Item 1. Business.
Introduction
We
are a blank check company incorporated on January 11, 2021 as a Delaware corporation for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, which refer to throughout this
Annual Report on Form 10-K as our initial business combination, with one or more businesses. Although we are not limited to a
particular industry or geographic region for purposes of consummating a business combination, we initially are concentrated on
target businesses making a positive contribution to sustainability through the ownership, financing and management of societal
infrastructure.
Formation
On
January 13, 2021, our sponsor paid $25,000 to cover certain offering costs in consideration of 4,312,500 founder shares. Up to 562,500
founder shares were subject to forfeiture by our sponsor depending on the extent to which the underwriters’ over-allotment option
was exercised, so that our sponsor would own 20% of our issued and outstanding shares after our IPO. On April 8, 2021, as a result of
the underwriters’ election to partially exercise their over-allotment option and the forfeiture of the remaining over-allotment
option, 1,250 founder shares were forfeited and 561,250 founder shares ceased to be subject to forfeiture, resulting in an aggregate
of 4,311,250 founder shares issued and outstanding.
Initial
Public Offering
On
March 26, 2021, we consummated our IPO of 15,000,000 units. Each unit consists of one share of common stock of, par value $0.0001 per
share, and one-fourth of one redeemable warrant. Each whole warrant will become exercisable for one share of common stock, with an exercise
price of $11.50 per share, at any time commencing on the later of 12 months from the closing of our IPO or 30 days after the completion
of an initial business combination and will expire on the fifth anniversary of our completion of an initial business combination, or
earlier upon redemption or liquidation. The units were sold at a price of $10.00 per unit, generating gross proceeds of $150,000,000.
On
March 26, 2021, simultaneously with the closing of our IPO, we consummated the private sale of 3,166,667 warrants at a purchase price
of $1.50 per private placement warrant to our sponsor, generating gross proceeds of $4,750,000. The private placement warrants are identical
to the warrants sold as part of the units in our IPO, except that the private placement warrants will be non-redeemable for cash and
will be exercisable on a cashless basis so long as they are held by our sponsor or its permitted transferees. Our sponsor has agreed
not to transfer, assign or sell any of the private placement warrants (except to certain permitted transferees) until 30 days after the
completion of our initial business combination.
On April 8, 2021, in connection with the underwriters’ election
to partially exercise their over-allotment option, we consummated the sale of an additional 2,245,000 units and the sale of an additional
299,334 private placement warrants, generating total gross proceeds of $22,899,001.
In connection with the Initial
Public Offering, we entered into a forward purchase agreement (the “Original Agreement”) with Northern Genesis Capital III
LLC (“NGC”), an entity which is affiliated with our sponsor. On April 21, 2021, the Company entered into an Amended and Restated
Forward Purchase Agreement with NGC (the “NGC Forward Purchase Agreement”), and certain additional Forward Purchase Agreements
with additional institutional investors (collectively, with the NGC Forward Purchase Agreement, the “Forward Purchase Agreements”).
The Forward Purchase Agreements collectively replace the Original Agreement.
Pursuant to the Forward Purchase
Agreements, if we determine to raise capital by the private placement of equity securities in connection with the closing of our initial
business combination (subject to certain limited exceptions), the members of NGC (institutional investors that also are members of our
sponsor) and the parties to the additional Forward Purchase Agreements have the first right to purchase an aggregate amount of up to 7,500,000
of our “forward purchase units” (under all Forward Purchase Agreements, taken together) for $10.00 per forward purchase unit,
or an aggregate total of $75,000,000. Each forward purchase unit would consist of one share of the our common stock and one-eighth of
one warrant, with each whole warrant exercisable to purchase one share of the our common stock at $11.50 per share. The common stock and
warrants included in the forward purchase units would have the same terms as our public shares and warrants but would not be freely tradable
until registered. As with the Original Agreement, any commitment by any potential purchaser under any of the Forward Purchase Agreements
is subject to and conditioned upon written confirmation from the prospective purchaser, following our notification to such purchaser of
its intention to enter into an initial business combination agreement, which a prospective purchaser was grant or withhold in its sole
discretion.
In addition, if a private
placement of equity securities in connection with our initial business combination exceeds $75,000,000, we agreed under each Forward Purchase
Agreement to use its commercially reasonable efforts to permit priority participation in such additional amount by the members of NGC
and the parties to the additional Forward Purchase Agreements, in an aggregate additional amount up to $150,000,000, on the same terms
as those offered to other prospective purchasers in connection with such additional private placement amount.
Each Forward Purchase Agreement
that the holders of the shares of common stock and warrants included in the forward purchase units will be entitled to registration rights
pursuant to the terms of any registration rights agreement applicable to any equity securities issued by way of private placement in connection
with the closing of our initial business combination or, in the absence of the foregoing, pursuant to the terms of the registration rights
agreement that we entered into with our sponsor and NGC in connection with our IPO (the “Registration Rights Agreement”).
Pursuant to the foregoing, on April 21, 2021, the Registration Rights Agreement was amended to clarify that the shares and warrants included
in up to 7,500,000 total forward purchase units remain subject to the Registration Rights Agreement, regardless of the specific Forward
Purchase Agreement pursuant to which they may be issued.
Each Forward Purchase Agreement
contains representations and warranties by each party, conditions to closing, and additional provisions that are customary for agreements
of this nature. The terms of all of the Forward Purchase Agreements are substantively the same, except that the NGC Forward Purchase Agreement
gives NGC board observation rights prior to our initial business combination and gives the members of NGC a priority right to subscribe
for any of the forward purchase units that any other prospective purchasers do not elect to purchase under any of the other Forward Purchase
Agreements.
NYSE
Listing
The
public shares, units, and public warrants are currently listed for trading on the NYSE under the symbols “NGC,” “NGC.U,”
and “NGC.WS,” respectively.
Our
Company
We
are a newly organized blank check company incorporated in Delaware and formed for the purpose of effecting an initial business combination
with one or more target businesses. To date, our efforts have been limited to organizational activities, activities relating to our IPO
and, following the closing of our IPO, our search for a suitable candidate for our initial business combination. We have generated no
revenues to date, and we do not expect that we will generate operating revenues until we consummate our initial business combination
at the earliest. Although we may pursue an acquisition opportunity in any business or industry, we intend to focus on opportunities making
a positive contribution to sustainability through the ownership, financing and management of societal infrastructure.
Our
management team co-founded Northern Genesis Acquisition Corp. (“Northern Genesis Acquisition I”) (NYSE: NGA), a special purpose
acquisition company that completed its initial public offering in August 2020, in which it sold 31,945,344 units, each consisting
of one share of common stock and one-half of one warrant, with each whole warrant entitling the holder thereof to purchase one share
of common stock, for an offering price of $10.00 per unit, generating aggregate proceeds of approximately $320 million. Our management
team also co-founded Northern Genesis Acquisition Corp. II (NYSE: NGAB) (“Northern Genesis Acquisition II”), a special purpose
acquisition company that completed its initial public offering in January 2021, in which it sold 41,400,000 units, each consisting
of one share of common stock and one-third of one warrant, with each whole warrant entitling the holder thereof to purchase one share
of common stock, for an offering price of $10.00 per unit, generating aggregate proceeds of approximately $414 million.
On November 30, 2020, Northern Genesis Acquisition I announced it had
entered into a definitive agreement for its initial business combination with The Lion Electric Company, and on May 6, 2021, completed
the initial business combination, with the common shares of the combined entity listed on the NYSE and TSX under the ticker symbol “LEV.”
On June 23, 2021, Northern Genesis Acquisition II announced it had entered into a definitive agreement for its initial business combination
with Embark Trucks Inc. (“Embark”), and on November 10, 2021, completed the initial business combination, with the shares
of common stock of the combined entity listed on the NASDAQ Global Market under the ticker symbol “EMBK.” We believe that
we will benefit from the valuable experience gained by our management team during the launch and operation of Northern Genesis Acquisition
I and Northern Genesis Acquisition II, including the process of evaluating numerous target companies and industry sectors, selecting appropriate
companies as the business combination partner and negotiating the terms of the business combination agreements, and all of the related
transactions. Past performance by our management team, Northern Genesis Acquisition I or Northern Genesis Acquisition II may not be indicative
of future performance of an investment in us.
We
believe that there is a growing societal sensitivity on the part of customers, investors and employees to the alignment that a business
demonstrates with the principles underlying sustainability. Incorporating these principles into business strategies requires ongoing
consideration of certain ESG factors that can both create opportunities and present potential risks. By weaving a focus on sustainability
into their business plans and activities, companies can build business models that create social and environmental value in addition
to financial or economic value. We believe there are significant, attractive opportunities to invest in businesses that demonstrate a
commitment to this ‘triple bottom line’ orientation.
