial business combination.
Our
key personnel may be able to remain with our company after the completion of our initial business combination only if they are able to
negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously
with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the business combination. Such negotiations also could
make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such
individuals may influence their motivation in identifying and selecting a target business. 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, as we do not expect that any of our key personnel will remain with us
after the completion of our initial business combination. 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 affect our initial business
combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the
target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders or warrant holders who choose to remain a stockholder or warrant holder following our initial business combination could
suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy for such reduction
in value.
The
officers and directors of an initial business combination candidate may resign upon completion of our initial business combination. The
departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business. The role of an 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 acquisition 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 acquisition candidate will not wish to remain in place. As a result, we may need to reconstitute the
management team of the post-transaction company in connection with our initial business combination, which may adversely impact our ability
to complete an initial business combination in a timely manner or at all.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities
similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity or other transaction should be presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses.
Our Sponsor and officers and directors are, or may in the future become, affiliated with entities (such as operating companies or investment
vehicles) that are engaged in a similar business. We do not have employment contracts with our officers and directors that will limit
their ability to work at other businesses. In addition, our Sponsor, officers and directors may participate in the formation of, or become
an officer or director of, any other blank check company prior to completion of our initial business combination. As a result, our Sponsor,
officers, or directors could have conflicts of interest in determining whether to present business combination opportunities to us or
to any other blank check company with which they may become involved.
As
described in “Item 10. Directors, Executive Officers, and Corporate Governance - Conflicts of Interest,” each of our officers
and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other obligations or duties
to one or more other entities pursuant to which such officer or director is or will be required to present a business combination opportunity
to such entities. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable
for one or more entities to which he or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations
and duties to present such business combination opportunity to such entities first, and only present it to us if such entities reject
the opportunity and he or she determines to present the opportunity to us. 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 Charter provides that we renounce our interest
in any corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely
in his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity
to us without violating another legal obligation.
Please
see “Item 10. Directors, Executive Officers, and Corporate Governance - Conflicts of Interest” and “Item 11. Certain
Relationships and Related Party Transactions” for a discussion of our officers’ and directors’ business affiliations
and potential conflicts of interest.
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 a business combination with a target business that is affiliated with our sponsor or our
directors or officers. 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.
In
particular, affiliates of our Sponsor, our directors and our officers have invested, and may in the future invest, in a broad array of
sectors, including those in which our company may invest. As a result, there may be substantial overlap between companies that would
be a suitable business combination for us and companies that would make an attractive target for such other affiliates.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our Sponsor, officers, or directors, which may raise potential conflicts of interest.
In
light of the involvement of our Sponsor, officers and directors with other businesses, we may decide to acquire one or more businesses
affiliated with or competitive with our sponsor, officers, and directors, and their respective affiliates. Our directors also serve as
officers and board members for other entities, including, without limitation, those described under “Item 10. Directors, Executive
Officers, and Corporate Governance - Conflicts of Interest.” Such entities may compete with us for business combination opportunities.
Our Sponsor, officers, and directors are not currently aware of any specific opportunities for us to complete our initial business combination
with any entities with which they are affiliated, and there have been no substantive discussions concerning a business combination with
any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities,
we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination and such
transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from
an independent investment banking firm that is a member of FINRA or from an independent accounting firm regarding the fairness to our
stockholders from a financial point of view of a business combination with one or more domestic or international businesses affiliated
with our Sponsor, officers, or directors, potential conflicts of interest still may exist and, as a result, the terms of the business
combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since
our initial stockholders will lose their entire investment in us if our initial business combination is not completed (other than with
respect to any public shares they may hold), a conflict of interest may arise in determining whether a particular business combination
target is appropriate for our initial business combination.
On
February 15, 2021, 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 number of Founder Shares issued was determined based on the expectation that the Founder Shares would represent
20% of the outstanding shares of common stock upon the completion of our Initial Public Offering. The Founder Shares will be worthless
if we do not complete an initial business combination.
In
addition, our Sponsor purchased an aggregate of 5,250,000 Private Placement Warrants for a purchase price of $5,250,000, or $1.00 per
warrant, that will also be worthless if we do not complete our initial business combination. Each Private Placement Warrant entitles
the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as provided
herein.
The
Founder Shares are identical to the shares of Class A common stock included in the Units sold in our Initial Public Offering, except
that: (1) only holders of the Founder Shares have the right to vote on the election and removal of directors prior to our initial business
combination; (2) the Founder Shares are subject to certain transfer restrictions, as described in more detail below; (3) our Sponsor,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to: (a) waive their redemption
rights with respect to any Founder Shares and any Public Shares held by them in connection with the completion of our initial business
combination, (b) waive their redemption rights with respect to any Founder Shares and Public Shares held by them in connection with a
stockholder vote to approve an amendment to our Charter to modify the substance or timing of our obligation to provide for the redemption
of our Public Shares in connection with an initial business combination or to redeem 100% of our Public Shares if we have not consummated
our initial business combination within the Completion Window; and (c) waive their rights to liquidating distributions from the Trust
Account with respect to any Founder Shares held by them if we fail to complete our initial business combination within the Completion
Window (although they will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares they hold
if we fail to complete our initial business combination within the Completion Window); (4) the Founder Shares are automatically convertible
into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis, subject to adjustment
pursuant to certain anti-dilution rights, as described herein; and (5) the holders of Founder Shares are entitled to registration rights.
