Introduction
We are a blank check
company formed under the laws of the State of Delaware on October 14, 2020. We were formed for the purpose of effecting merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more
businesses. While we may pursue an initial business combination target in any industry or geographic region, we intend to concentrate
our efforts on identifying businesses that are either directly or indirectly connected with the music sector, with particular emphasis
on businesses where our significant strategic and operational expertise and long-standing position within the music industry will
be a value-additive proposition to potential target businesses. We have not selected any specific business combination target and
we have not, nor has anyone on our behalf, engaged in any substantive discussions directly or indirectly, with any business combination
target with respect to an initial business combination with us.
Our Sponsor is Music
Acquisition Sponsor, LLC (the “Sponsor”), a Delaware limited liability company. The registration statement on Form
S-1 for our Initial Public Offering (the “Initial Public Offering” or “IPO”) was declared effective on
February 2, 2021. On February 5, 2021, we consummated the Initial Public Offering of 23,000,000 units (the “Units”
and, with respect to the Class A common stock included in the Units, the “Public Shares”), which included the full
exercise of the underwriters’ option to purchase up to an additional 3,000,000 Units at the Initial Public Offering price
to cover over-allotments. Each Unit consists of one share of Class A common stock of the company, par value $0.0001 per share (“Class
A Common Stock”), and one-half of one redeemable warrant of the company (“Warrants”), with each whole Warrant
entitling the holder thereof to purchase one share of Class A Common Stock at an exercise price of $11.50 per share, subject to
adjustment, pursuant to the Company’s registration statement on Form S-1 (File No. 333-252152). The Units were sold at a
price of $10.00 per Unit, generating gross proceeds of $230.0 million.
Simultaneously with
the closing of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 6,600,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) to our
Sponsor, each exercisable to purchase one share of Class A common stock at $11.50 per share, at a price of $1.00 per Private Placement
Warrant, generating gross proceeds to us of $6.6 million.
Upon the closing of
the Initial Public Offering and the Private Placement (including the additional Units and additional Private Placement Warrants
sold in connection with the full exercise of the underwriters’ over-allotment option), a total of $230,000,000 of the net
proceeds of the Initial Public Offering and the Private Placement, including $8,050,000, of deferred underwriting discounts and
commissions, were placed in a Trust Account (“Trust Account”) located in the United States at JP Morgan Chase Bank,
N.A. with Continental Stock Transfer & Trust Company acting as trustee.
If we are unable to
complete an initial business combination within 24 months from the closing of the Initial Public Offering, or February 5, 2023,
we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (net of permitted withdrawals
and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the
remaining stockholders and the board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law.
Management Expertise
Our Leadership
Our management team
and board of directors consists of seasoned industry executives that have collaborated and worked together for many years, and
possess deep collective understanding of music, digital entertainment, social media and technology, as well as the evolution of
these sectors and market opportunities. Our management team represents a unique combination of operating, investing, financial
and transactional experience.
Neil
Jacobson, our Chairman and Chief Executive Officer, is a 20-year veteran of the music business. Mr. Jacobson spent the majority
of his career at Interscope Geffen A&M Records, a subsidiary of Universal Music Group, where he held positions as a publicist,
Senior Vice President and Executive Vice President, and participated in the management of artists and producers such as will.i.am,
Robin Thicke and Jeff Bhasker. In January 2016, Mr. Jacobson was appointed President of Geffen Records, a historic record label
re-established under Interscope Geffen A&M Records and held that position until January 2020. During
his tenure as President of Geffen Records, Mr. Jacobson oversaw the signing of Darkroom Records, home to Billie Eilish. In January 2020,
Mr. Jacobson founded Hallwood Media, an independent music management company exclusively focused on songwriters and producers.
Over the last 13 months acting as a trusted advisor to artists and creators, Mr. Jacobson has helped coordinate the sale of artist
catalogs for an aggregate total in excess of $100 million. For the past three years, Mr. Jacobson has been a member of the Young
Presidents Organization (YPO), which serves as a global leadership community to improve lives, businesses and the world.
Todd Lowen, our Chief
Operating Officer and one of our directors, has 20 years of experience in finance and investment. Mr. Lowen spent the majority
of his career in the Equity Derivatives businesses of Lehman Brothers and Barclays Capital Inc. in New York, where he advised
institutional investors, such as hedge funds and pension funds, on event driven investment strategies relating to, and including,
merger arbitrage, spin-offs/splits, exchange offers, tenders, and special purpose acquisition companies (“SPACs”). In
September of 2016, Mr. Lowen joined Olivetree Financial, LLC as a Managing Director to further establish its U.S. Event Driven
Business, building a team around similar strategies, with a particular recent focus on SPACs. Away from the office, Mr. Lowen is
actively involved with Success Academy Charter Schools, which help provide world class education opportunities to children
from all backgrounds in New York, as well as City Harvest, a food rescue and re-distribution organization in New York
City.