While
a commitment to ESG covers a broad range of themes, we are specifically focused on evaluating suitable targets whose business practices
demonstrate clear alignment with sustainability principles and whose organizational culture embraces the value of such alignment. We
believe there are attractive investment opportunities that may benefit, both operationally and economically, from our management team’s
commitment to and expertise in designing and incorporating ESG processes and practices. We believe that opportunities for improved business
success based on strong ESG alignment exist across a broad range of industries and sectors. As demonstrated by our management team with
Northern Genesis Acquisition I’s completed business combination with The Lion Electric Company and Northern Genesis Acquisition
II’s completed business combination with Embark, we believe the experience of our management team will allow us to evaluate targets
in industries such as transition to renewable energy, transportation and electric mobility (including charging infrastructure, batteries,
railways and logistics), data and communication (including data centers, internet distribution and mobile infrastructure), agriculture
(including product logistics, biofuels and storage) and community services (including waste, recycling, environmental and construction),
among others. We believe that organizations operating in all of these sectors can generate attractive returns through strengthened ESG
profiles and incorporating environmental sustainability into their business strategies. Companies in our target universe tend to have
stable growth rates and would greatly benefit from access to both public market capital and public market expertise.
We
believe in the ability of our management team to add significant value to a target company from a commercial, operating, strategic and
sustainability perspective. In particular, we will seek to identify and acquire a business that could benefit from a hands-on owner with
extensive operational experience and the public company expertise our management team possesses, or that relies on the target’s
executive and operational expertise but presents potential for an attractive risk-adjusted return profile following a business combination
with us. Even fundamentally sound companies can often underperform their potential due to underinvestment, a temporary period of dislocation
in the markets in which they operate, over-levered capital structures, excessive cost structures, incomplete management teams and/or
a need to realign business strategies. In addition, these companies may have little or no experience operating in the public markets.
Our management team has significant experience in identifying such opportunities and executing on strategies to surface value in a public
market context.
Our
management team includes all of the members of the management team of Northern Genesis Acquisition I and Northern Genesis Acquisition
II. We believe that potential sellers of target businesses will view the fact that our management team has successfully negotiated a
business combination for each of Northern Genesis Acquisition I and Northern Genesis Acquisition II as a positive factor in considering
whether or not to enter into a business combination with us. Notwithstanding the foregoing, past performance of our management team,
Northern Genesis Acquisition I or Northern Genesis Acquisition II is not a guarantee either (i) that we will be able to identify
a suitable candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate.
You should not rely on the historical record of our management team, Northern Genesis Acquisition I’s or Northern Genesis Acquisition
II’s performance as indicative of our future performance.
Business
Strategy
We
seek to identify and complete our initial business combination with a company that complements the experience of our management team
and can benefit from their operating and deal making expertise. Our selection process is expected to leverage our management team’s
network of relationships, deal sourcing capability and unique industry experiences to access a wide range of proprietary opportunities.
The team members have developed these capabilities during their respective career endeavors. Our management team has a history of sourcing,
structuring, acquiring, operating, developing, growing, financing and selling businesses. They also share deep relationships with target
companies and capital markets advisors, as well as extensive experience raising both debt and equity capital across business cycles.
These experiences have provided them with a broad understanding of public market performance and investor expectations, enhancing their
ability to provide mentorship as a target management team transitions from private to public markets.
Initial
Business Combination
The
NYSE rules require that our initial business combination must be with one or more target businesses that together have a fair market
value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest
earned) at the time of our signing a definitive agreement in connection with our initial business combination. If our board of directors
is not able to determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment
banking firm or from another independent entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria.
However, we will not be required to meet this condition if we are not then listed on the NYSE.
We
anticipate structuring our initial business combination so that the company in which our public stockholders own shares following the
transaction will own or acquire 100% of the outstanding equity interests or assets of the target business or businesses. We may, however,
structure our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or
assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons,
but we anticipate only completing such business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act of 1940, as amended. Even if the post-transaction company owns or acquires
50% or more of the voting securities of the target, our stockholders prior to our initial business combination may collectively own less
than a majority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination
transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the
outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result
of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own
less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests
or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses
that is owned or acquired is what will be valued for purposes of the NYSE’s 80% fair market value test. If our initial business
combination involves more than one target business, the 80% fair market value test will be based on the aggregate value of all of the
target businesses.
Our
Acquisition Process
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other things,
meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other
information that will be made available to us. We will also utilize our operational and capital allocation experience.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors.
In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors,
we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent
entity that commonly renders valuation opinions that our initial business combination is fair to our company from a financial point of
view.
Members
of our management team and our independent directors have an indirect financial interest in our founder shares and/or private placement
warrants, and may acquire a direct or indirect financial interest in working capital loans to us or in our working capital warrants,
which, due to the prices paid for such securities, the lack of redemption rights with respect to such securities and fact that such securities
and loans likely would be worthless in the absence of business combination, and other factors, may give rise to conflicts of interest
in determining whether to effectuate a particular initial business combination. Further, each of our officers and directors may have
a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officers
and directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to
such entity. Our amended and restated certificate of incorporation provides that we renounce any interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director
or officer of our company and such opportunity is one that we are legally and contractually permitted to undertake and that otherwise
would be reasonable for us to pursue. Subject to the foregoing, if any of our officers or directors becomes aware of a business combination
opportunity which is suitable for an entity to which he or she then has fiduciary or contractual obligations, he or she will honor his
fiduciary or contractual obligations to present such opportunity to such entity. In addition, he or she otherwise may choose to present
such opportunities to such other entities before he or she presents such opportunities to us, to the extent that he or she determines,
in the good faith exercise of his or her professional business judgment, that such opportunities are not suitable for us. Our board of
directors has determined that a combination with a particular target generally will not be suitable for us if the cash needed for the
acquisition and near-term expansion of the target’s business is less than the $172 million currently held in our trust
account.
Without
limiting the foregoing, all of our officers and directors have contractual obligations and fiduciary duties under the General Corporation
Law of the State of Delaware (the “DGCL”) to Northern Genesis Holdings Inc. and/or to certain companies in which it has invested
or may invest, by reason of his or her position with such company, which may compete with us for business combination opportunities.
Since consummation of the business combination between Northern Genesis Acquisition II and Embark, Ian Robertson has been and continues
to serve on the board of directors of Embark and has fiduciary obligations to Embark.
We
do not believe that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability to
complete our business combination.
Acquisition
Criteria
We
have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses
for a business combination:
| ● | Ability
to align with our sustainability principles and support reduction of carbon intensity; |
| ● | Defined
barriers to entry or sustainable competitive advantages; |
| ● | Predictable
revenue and free cash flow to support reinvestment growth; |
| ● | Little
material technology, scale-up or market risk and success not premised on future capital raises to achieve growth plans; |
| ● | Opportunity
to benefit from our management team’s network and expertise to drive improved financial performance; and |
| ● | Ability
to benefit from access to the public capital markets. |
Notwithstanding
the foregoing, these criteria and guidelines are not intended to be exhaustive. Further, we may elect to pursue a business combination
with a target business that may not meet any of the foregoing criteria and guidelines. Any evaluation relating to the merits of a particular
initial business combination may be based, to the extent relevant, on these general criteria and guidelines as well as other considerations,
factors, criteria and guidelines that our management may deem relevant. In the event that we decide to enter into our initial business
combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does
not meet the above criteria and guidelines in our stockholder communications related to our initial business combination, which would
be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Our
Management Team
Members
of our management team are not obligated to devote any specific number of hours to our matters, but they have advised us that they intend
to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount
of time that any member of our management team will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the current stage of the business combination process.
As
supported by Northern Genesis Acquisition I’s completed business combination with The Lion Electric Company and Northern Genesis
Acquisition II’s completed business combination with Embark, we believe our management team’s operating and transaction experience
and relationships with companies will provide us with a substantial number of potential business combination targets. Over the course
of their careers, the members of our management team have developed a broad network of contacts and corporate relationships around the
world. This network has grown through the activities of our management team sourcing, acquiring and financing businesses, our management
team’s relationships with sellers, financing sources and target management teams and the experience of our management team in executing
transactions under varying economic and financial market conditions.