The
personal and financial interests of our Sponsor, officers and directors may influence their motivation in identifying and selecting a
target business combination, completing an initial business combination and influencing the operation of the business following the initial
business combination. This risk may become more acute as the deadline for completing our initial business combination nears.
Risks
Associated with Acquiring and Operating a Business in Foreign Countries
If
our management team pursues a company with operations or opportunities outside of the United States for our initial business combination,
we may face additional burdens in connection with investigating, agreeing to and completing such combination, and if we effect such initial
business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial business combination,
we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing
to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved
by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
| ● | costs
and difficulties inherent in managing cross-border business operations and complying with
commercial and legal requirements of overseas markets; |
| ● | rules
and regulations regarding currency redemption; |
| ● | complex
corporate withholding taxes on individuals; |
| ● | laws
governing the manner in which future business combinations may be effected; |
| ● | tariffs
and trade barriers; |
| ● | regulations
related to customs and import/export matters; |
| ● | currency
fluctuations and exchange controls; |
| ● | challenges
in collecting accounts receivable; |
| ● | cultural
and language differences; |
| ● | crime,
strikes, riots, civil disturbances, terrorist attacks, invasions, natural disasters, and
wars; |
| ● | downstream
effects of the actual or potential imposition of sanctions against certain nations; |
| ● | deterioration
of political relations with the United States; |
| ● | obligatory
military service by personnel; and |
| ● | government
appropriation of assets. |
We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business
combination or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact our
business, results of operations and financial condition.
If
our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time and resources
becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, any or all of our management could resign from their positions as officers of the Company, and the
management of the target business at the time of the business combination could remain in place. Management of the target business may
not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and
resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which
may adversely affect our operations.
General
Risk Factors
The
continued threat of global terrorism and/or war and the impact of military and other action will likely continue to cause volatility
in the economies of certain countries and various aspects thereof, including in prices of commodities, and could affect our financial
results.
A
prospective business target’s operations may involve significant strategic assets having a national or regional profile. The nature
of these assets could expose such a target to a greater risk of being the subject of a terrorist attack or military activity than other
assets or businesses. Any terrorist attacks that occur at or near such assets would likely cause significant harm to employees, property
and, potentially, the surrounding community, and may result in losses far in excess of available insurance coverage. As a result of global
events and continued terrorism concerns, insurers significantly reduced the amount of insurance coverage available for liability to persons
other than employees for claims resulting from acts of terrorism, war, or similar events. As a result of a terrorist attack or terrorist
activities in general, we may not be able to obtain insurance coverage and other endorsements at commercially reasonable prices or at
all.
Certain
agreements related to our Initial Public Offering may be amended without stockholder approval.
Certain
agreements, including the underwriting agreement relating to our Initial Public Offering, the letter agreement among us and our Sponsor,
officers, and directors, and the registration rights agreement among us and our initial stockholders, may be amended without stockholder
approval. These agreements contain various provisions that our public stockholders might deem to be material. While we do not expect
our Board to approve any amendment to any of these agreements prior to our initial business combination, it may be possible that our
Board, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such
agreement in connection with the consummation of our initial business combination. Any such amendments would not require approval from
our stockholders, may result in the completion of our initial business combination that may not otherwise have been possible, and may
have an adverse effect on the value of an investment in our securities.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more
difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including
if the market value of our common stock held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year,
in which case we would no longer be an emerging growth company as of the end of such fiscal year. 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 election to opt out is irrevocable. We have elected not to opt out of such extended
transition period which means that when a standard is issued or revised and it has different application dates for public or private
companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised
standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company
nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.
Provisions
in our Charter and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our
Charter requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers,
and employees 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. This provision may have the effect of discouraging lawsuits against our directors and officers.
Our
Charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings
that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for
disputes with the Company or the Company’s directors, officers, or other employees.
Our
Charter provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware
shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on
behalf of the Company, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee, or agent
of the Company to the Company or our stockholders, or any claim for aiding and abetting any such alleged breach, (iii) action asserting
a claim against the Company or any director, officer, or employee of the Company arising pursuant to any provision of the DGCL or our
Charter or our bylaws, or (iv) action asserting a claim against us or any director, officer, or employee of the Company governed by the
internal affairs doctrine except for, as to each of (i) through (iv) above, any claim (a) as to which the Court of Chancery of the State
of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable
party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (b) which
is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or (c) arising under the Federal securities
laws, including the Securities Act, as to which the Court of Chancery and the Federal district court for the District of Delaware shall
concurrently be the sole and exclusive forums.
Notwithstanding
the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any liability or duty created by the Exchange
Act or any other claim for which the Federal district courts of the United States of America shall be the sole and exclusive forum. Any
person or entity purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have consented
to the forum provisions in our Charter. If any action, the subject matter of which is within the scope the forum provisions, is filed
in a court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such
stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State
of Delaware in connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”);
and (y) having service of process made.
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 the Company or its directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court were to
find this provision of our amended and restated certificate of incorporation inapplicable or unenforceable with respect to one or more
of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions,
which could materially and adversely affect our business, financial condition, and results of operations and result in a diversion of
the time and resources of our management and board of directors.