Mr. Jacobson and Mr.
Lowen each have a distinguished record of accomplishment in their respective industries. As an international publicist for Interscope,
Mr. Jacobson traveled globally with artists such as Eminem, 50 Cent, and the Black Eyed Peas. His close relationship with Black
Eyed Peas member will.i.am led to his introduction to industry legend, future mentor and Beats by Dre co-founder Jimmy Iovine and
eventual appointment to President of Geffen Records in 2016. Mr. Jacobson has spent two decades operating in the music business
across a variety of roles. His experience spans many different geographies/continents, and he has represented talent across North
America, Europe, Asia, and South America. During his time in the music industry, Mr. Jacobson has worked with some of the most
recognizable talent in the world including Eminem, Gwen Stefani, Black Eyed Peas, Avicii and DJ Snake. We believe that prospective
target companies will benefit from the guidance and insight that Mr. Jacobson can provide through mentorship, governance and operational
involvement and experience.
Over the course of
his 20-year career in finance, Mr. Lowen has advised over 150 institutional investors on event driven investments and trading strategies
across 500+ unique mergers, spin-offs, exchange offers, tenders, and SPACs. Most recently, Mr. Lowen has re-focused on the SPAC
market, providing insight, analysis, and investment strategy around the SPAC asset class, covering entities from their pre-IPO
filings all the way through to their status as public companies and through consummation of their ultimate respective business
combinations.
We believe that our
management team is well positioned to identify attractive business combination opportunities with a compelling industry backdrop
and an opportunity for transformational growth. Our objectives are to generate attractive returns for our stockholders and enhance
value by improving operational performance of the acquired company. We believe our management’s strong reputation within
the industry sectors targeted by us, together with its vast network of key industry participants built over decades, will give
us the ability to identify attractive opportunities that would thrive in the public markets. We also believe that our management
team can add significant value to a newly public company through extensive industry knowledge, marketing and financial expertise,
as well as a network of strategic investors and resources.
Our Directors
Our leadership team’s
skills are complemented by our directors, who bring significant operating experience and relationships throughout the media, entertainment
and finance industries. In addition to Neil Jacobson and Todd Lowen, Michael Levitt, Ben Silverman and Babatunde “Tunde”
Balogun are directors.
Michael Levitt, a member
of our board of directors, brings extensive private equity, investment banking and management experience to the Company. Michael
Levitt has been the Chief Executive Officer of Kayne Anderson Capital Advisors, L.P. (“Kayne”) since July 2016. Prior
to joining Kayne, Mr. Levitt served as a vice chairman with Apollo Global Management, LLC (NYSE: APO) from April 2012 to May 2016.
Mr. Levitt joined Apollo following Apollo’s acquisition of Stone Tower Capital LLC (“Stone Tower”), a mergers &
acquisitions, corporate finance, restructuring and debt finance firm, in 2012. Mr. Levitt founded Stone Tower in 2001 and grew
the firm to become a leading alternative credit manager with approximately $17 billion in credit-focused alternative assets under
management at the time of its acquisition. During his tenure at Stone Tower, Mr. Levitt served as Chairman of the Board, Chief
Executive Officer and Chief Investment Officer. Before founding Stone Tower, Mr. Levitt worked as a partner at the private equity
firm Hicks, Muse, Tate & Furst Incorporated, where he was involved in media and consumer investments. Earlier in his career,
Mr. Levitt served as the co-head of the investment banking division of Smith Barney Inc. Mr. Levitt began his investment banking
career at Morgan Stanley & Co., Inc. (NYSE: MS), where he oversaw corporate finance and advisory businesses related to
private equity firms and non-investment grade companies. Mr. Levitt currently serves on the board of Core Scientific, Inc, as well
as the boards of Kayne Anderson Energy Infrastructure Fund Inc. (NYSE: KYN), Kayne Anderson NextGen Energy & Infrastructure
Inc. (NYSE: KMF), and Kayne Anderson BDC, LLC. Mr. Levitt is also a member of the Visiting Committee of the Stephen M. Ross School
of Business at the University of Michigan and the Trustee of the University of Michigan Law School’s Cook Trust. Over the
years, Mr. Levitt has worked with numerous philanthropic organizations, including Make-A-Wish Foundations of America and New York,
and the New York Police and Fire Widows’ and Children’s Benefit Fund.