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As an existing public company, we offer
a target business an alternative to the traditional initial public offering through a merger or other business combination. In this situation,
the owners of the target business would exchange their shares of stock in the target business for shares of our stock or for a combination
of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various
costs and obligations associated with being a public company, we believe target businesses will find this method a more certain and cost-effective
method to becoming a public company than the typical initial public offering. In a typical initial public offering, there are additional
expenses incurred in marketing, road show and public reporting efforts that may not be present to the same extent in connection with
a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public
offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could
delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe the target business
would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’
interests. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in
attracting talented employees.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (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, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a
less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In
other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would
otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we
are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700
million as of the prior June 30th; and (ii) the date on which we have issued more than $1.00 billion in non-convertible debt securities
during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with
it in the JOBS Act.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates equals or exceeds $250 million as of the prior June 30th, and (2) our annual revenues equaled
or exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates equals or
exceeds $700 million as of the prior June 30th.
Financial
Position
With funds available for a business combination initially in the amount
of $172,899,001 assuming no redemptions and after payment of $6,035,750 of deferred underwriting fees, we offer a target business a variety
of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations
or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our initial business combination using
our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination
that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, other than the
forward purchase agreement, we have not taken any steps to secure third party financing and there can be no assurance it will be available
to us.
Effecting
our Initial Business Combination
We
intend to effectuate our initial business combination using cash from the proceeds of our IPO and the private placement of the private
placement warrants, the proceeds of the sale of any of our securities (including forward purchase securities) in connection with our
initial business combination, shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target,
or a combination of the foregoing or other sources. We may seek to complete our initial business combination with a company or business
that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent
in such companies and businesses.
If
the purchase price for our initial business combination is paid in equity or debt securities, or not all of the funds released from the
trust account are used for payment of the purchase price or for redemptions of our public shares, we may apply the balance of the cash
released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction
company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the
purchase of other companies or for working capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial
business combination (including, but not limited to, pursuant to the forward purchase agreement), and we may effectuate our initial business
combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject to compliance with applicable
securities laws, we would expect to complete such financing only simultaneously with the completion of our business combination. In the
case of an initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials
disclosing the business combination would disclose the terms of the financing. There are no prohibitions on our ability to raise funds
privately, or through loans in connection with our initial business combination. Other than the forward purchase agreement, at this time
we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the
sale of securities or otherwise.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment market
participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Target businesses
may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings. These sources
may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources
will have read our filings with the SEC and know what types of businesses we are targeting. Our officers and directors, as well as their
affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a
result of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we
may engage the services of professional firms or other individuals that specialize in business acquisitions, in which event we may pay
a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of
the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities
to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our
management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction;
in which case any such fee will be paid out of the funds held in the trust account.
Subject
to maintaining funds adequate for our projected obligations, we expect to make payments, up to $2,000,000 in the aggregate, in respect
of the services of personnel affiliated with our sponsor, including persons who may be directors or officers of our company, for activities
on our behalf, including services related to identifying, investigating and completing an initial business combination and other operational
and support services. To the extent any amounts are in respect of the services of individuals who also serve as directors or executive
officers of our company, such amounts will be reviewed and approved by our audit committee. We also will reimburse our sponsor, officers,
directors and their respective affiliates for any out-of-pocket expenses incurred on our behalf, and we have agreed to pay our sponsor
or its affiliate a total of $10,000 per month, from the date our securities were first listed on the NYSE until the closing of our initial
business combination, for office space, utilities, secretarial support and administrative services.
Some
of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our initial
business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process
of an acquisition candidate.
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our sponsor,
officers, directors or their affiliates or making the acquisition through a joint venture or other form of shared ownership with our
sponsor, officers, directors or their affiliates. In the event we seek to complete our initial business combination with a business combination
target that is affiliated with any such persons, we, or a committee of independent directors, would obtain an opinion from an independent
investment banking firm or another independent firm that commonly renders valuation opinions that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Selection
of a Target Business and Structuring of our Initial Business Combination
NYSE
rules require that our initial business combination must occur with one or more target businesses that together have an aggregate fair
market value of at least 80% of our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable
on the income earned on the trust account) at the time of the agreement to enter into the initial business combination. The fair market
value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the
financial community, such as discounted cash flow valuation 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 or from another independent firm that commonly renders valuation opinions with respect to the satisfaction of such criteria. Subject
to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective
target businesses.
Notwithstanding
the foregoing, if we are not then listed on the NYSE for whatever reason, we would no longer be required to meet the foregoing 80% fair
market value test.
In
any case, we anticipate only completing an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register as
an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets of a target
business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company is what
will be valued for purposes of the 80% fair market value test. There is no basis for investors in our company to evaluate the possible
merits or risks of any target business with which we may ultimately complete our 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, interviews of customers and suppliers, inspection of facilities,
as well as a review of financial, operational, legal and other information that will be made available to us. If we determine to move
forward with a particular target, we will proceed to structure and negotiate the terms of the business combination transaction.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of, and negotiation with, a prospective target business with which our business combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. In addition, we intend to focus our search for an initial business combination in a
single industry. By completing our business combination with only a single entity, our success may depend on the marketing and sale of
a limited number of products or services, and we may be subject to any negative economic, competitive and regulatory developments affecting
the particular industry in which we operate after 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’ management may not prove to be correct. In addition,
future management may not have the necessary skills, qualifications or abilities to manage a public company.
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. While it is possible that one or more of our directors will remain associated in some capacity with us following our business
combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our business combination. Moreover,
we cannot assure you that our officers and directors and will have significant experience or knowledge relating to the operations of
any particular target business with which we may combine.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We
cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval
if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal
reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether
stockholder approval is currently required under Delaware law for each such transaction.
| Type of Transaction | |
| 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 shares of common stock that will be equal to or in excess of 20% of the number of shares of our common stock 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 or officers (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 of common stock will result in our undergoing a change of control. |
Liquidation
if No Business Combination
We
have until March 26, 2023 to complete our initial business combination. If we are unable to complete our business combination within
such period (and our stockholders have not amended our amended and restated certificate of incorporation to extend this time period),
we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more
than ten business days thereafter, redeem the public shares for cash, at a per-share price equal to the aggregate amount then on deposit
in the trust account (including interest earned on the funds held in the trust account and not previously released to us to pay our tax
obligations, less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject
to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and
(iii) 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 business combination within the 24-month time period.
The
holders of our founder shares are not entitled to any liquidating distributions from the trust account with respect to such founder shares
if we fail to complete our initial business combination within 24 months from the closing of our IPO.
Our
sponsor, officers and directors have agreed, pursuant to written agreements with us, that they will not propose any amendment to our
amended and restated certificate of incorporation (a) that would modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or certain amendments to our certificate of incorporation or to redeem 100% of our
public shares if we do not complete our initial business combination within 24 months from the closing of our IPO or (b) with respect
to any other provisions that specifically apply only to the period prior to the consummation of our initial business combination, unless
we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at
a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the
funds held in the trust account and not previously released to us to pay our tax obligations divided by the number of then outstanding
public shares. However, we may not redeem our public shares unless our net tangible assets are at least $5,000,001 either immediately
prior to or upon consummation of a business combination (so that we are not subject to the SEC’s “penny stock” rules).
We
expect that all costs and expenses associated with implementing a plan of dissolution, as well as payments to any creditors, will be
funded from funds available to us outside the trust account, although we cannot assure you that there will be sufficient funds for such
purpose. 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 our tax obligations, we may request that the trustee
release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our IPO and the sale of the private placement warrants, other than the proceeds deposited
in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption amount
received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could, however,
become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We cannot
assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00. Under Section 281(b)
of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made
in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of
our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient
to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers (other than our independent auditors and the underwriters in our IPO), prospective
target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim
of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they
will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust
account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims
challenging the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets,
including the funds held in the trust account. If any third-party refuses to execute an agreement waiving such claims to the monies held
in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement
with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly
more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly
superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service
provider willing to execute a waiver.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor
has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or
by a prospective target business with which we have discussed entering into a definitive agreement for a business combination, reduce
the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in
the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each
case net of the interest which may be withdrawn to pay our tax obligations and up to $100,000 for liquidation expenses, except as to
any claims by a third party who executed a waiver of any and all rights to seek access to the trust account (even if such waiver is deemed
to be unenforceable) and except as to any claims under our indemnity of the underwriters of our IPO against certain liabilities, including
liabilities under the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy this indemnity
obligation, nor have we asked it to reserve for such eventuality and believe that our sponsor’s only assets are securities of our
company. Therefore, we believe it is unlikely 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, if we are not able to complete our initial business combination, you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets,
in each case net of the amount of interest which may be withdrawn to pay our tax obligations and up to $100,000 for liquidation expenses,
and our sponsor asserts that it is unable to satisfy its indemnification obligation or that it has no indemnification obligation related
to a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification
obligation. While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce
its indemnification obligation to us, it is possible that our independent directors in exercising their business judgment may choose
not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount
recoverable or if the independent directors determine that a favorable outcome is not likely. Accordingly, we cannot assure you that
due to claims of creditors the actual value of the per-share redemption price will not be less than $10.00 per public share.
We seek to reduce the possibility that our sponsor will have to indemnify
the trust account due to claims of creditors by endeavoring to have all vendors, service providers (other than our independent registered
public accounting firm and the underwriters of our IPO), 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.
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 business combination within 24 months from the closing of our IPO may be considered a liquidating
distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended
to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a
liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is
our intention to redeem our public shares as soon as reasonably possible following our 24th month and, therefore, we do not intend to
comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received
by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
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 business combination within 24 months from the closing of our IPO, 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 file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover 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, and thereby exposing itself and our company
to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot
assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only in the event of the redemption of our public shares
if we do not complete our business combination within 24 months from the closing of our IPO, or if they redeem their respective shares
for cash upon the completion of the initial business combination, or in connection with certain amendments to our amended and restated
certificate of incorporation. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust
account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting
in connection with the business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable
pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
Competition
In
identifying, evaluating and selecting a target business for our 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
possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will be limited
by our available financial resources. This inherent limitation gives others an advantage in pursuing the 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.
Facilities
Our
executive offices are located at 4801 Main Street, Suite 1000, Kansas City, MO 64112. The cost for our use of any office space used by
us, including this space, is included in the $10,000 per month fee we will pay to our sponsor or its affiliates for office space, utilities,
secretarial support and administrative services. We consider our current office space adequate for our current operations.
Employees
We do not have any full-time employees and we do not intend to have
any prior to the completion of our initial business combination.
Website
Our
website address is www.northerngenesis.com. Information contained on our website is not part of this Annual Report on Form 10-K.
Our
Annual Reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, as well as any amendments and exhibits to
these reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), are available on our website, free of charge, as soon as reasonably practicable after such reports are filed with, or furnished
to, the SEC. Alternatively, you may access these reports at the SEC’s website at www.sec.gov.
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, including our financial statements and related notes, before
making a decision to invest in our securities. If any of the following events occur, our business, financial condition and operating
results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all
or part of your investment.
Risk
Factor Summary
Risks
Regarding Our Business Strategy
| ● | We
are a newly formed company with no operating history and no revenues; our ability to source and complete an initial business combination
is entirely dependent upon the efforts of our management team; and past performance by our management team or by Northern Genesis Acquisition
I or Northern Genesis Acquisition II may not be indicative of future performance of an investment in us. |
| ● | If,
due to our lack of revenues, other resource constraints, competition, or any other factors we are unable to complete an initial business
combination within 24 months following the closing of our IPO, our public stockholders may receive only $10.00 per share, and perhaps
less, on the redemption of our public shares, and our warrants will expire worthless. |
| ● | The
right of our public stockholders to cause their public shares to be redeemed upon a business combination, the significant number of warrants
that we will issue, and the uncertainties regarding the extent and amount of any redemptions of our common stock and exercise of our
warrants may make us a less attractive combination candidate than strategic or other competitors, increasing the risk that we fail to
timely complete an initial business combination, or do so on less favorable terms. |
| |
● |
Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.” |
Business
Combination Risks
| ● | Because
we are not limited to evaluating target businesses in a particular industry and have not identified any specific target businesses with
which to pursue for our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s
operations prior to an investment in our securities. We may enter into our initial business combination with a target that does not meet
our criteria and guidelines, that is in a sector or geography that is outside of our management team’s expertise, or that is financially
unstable, exposing your investment to unexpected and potentially concentrated risks. |
| ● | Our
due diligence regarding any particular target may not uncover all material risks, or identified risks may evolve in unforeseen ways,
and our assessment of how management or key personnel of a target may perform in a higher growth mode or as a public company may be inaccurate. |
| ● | We
are not required to obtain an opinion from an independent investment banking firm or from another independent firm that commonly renders
valuation opinions, and consequently, you may have no assurance from an independent source that the price we are paying for, or relative
valuations reflected by, a business combination is fair to our company from a financial point of view. |
| ● | Due
to transaction structure or other reasons, our stockholders may represent a minority of a combined business, and our management team
may not control or have significant influence over management of the target business following our initial business combination. |
Risks
Related to Our Securities and Redemption
| ● | 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. |
| ● | You
may experience future dilution as a result of private placements or other financing to complete our initial business combination as well
as the exercise of any of the significant number of warrants for our common stock. In addition, we may issue additional shares of common
stock or preferred stock to complete our initial business combination or thereafter. |
| ● | We
are not registering the shares of 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
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you. In addition, our ability to require
exercise such warrants on a cashless basis after we call the warrants for redemption or if there is no effective registration statement
covering the shares of common stock issuable upon exercise will cause holders to receive fewer shares of common stock upon their exercise
of the warrants than they would have received had they been able to pay the exercise price of their warrants in cash. |
| ● | You
will not have any rights or interests in funds from the trust account established with proceeds of our IPO, 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.
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 common stock, you will lose the ability
to redeem all such shares in excess of 15% of our common stock. |
| ● | If
third parties bring claims against us, including but not limited to claims in bankruptcy, 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. In addition, in certain circumstances
a bankruptcy trustee or third parties could seek to recover redemption payments from stockholders who received such payments. |
Conflict
of Interest Risks
| |
● |
Certain of our officers
and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar
to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining
to which entity a particular business opportunity should be presented. |
| |
● |
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,
directors or their affiliates which may raise potential conflicts of interest. |
| |
● |
The sponsor and our officers
and directors have or may have interests in us and our securities that differ from or are in addition to those of our stockholders
generally, including as a result of direct or indirect interests in the founders shares, private placement warrants, working capital
warrants, and forward purchase securities, loans to us, and waivers of rights to receive funds from the trust account. |
| |
● |
Our key personnel may negotiate
employment or consulting agreements with a target business in connection with a particular business combination. These agreements
may provide for them to receive compensation following our business combination and as a result, may cause them to have conflicts
of interest in determining whether a particular business combination is the most advantageous. |
Risks
Regarding Our Business Strategy
We
are a newly formed blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability
to achieve our business objective.
We
are a newly formed blank check company with no operating results and we will not commence operations until obtaining funding through
our IPO and consummating our initial business combination. Because we lack an operating history, you have no basis upon which to evaluate
our ability to achieve our business objective of completing our initial business combination with one or more target businesses. We have
no plans, arrangements or understandings with any prospective target business concerning a business combination with our company and
may be unable to complete our business combination. If we fail to complete our business combination, we will never generate any operating
revenues.
Past
performance of our management team, Northern Genesis Acquisition I or Northern Genesis Acquisition II may not be indicative of future
performance of an investment in the company.
Information
regarding performance by, or businesses associated with, our management team, Northern Genesis Acquisition I or Northern Genesis Acquisition
II is presented for informational purposes only. Past performance of our management team, Northern Genesis Acquisition I or Northern
Genesis Acquisition II is not a guarantee either (i) that we will be able to identify a suitable candidate for our initial business
combination or (ii) of success with respect to any business combination we may consummate. You should not rely on the historical
performance record of our management team, Northern Genesis Acquisition I or Northern Genesis Acquisition II as indicative of our future
performance or of an investment in us or the returns we will, or are likely to, generate going forward.
Certain
agreements related to the IPO may be amended without stockholder approval.
Certain
agreements, including the underwriting agreement relating to our IPO, 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. 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.
You
are not entitled to protections normally afforded to investors of many other blank check companies.
Since the net proceeds of our IPO and the sale of the private placement
warrants are intended to be used to complete an initial business combination with a target business that has not been identified, we may
be deemed to be a “blank check” company under the U.S. securities laws. However, because we will have net tangible assets
in excess of $5,000,000 upon the successful completion of our IPO and filed a Current Report on Form 8-K, including an audited balance
sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as
Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means
our units are tradable and have a longer period of time to complete our initial business combination than do companies subject to Rule 419.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the
opportunity for our stockholders to elect directors.
In
accordance with the NYSE corporate governance requirements, we are not required to hold an annual meeting until one year after our first
full fiscal year end following our listing on the NYSE. Under Section 211(b) of the DGCL, we are, however, required to hold an annual
meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written
consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation
of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL. Therefore, if our stockholders
want us to hold an annual meeting prior to the consummation of our initial business combination, they would have to force us to hold
one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We
are dependent upon our executive officers and directors and their loss could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe
that our success depends on the continued service of our officers and directors, at least until we have completed our initial business
combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs
and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying potential
business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on
the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive
officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts
of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our 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 business combination, it is likely that some or all of the management of the
target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the
requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become
familiar with such requirements.
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.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our
warrants will expire worthless.
We
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, 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 IPO and the sale of the private placement warrants and forward
purchase securities, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited
by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain
target businesses. If we are unable to complete our initial business combination, our public stockholders may receive only $10.00 per
share, or possibly less than $10.00 per share, on the liquidation of our trust account and our warrants will expire worthless.
If
the net proceeds of our IPO and the sale of the private placement warrants not being held in the trust account are insufficient to allow
us to operate for at least the next 24 months, we may be unable to complete our initial business combination, in which case our public
stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Of
the net proceeds of our IPO and the sale of the private placement warrants, only approximately $1,000,000 will be held outside the trust
account and available to us prior to an initial business combination to fund our working capital requirements. We believe that the funds
available to us outside of the trust account will be sufficient to allow us to operate for at least the next 24 months; however, we cannot
assure you that our estimate is accurate. If we are required to seek additional capital, we would need to borrow funds from our sponsor
or other third parties to operate or may be forced to liquidate.
Neither
our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances.
Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our
initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive
$10.00 per share, or possibly less than $10.00 per share, on our redemption of our public shares and our warrants will expire worthless.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential target
businesses, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a definitive agreement with a prospective target business that requires as a closing condition that we have a
minimum amount of cash. If too many public stockholders exercise their redemption rights, we may not be able to meet such closing condition
and, as a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares
unless our net tangible assets are at least $5,000,001 either immediately prior to or upon consummation of such business combination
(so that we are not subject to the SEC’s “penny stock” rules). Consequently, if accepting all properly submitted redemption
requests would cause our net tangible assets to be less than $5,000,001 or will result in us not being able 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 definitive agreement
with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption
rights and, therefore, will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the
purchase price or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust
account to meet such requirements or arrange for third-party financing. In addition, if a larger number of shares are submitted for redemption
than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account
or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. 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 have your stock
redeemed.
If
our 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 not be consummated is increased.
If our initial business combination is not consummated, our public stockholders would not receive their pro rata portion of the trust
account until we liquidate the trust account. Public stockholders in need of immediate liquidity could attempt to sell their 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, public stockholders may suffer a material loss on their investment or lose the benefit of funds expected in connection with
our redemption until we liquidate or they are able to sell their stock in the open market.
The
requirement that the target business or businesses that we acquire must collectively have a fair market value equal to at least 80% of
the balance of the funds in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the
time of the execution of a definitive agreement for our initial business combination may limit the type and number of companies with
which we may complete such a business combination.
NYSE
rules and our amended and restated certificate of incorporation require that the target business or businesses that we acquire must collectively
have a fair market value equal to at least 80% of the balance of the funds in the trust account (less any deferred underwriting commissions
and taxes payable on interest earned) at the time of the execution of a definitive agreement for our initial business combination. This
restriction may limit the type and number of companies that we may complete a business combination with. If we are unable to locate a
target business or businesses that satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to
receive your pro rata portion of the funds in the trust account, which may be less than $10.00 per share.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating a business combination as we approach our dissolution deadline, which could undermine our ability to complete
our business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination within 24 months from the closing of our IPO. 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.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate. As a result, our public stockholders may only
receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
We
must complete our initial business combination within 24 months from the closing of our IPO. We may not be able to find a suitable target
business and complete our initial business combination within such time period. If we have not completed our initial business combination
within such time period and have not increased the time available to us by amending our amended and restated certificate of incorporation,
we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more
than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to us to
pay our tax obligations (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public
shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the
case of clauses (ii) and (iii) to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. In such case, our public stockholders may only receive $10.00 per share, and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares.
The
grant of registration rights may make it more difficult to negotiate the terms of our initial business combination, and the future exercise
of such rights may adversely affect the market price of our common stock.
Pursuant
to the registration rights agreement, the holders of our founder shares, private placement warrants, any working capital warrants, and
any forward purchase securities can demand that we register such securities and the shares of common stock issuable upon exercise of
the private placement warrants, working capital warrants or forward purchase 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 common stock. In addition, the existence of the registration
rights may make negotiating the terms of our initial business combination more difficult. 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 the securities of the combined company that may occur when such securities are registered.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business.
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.
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 meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement
disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial
statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States
of America, or GAAP, or international financing reporting standards, or IFRS, depending on the circumstances and the historical financial
statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States),
or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets
may be unable to provide such financial statements in time for us to disclose such statements in accordance with federal proxy rules
and complete our initial business combination within the prescribed time frame.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of
third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data, or that of a third party with which we do business. As an early stage company without
significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not have sufficient
resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any
of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial loss, lawsuits,
investigations, fines and penalties, whether directly or through claims made against us by third parties.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by the coronavirus (COVID-19) pandemic.
The COVID-19 pandemic has adversely affected, and other events (such
as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) could adversely affect, the economies
and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could
be materially and adversely affected. Furthermore, we may be unable to complete a business combination if concerns relating to COVID-19
continue to restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors
and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts
our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including
new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.
While various vaccines have been developed, there can be no guarantee that the vaccines will be successful in halting
the spread of COVID-19 or its variants. If the disruptions posed by COVID-19 or other events (such as terrorist attacks, natural
disasters or a significant outbreak of other infectious diseases) continue for an extensive period of time, our ability to consummate
a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially
adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), including
as a result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable
to us or at all.
Our independent registered public accounting
firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going
concern.”
In connection with our assessment
of going concern considerations in accordance with ASC Topic 205-40 Presentation of Financial Statements – Going Concern, management
has determined that mandatory liquidation and subsequent dissolution raises substantial doubt about our company’s ability to continue
as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should our company be required to liquidate
after March 26, 2023. Although we intend to consummate a business combination on or before March 26, 2023, and may seek an extension,
it is uncertain that we will be able to consummate a business combination, or obtain an extension, by this time. This, as well as our
liquidity condition, raise substantial doubt about our ability to continue as a going concern. See “Item 7 – Management’s
Discussion and Analysis of Financial Condition and Results of Operations – Going Concern. The financial statements do not include
any adjustment that might be necessary if our company is unable to continue as a going concern.
Business
Combination Risks
Because
we are not limited to evaluating target businesses in a particular industry and have not identified any specific target businesses with
which to pursue for our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s
operations prior to an investment in our securities.
Although
we expect to focus our search for a target business involved in the ownership, financing and management of societal infrastructure, we
may seek to complete a business combination with a target business in any industry or sector. Because we have not yet identified or approached
any specific target business with respect to a business combination with our company, 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. We 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 who choose to
remain stockholders following our initial business combination could suffer a reduction in the value of their shares.
We
may seek acquisition opportunities in industries or sectors outside of our management’s area of expertise and our management may
not be able to adequately ascertain or assess all significant risks associated with the target company.
We
may consider a business combination outside of our management’s area of expertise if a target business is presented to us and we
determine that such target 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. Accordingly, any stockholders who choose to remain stockholders following our business combination
could suffer a reduction in the value of their shares.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target
business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria
and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial
business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a
combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business
combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their
redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a
minimum amount of cash. In addition, if stockholder approval of the transaction is required by law or stock exchange listing requirements,
or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder
approval of our initial business combination if the target business does not meet our general criteria and guidelines.
We
may have a limited ability to assess the management of a prospective target business and this, 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,
which could, in turn, negatively impact the value of our stockholders’ investment in us.
When
evaluating the desirability of affecting our initial business combination with a prospective target business, our ability to assess the
target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose
to remain stockholders following the business combination could suffer a reduction in the value of their shares.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of revenue or earnings,
which could subject us to volatile revenues or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established record
of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These
risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. 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.
If
we effect our initial business combination with a company with operations or opportunities outside of the United States, we would
be subject to a variety of additional risks that may negatively impact our operations.
If
we effect our initial business combination with a company with operations or opportunities outside of the United States, we would
be subject to any special considerations or risks associated with companies operating in an international setting, including any of the
following:
| ● | higher
costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements
of overseas markets; |
| ● | rules
and regulations regarding currency redemption; |
| ● | complex
corporate withholding taxes on individuals; |
| ● | laws
governing the manner in which future business combinations may be effected; |
| ● | tariffs
and trade barriers; |
| ● | regulations
related to customs and import/export matters; |
| ● | longer
payment cycles and challenges in collecting accounts receivable; |
| ● | tax
issues, such as tax law changes and variations in tax laws as compared to the United States; |
| ● | currency
fluctuations and exchange controls; |
| ● | cultural
and language differences; |
| ● | crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; |
| ● | deterioration
of political relations with the United States; and |
| ● | government
appropriations of assets. |
We
may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely
impact our results of operations and financial condition.
We
are not required to obtain an opinion from an independent investment banking firm or from another independent firm that commonly renders
valuation opinions, and consequently, you may have no assurance from an independent source that the price we are paying for the business
is fair to our company from a financial point of view.
Unless
we complete our business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment
banking firm or from another independent entity that commonly renders valuation opinions that our initial business combination is fair
to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board
of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used
will be disclosed in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
If
our business combination is with only one target business, we would be solely dependent on this single business which may have a limited
number of products or services. This lack of diversification may negatively impact our operations and profitability.
We
may effectuate our 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 business combination with more than one target business because of various
factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements
with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on
a combined basis.
By
completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic,
competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading
of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different
industries or different areas of a single industry. In addition, we intend to focus our search for an initial business combination in
a single industry. Accordingly, the prospects for our success may be:
| ● | 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 developments, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
If
we attempt to simultaneously complete business combinations with multiple prospective targets, it may hinder our ability to complete
our 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 may 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.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our
initial business combination even though a majority of our public stockholders do not support such a combination.
We
may not hold a stockholder vote to approve our initial business combination unless such business combination would require stockholder
approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other
legal reasons. Except as required by law or stock exchange listing requirements, 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. If we decide to allow stockholders to their shares to us in a tender offer, we may complete our initial business
combination even if holders of a majority of our public shares do not approve of the business combination.
In
evaluating a prospective target business for our initial business combination, our management may consider the availability of funds
from a sale of the forward purchase securities, which may be used as part of the consideration to the sellers in the initial business
combination. If the forward purchase investors decide not to exercise their right to purchase all or some of the forward purchase securities
that we may offer to them, we may decide not to consummate our initial business combination, or if we decide to, we may lack sufficient
funds to consummate our initial business combination.
We have entered into the Forward Purchase Agreements. Whether we would
issue forward purchase units for $10.00 per unit or forward purchase shares for $9.75 per share to the forward purchase investors would
be determined at our election, and in our sole discretion, at the time of such offer. The funds from any sale of forward purchase securities
are expected to be used as part of the consideration to the sellers in our initial business combination, to pay expenses in connection
with our initial business combination, and for capital needs of the post-transaction company.
The rights and obligations under the Forward Purchase Agreements will
not depend on whether any public stockholders elect to redeem their shares in connection with our initial business combination. However,
if we offer forward purchase securities under the Forward Purchase Agreements but the sale does not close, or the amount purchased is
less than the amount offered, we may lack sufficient funds to consummate our initial business combination. Each forward purchase investor’s
commitment to purchase forward purchase securities is conditioned on, among other things, such forward purchase investor confirming its
commitment and the amount thereof no later than fifteen days after we notify it of a proposed business combination and of our intention
to raise capital through the issuance of equity securities in connection with the closing of such business combination, and on a requirement
that such initial business combination be approved by a majority of our board and a majority of the independent directors of our board.
Accordingly, if a forward purchase investor does not confirm its commitment at such time, or if such business combination is not approved
by a majority of our board and a majority of the independent directors of our board, such forward purchase investor would not be obligated
and would not have the right to purchase any forward purchase securities.
In
the event that one or more forward purchase investors decline to confirm or fail to fund a purchase of forward purchase securities, or
the forward purchase agreement is terminated, or any condition to such purchase is not satisfied and is not waived, the amount of funds
that we would have available for our initial business combination and working capital of the post-business combination company would
be reduced and we may not be able to obtain additional funds to account for such shortfall on terms favorable to us or at all.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates may
elect to purchase shares from public stockholders, which may influence a vote on a proposed business combination and may increase the
likelihood of conditions thereto being satisfied, and may reduce the public “float” of our common stock or public warrants.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their affiliates may purchase public
shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our
initial business combination, although they are under no obligation to do so. Other than as expressly stated herein, they have no current
commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions.
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 affiliates purchase public shares in privately negotiated transactions from public stockholders who
have already elected to exercise their redemption rights, such selling public stockholders could be required to revoke their prior elections
to redeem their shares. The purpose of such purchases would 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 amount of cash at the closing of our initial business combination, where it appears
that such requirements would otherwise not be met. This 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 or public warrants 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.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
a business combination even though a substantial majority of our stockholders elect to have their shares redeemed.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event
will we redeem our public shares unless our net tangible assets are at least $5,000,001 either immediately prior to or upon consummation
of an initial business combination (such that we are not subject to the SEC’s “penny stock” rules). 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. 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.
Our
management may not be able to maintain control of a target business after our initial business combination.
We
anticipate only completing a business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target sufficient for us not to be required to register
as an investment company under the Investment Company Act. Even if the post-transaction company owns 50% or more of the voting securities
of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue
a transaction in which we issue a substantial number of new shares 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 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.
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 our stock price,
which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface
all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later
arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though
these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature
could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate
net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue
of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain stockholders following the business
combination could suffer a reduction in the value of their shares.
Risks
Related to Our Securities and Redemption
There
is currently no market for our securities and a market for our securities may not develop, which would adversely affect the liquidity
and price of our securities.
An
active trading market for our securities may not be sustained. You may be unable to sell your securities unless a market can be established
and sustained.
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. common stock and warrants are listed on the NYSE. We expect
to continue to meet the minimum initial listing standards set forth in the NYSE listing standards; however, we cannot assure you that
our securities will continue to be listed on the NYSE in the future. 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. Generally, we must maintain
a minimum number of holders of our securities (generally 300 public stockholders). 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 $4.00 per share, our global market capitalization would be required
to be at least $150,000,000, the aggregate market value of publicly-held shares would be required to be at least $40,000,000 and we would
be required to have at least 400 round lot holders. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If
the NYSE delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
| ● | a
limited availability of market quotations for our securities; |
| ● | reduced
liquidity for our securities; |
| ● | a
determination that our common stock is a “penny stock” which will require brokers trading in our 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, common stock and warrants are listed on the NYSE, our units, common stock and warrants are covered
securities. If we were no longer listed on the NYSE, our securities would not be covered securities and we would be subject to regulation
in each state in which we offer our securities.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this Annual Report on Form 10-K to issue any notes or other debt securities, or to otherwise
incur outstanding debt, we may choose to incur substantial debt to complete our business combination, but 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 security is payable on demand; |
| ● | our
inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing
while the debt security is outstanding; |
| ● | our
inability to pay dividends on our common stock; |
| ● | using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate
purposes; |
| ● | limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
| ● | limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution
of our strategy; and |
| ● | other
disadvantages compared to our competitors who have less debt. |
Our
warrants may have an adverse effect on the market price of our common stock and make it more difficult to effectuate our business combination.
We
have issued warrants to purchase up to 4,311,250 shares of common stock as part of the units sold in our IPO and, simultaneously with
such IPO, warrants to purchase up to 3,466,001 shares of common stock in a private placement to our sponsor.
In
order to provide working capital or fund payment of transaction costs in connection with an intended initial business combination, our
sponsor has the right, but is not obligated, to purchase from us up to 2,000,000 working capital warrants, having terms identical to
the private placement warrants, at a price of $1.50 per warrant. In addition, our sponsor, officers, directors or their affiliates may,
but are not obligated to, loan us funds on a non-interest basis. The terms of such loans may provide that up to $3,000,000 of such loans
may be converted, at the option of the lender, into working capital warrants to the extent not previously issued to our sponsor, at a
price of $1.50 per warrant. In no case will we issue more than 2,000,000 working capital warrants, in the aggregate.
To
the extent we issue shares of common stock to effectuate a business combination, the potential for the issuance of a substantial number
of additional shares of common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target
business. Any such issuance will increase the number of issued and outstanding shares of our common stock and reduce the value of the
shares of common stock issued to complete the business combination. Therefore, our warrants may make it more difficult to effectuate
a business combination or increase the cost of acquiring the target business.
Because
each unit contains one-quarter of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than
units of other blank check companies.
Each
unit contains one-quarter of one redeemable warrant. Because, pursuant to the warrant agreement, the warrants may only be exercised for
a whole number of shares, only a whole warrant may be exercised at any given time. This is different from other offerings similar to
ours whose units include one share of common stock and one warrant to purchase one whole share. We have established the components of
the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants
will be exercisable in the aggregate for one-quarter of the number of shares compared to units that each contain a warrant to purchase
one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure
may cause our units to be worth less than if they included a warrant to purchase one whole share
We
have not registered the shares of common stock issuable upon exercise of our warrants under the Securities Act or any state securities
laws, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being
able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We
have not registered the shares of common stock issuable upon exercise of our warrants. Under the terms of the warrant agreement, we have
agreed to use our best efforts to file a registration statement under the Securities Act covering such shares no later than 15 business
days after the closing of our initial business combination, and to have it declared effective and to maintain a current prospectus relating
to the common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of
the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent
a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or
incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of
the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless
basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities
laws of the state of the exercising holder, or an exemption from registration is available.
Notwithstanding
the above, if our 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 be required to use our best efforts to register or qualify the shares under applicable state securities laws to the extent
an exemption is not 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, if the holder does not sell the warrant, such warrant
may have no value and expire worthless. 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 common stock for sale under all applicable state securities laws.
Our
ability to require holders of our warrants to exercise such warrants on a cashless basis after we call the warrants for redemption or
if there is no effective registration statement covering the shares of common stock issuable upon exercise of these warrants will cause
holders to receive fewer shares of common stock upon their exercise of the warrants than they would have received had they been able
to pay the exercise price of their warrants in cash.
If
we call the warrants for redemption for cash, we will have the option, in our sole discretion, to require all holders that wish to exercise
warrants to do so on a cashless basis. If we choose to require holders to exercise their warrants on a cashless basis or if holders elect
to do so when there is no effective registration statement, the number of shares of common stock received by a holder upon exercise will
be fewer than it would have been had such holder exercised his or her warrant for cash. For example, if the holder is exercising 875
public warrants at $11.50 per share through a cashless exercise when shares of common stock have a fair market value of $17.50 per share,
then upon the cashless exercise, the holder will receive 300 shares of common stock. The holder would have received 875 shares of common
stock if the exercise price was paid in cash. This will have the effect of reducing the potential “upside” of the holder’s
investment in our company.
We
may issue additional shares of common stock or preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. Any such issuances would dilute the interest of our stockholders and likely
present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $0.0001
per share, and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share. Immediately after our IPO, there are 78,443,750
authorized but unissued shares of common stock available for issuance (which amount does not take into account the shares of common stock
reserved for issuance upon exercise of any outstanding warrants). We may issue a substantial number of additional shares of common stock,
and may issue shares of preferred stock to complete our initial business combination or under an employee incentive plan after completion
of our initial business combination. However, our amended and restated certificate of incorporation provides, among other things, that
prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof
to (i) receive funds from the trust account or (ii) vote on any initial business combination. The issuance of additional shares
of common or preferred stock:
| ● | may
significantly dilute the equity interest of investors in our IPO; |
| ● | may
subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; |
| ● | could
cause a change of control if a substantial number of shares of 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, common stock and/or warrants. |
The
warrants may become exercisable and redeemable for a security other than shares of our common stock, and you will not have any information
regarding such other security at this time.
In
certain situations, including if we are not the surviving entity in our initial business combination, the warrants may become exercisable
for a security other than shares of our common stock. As a result, if the surviving company redeems your warrants for securities pursuant
to the warrant agreement, you may receive a security in a company of which you do not have information at this time.
We
may amend the terms of the warrants in a manner that may be adverse to holders of warrants with the approval by the holders of at least
a majority of the then outstanding warrants.
Our
warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as
warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least a majority of the then
outstanding warrants (including the private placement 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 warrants in a manner adverse to a holder if holders of at least
a majority of the then outstanding warrants approve of such amendment. As a result, if all private placement warrants are voted in favor
of any such amendment, we would need only 500,397, or approximately 11.6%, of the 4,311,250 warrants sold in our IPO to be voted in favor
of the amendment to have it approved. Although our ability to amend the terms of the warrants with the consent of at least a majority
of the then outstanding warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise
price of the warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of
a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the last reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the like and for certain issuances of common stock and equity-linked
securities as described herein) for any 20 trading days within a 30 trading-day period commencing once the warrants become exercisable
and ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions
are met. If and when the warrants become redeemable by us, we may 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 (i) to exercise your warrants and pay the exercise price therefor at a time when it
may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish
to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for
redemption, is likely to be substantially less than the market value of your warrants. None of the private placement warrants or working
capital warrants will be redeemable by us so long as they are held by the initial purchasers or their permitted transferees.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity may be amended
with the approval of holders of a majority of the outstanding shares of our common stock.
Our
amended and restated certificate of incorporation may be amended if approved by holders of a majority of the outstanding shares of our
common stock, subject to applicable provisions of the DGCL or applicable stock exchange rules, and subject to rights of our public stockholders
to require the redemption of their public shares in the event of amendments prior to our initial business combination to provisions that
specifically apply only to the period prior to the consummation of our initial business combination. Our sponsor, who beneficially owns
up to 20% of our common stock, will participate in any vote to amend our amended and restated certificate of incorporation and will have
the discretion to vote in any manner it chooses. Our ability to amend the provisions of our amended and restated certificate of incorporation
which govern our pre-business combination activity may increase our ability to complete a business combination with which you do not
agree.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our 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 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, in connection with any stockholder vote to
approve a business combination, we may require our public stockholders seeking to exercise their redemption rights, whether they are
record holders or hold their shares in “street name,” to either tender their certificates to our transfer agent up to two
business days prior to the vote on the proposal to approve the business combination or to deliver their shares to the transfer agent
electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion
of an initial business combination, and then only in connection with those shares of common stock that such stockholder properly elected
to redeem, subject to the limitations described herein; (ii) the redemption of any public shares properly submitted in connection
with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of
our obligation to allow redemption in connection with our initial business combination or certain amendments to our certificate of incorporation
or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our
IPO or (B) with respect to any other provisions that specifically apply only to the period prior to the consummation of our initial
business combination and (iii) the redemption of our public shares if we are unable to complete an initial business combination
within 24 months from the closing of our IPO as further described herein. In no other circumstances will a public stockholder have any
right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account
with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially
at a loss.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold in excess of 15% of our common stock, you will lose the ability
to redeem all such shares in excess of 15% of our common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules,
our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of
the Exchange Act), will be restricted from seeking redemption rights with respect to the Excess Shares. However, we would not be restricting
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and
you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will
not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result,
you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your
stock in open market transactions, potentially at a loss.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination within 24 months from the closing of our IPO may be considered
a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the
DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any
third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought,
and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
However, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the
closing of our IPO in the event we do not complete our business combination and, therefore, we do not intend to comply with the foregoing
procedures.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to
us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with
Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of
such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that
may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 24 months from the closing of our IPO 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
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 and the underwriters in our IPO), 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.
Upon
redemption of our public shares, if we are unable to complete our business combination within the prescribed timeframe, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share initially
held in the trust account, due to claims of such creditors. Our sponsor has agreed that it will be liable to us if and to the extent
any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering
into a definitive agreement for a business combination, reduce the amount of funds in the trust account to below (i) $10.00 per public
share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account
due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay our tax obligations
and up to $100,000 for liquidation expenses, except as to any claims by a third party who executed a waiver of any and all rights to
seek access to the trust account (even if such waiver is deemed to be unenforceable) and except as to any claims under our indemnity
of the underwriters of our IPO against certain liabilities, including liabilities under the Securities Act. We have not independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligation and its only assets are expected to be our securities.
We have not asked our sponsor to reserve for such indemnification obligations. As a result, we think it is unlikely that our sponsor
would be able to satisfy any indemnification obligation if it arises. In such event, you may receive less than $10.00 per share in connection
with any redemption of your public shares. None of our directors or officers will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligation of our sponsor resulting in a reduction in the amount of funds in
the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share or (ii) such lesser
amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the
trust assets, in each case net of the interest which may be withdrawn to pay our tax obligations and up to $100,000 for liquidation expenses,
and our sponsor asserts that it is unable to satisfy its obligation or that it has no indemnification obligation related to a particular
claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligation.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligation to us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for
example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if
the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce this indemnification
obligation, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00
per share.
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value
of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00 per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or
less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in
direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of
interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates
below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the
future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination
or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled to receive
their pro-rata share of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable (less, in the
case we are unable to complete our initial business combination, $100,000 of interest). Negative interest rates could reduce the value
of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00 per share.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be
exposed to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached
its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by
paying public stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our
stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be
reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
Conflict
of Interest Risks
Our
officers and directors may have conflicts of interest that 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 businesses. We do not intend
to have any full-time employees prior to the completion of our initial business combination. Each of our officers is engaged in several
other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any
specific number of hours per week to our affairs. The conflicts of interest could have a negative impact on our ability to complete our
initial business combination.
Our
officers and directors are, and in the future may be, affiliated with entities engaged in business activities similar to those intended
to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular
business opportunity should be presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses.
Northern Genesis and our sponsor and directors and officers may sponsor, invest in or otherwise become involved with other companies,
including blank check companies similar to ours during the period in which we are seeking an initial business combination. These entities
may compete with us for acquisition opportunities and may present additional conflicts of interest in pursuing an acquisition target,
particularly in the event that there is overlap among investment mandates and management teams.
Our
directors and officers may become aware of business opportunities which may be appropriate for presentation to us and the other entities
to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in determining to which entity
a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business
may be presented to other entities prior to its presentation to us. Our amended and restated certificate of incorporation provides that
we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered
to such person solely in his or her capacity as a director or officer of the company and such opportunity is one that we are legally
and contractually permitted to undertake and that otherwise would be reasonable for us to pursue.
In
addition, our directors and officers are not required to commit any specified amount of time to our affairs and are engaged in other
business activities, and, accordingly, will have conflicts of interest in allocating management time among various business activities.
In addition to obligations to various other third parties, our directors and officers in the future may have time and attention duties
in relation to other entities that at such time are affiliated with or managed by Northern Genesis.
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, officers,
directors or their affiliates although we do not currently intend to do so. We do not have a policy that expressly prohibits any such
persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities
may have a conflict between their interests and ours.
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, directors or their affiliates which may raise potential conflicts of interest.
We
may decide to acquire one or more businesses affiliated with our sponsor, officers, directors or their affiliates. 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 a transaction was attractive and in the best interests of our stockholders. Despite our agreement to obtain an opinion from
an independent investment banking firm or from another independent entity that commonly renders valuation opinions regarding the fairness
of such a transaction, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not
be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since
our sponsor, officers and directors will lose their entire investment in us if our business combination is not completed, a conflict
of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
Following
our IPO, we have issued an aggregate of 4,311,250 founder shares for an aggregate purchase price of $25,000. In addition, our sponsor
(i) has purchased 3,466,001 private placement warrants, and (ii) may purchase up to an additional 2,000,000 warrants for a purchase price
of up to $3,000,000, all of which also will be worthless if we do not complete a business combination. In addition, we may obtain loans
from our sponsor, officers, directors or their affiliates which likely would not be repaid if we do not consummate an initial business
combination. The personal and financial interests of our officers and directors may influence their motivation in identifying and selecting
a target business combination, completing an initial business combination and influencing the operation of the business following the
initial business combination.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination.
These agreements may provide for them to receive compensation following our business combination and as a result, may cause them to have
conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our 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. 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 business combination will not be the determining factor in
our decision as to whether or not we will proceed with any potential 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.
Our
sponsor controls a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
Our
sponsor owns 20% of our issued and outstanding shares of common stock. Our sponsor, officers, directors or their affiliates could
determine in the future to make such purchases in the open market or in private transactions, to the extent permitted by law, in order
to influence the vote or magnitude of the number of stockholders seeking to tender their shares to us. In connection with any vote for
a proposed business combination, our sponsor, as well as all of our officers and directors, have agreed to vote the shares of common
stock owned by them immediately before our IPO as well as any shares of common stock acquired in our IPO or in the aftermarket in favor
of such proposed business combination.
Our
board of directors is divided into two classes, each of which will generally serve for a term of two years with only one
class of directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors
prior to the consummation of a business combination, in which case all of the current directors will continue in office until at least
the consummation of the business combination. Accordingly, you may not be able to exercise your voting rights under corporate law for
up to 24 months. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of
the board of directors will be considered for election and our sponsor, because of their ownership position, will have considerable influence
regarding the outcome. Accordingly, our sponsor will continue to exert control at least until the consummation of a business combination.
The forward purchase securities will not be issued, if at all, until completion of our initial business combination, and, accordingly,
will not be included in any stockholder vote until such time.
Risks
Related to Regulatory Compliance and Corporate Governance
Our
warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
On
April 12, 2021, the SEC issued the SEC Staff Statement regarding the accounting and reporting considerations for warrants issued by SPACs.
Specifically, the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender offers following a
business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the
SEC Staff Statement, we reevaluated the accounting treatment of our public warrants and private placement warrants and determined to
classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As
a result, included on our balance sheet as of September 30, 2021, contained elsewhere in this Quarterly Report are derivative liabilities
related to embedded features contained within our warrants. ASC Subtopic 815, Derivatives and Hedging, provides for the remeasurement
of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the
fair value being recognized in earnings in the statements of operations. As a result of the recurring fair value measurement, our financial
statements and results of operations may fluctuate quarterly, based on factors which are outside of our control. Due to the recurring
fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the
amount of such gains or losses could be material.
We
have identified a material weakness in our internal control over financial reporting as of December 31, 2021. 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.
After
consultation with our independent registered public accounting firm, our management concluded that there was a material weakness in our
internal controls over financial reporting as of December 31, 2021. A material weakness is a deficiency, or a combination of deficiencies,
in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or
interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective
internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate
the 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.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability
to 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 complete our initial business combination, and results of operations.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of preferred shares. We are also subject to anti-takeover provisions under Delaware law,
which could delay or prevent a change of control. Together these provisions may make the removal of management more difficult and may
discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Our
amended and restated certificate of incorporation requires, subject to limited exceptions, that derivative actions brought in our name,
actions against our directors, officers or 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 such actions are brought outside of the State of Delaware, the stockholder bringing
the suit will be deemed to have consented to service of process on such stockholder’s counsel, which may have the effect of discouraging
lawsuits against our directors, officers or employees.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in
our name, actions against our directors, officers and employees for breach of fiduciary duty and certain other actions may be brought
only in the Court of Chancery in the State of Delaware, except any action (A) as to which the Court of Chancery in the State of
Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable
party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which
is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery
does not have subject matter jurisdiction. Except as otherwise limited by applicable law, any person or entity purchasing or otherwise
acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our
amended and restated certificate of incorporation.
This
choice of forum provision may make it more costly, or limit a stockholder’s ability, to bring a claim in a judicial forum that
it finds favorable for disputes with us or any of our directors, officers or employees, which may discourage lawsuits with respect to
such claims. However, we cannot be certain that a court will decide that this provision is either applicable or enforceable, and if a
court were to find the choice of forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in
an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business,
operating results and financial condition.
Section 27
of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange
Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and
state courts for all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Investors cannot waive compliance with federal securities laws and the rules and regulations thereunder. As a result, the exclusive forum
provision in our amended and restated certificate of incorporation will not apply to suits brought to enforce any duty or liability created
by the Exchange Act or the rules and regulations thereunder, or to suits brought to enforce any duty or liability created by the Securities
Act or the rules and regulations thereunder.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of
certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make
our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may
deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status
earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that
time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors
will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive
as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there
may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such
extended transition period, which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates equals or exceeds $250 million as of the prior June 30th, and (2) our annual revenues
equaled or exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates equals
or exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations,
it may also make comparison of our financial statements with other public companies difficult or impossible.
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 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 business combination. |
In
addition, we may have imposed upon us burdensome requirements, including:
| ● | registration
as an investment company; |
| ● | adoption
of a specific form of corporate structure; and |
| ● | reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must
ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities
do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business 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. As a result of the foregoing, we do not believe that our anticipated principal activities will subject us to the
Investment Company Act. Furthermore, 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. If we do
not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject
to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have
not allotted funds and may hinder our ability to complete a business combination.
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 acquisition.
Section 404
of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on
Form 10-K for the year ending December 31, 2021. The fact that we are a blank check company makes compliance with the requirements
of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which we
seek to complete our 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 acquisition. Further, we may be subject to additional burdensome and costly
requirements under the Sarbanes-Oxley Act if we are no longer an emerging growth company or smaller reporting company.