Ben Silverman, a
member of our board of directors, is an entrepreneur and producer with nearly 30 years of experience in the media and
entertainment industries. Since 2016, Mr. Silverman has served as the Chairman and Co-Chief Executive Officer of Propagate
Content, LLC (“Propagate”), a firm founded to create and produce all forms of content for distribution across a
variety of platforms around the world. Propagate’s recent credits include the Emmy-nominated “Hillary” that
premiered at Sundance and Berlin and now streams on Hulu, the recently aired “Notre Dame: Our Lady of Paris” on
ABC, the upcoming “Go-Big Show” on TBS and the American adaptation of The Eurovision Song Contest, as well as the
unscripted “November 13: Attack on Paris,” “Haunted” and “Prank Encounters” for Netflix,
and “In Search Of” and “Kings of Pain” for the History Channel. Mr. Silverman founded two acclaimed
“super indies” in the media industry, Electus, LLC and Reveille Productions. Mr. Silverman founded Reveille
Productions in 2002 in order to exploit international media formats in the United States. Elisabeth Murdoch’s Shine
Group acquired Reveille Productions for $125 million in 2008. Mr. Silverman launched Electus, LLC in 2009, and took a
leadership role in digital content, building the #1 comedy site on the Internet, CollegeHumor, and extending projects to
multiple platforms, including numerous digital projects and partnerships with Yahoo!, Facebook and YouTube. Prior to Electus,
LLC, Mr. Silverman served as Co-Chairman of NBC Entertainment and Universal Media Studios from 2007-2009. Mr. Silverman won
Emmy and Golden Globe awards for his role as a producer for “The Office” and was nominated a number of times for
his role producing “The Office” and “Ugly Betty” and over the course of his career. Mr. Silverman has
created and executive produced major network, cable, and digital platform hits, including Golden Globe and Peabody
award-winning shows “The Office”, “Ugly Betty”, “The Biggest Loser”, and “The
Tudors”, as well as hits like “Jane The Virgin” at The CW, “Marco Polo” and
“Flaked” with Will Arnett and Mitch Hurwitz for Netflix, NBC’s TV commerce show “Fashion Star”
and “Running Wild with Bear Grylls” on Nat Geo. Mr. Silverman has also produced feature films including “My
Boyfriend’s Meds”, “Mansome” and “Hands of Stone”, the biopic of Roberto Durán
starring Robert De Niro, Usher and Edgar Ramirez, which premiered at Cannes Film Festival in 2016.
Tunde Balogun, a member
of our board of directors, is an experienced media and music industry entrepreneur. Since 2013, Mr. Balogun has served as President
of LOVERENAISSANCE, LLC (“LVRN”), a diversified record label and media management company, which he co-founded. LVRN
is composed of LVRN Records, LLC (a recorded music company), LVRN Publishing, LLC (a music publishing company), LVRN Mgmt, LLC
(a music management company) and Kids Against Cubicles (a tv/film production company). LVRN artists include three-time Grammy nominee
6lack, platinum album selling Summer Walker and Dram, amongst others. Through the management of these companies, Mr. Balogun has
developed a strong track record of running multi-vertical music businesses, identifying and implementing innovative strategies,
and leveraging opportunities and relationships in the music and finance industries. Mr. Balogun has served on the Board of the
Atlanta Creative Industries Fund for Invest Atlanta since 2017. Mr. Balogun was named to Billboard’s 40 Under 40 and
Rolling Stone’s The Future 25 list and was honored at the 2019 Culture Creators awards. Mr. Balogun also serves
on the Global Citizen Entertainment Advisory Board.
We believe our directors
bring additional expertise that will enhance our ability to identify and execute our initial business combination, and may enhance
our ability to execute upon various value creation initiatives after the successful completion of our initial business combination.
With respect to the
foregoing experiences of our leadership team, past performance is not a guarantee (i) that we will be able to identify a suitable
candidate for our initial business combination or (ii) of success with respect to any business combination we may consummate.
You should not rely on the historical record of our management team’s performance as indicative of our future performance.
Other than Mr. Lowen, none of the members of our leadership team has any past experience with blank check companies or special
purpose acquisition companies. For more information on the experience and background of our management team, see the section entitled
“Directors, Executive Officers and Corporate Governance.”
Our Approach
Our business strategy
is to identify and complete our initial business combination with a company that complements the experience of our management and
directors and can benefit from their operational and investment expertise. We intend to concentrate our efforts on identifying
businesses that are either directly or indirectly connected to music, with particular emphasis on businesses where our specific
expertise and positioning within the music industry will be a value-additive proposition to our targets. Our selection process
will leverage Mr. Jacobson’s and Mr. Lowen’s broad and deep relationship network, unique industry experiences and deal
sourcing capabilities to access a broad spectrum of differentiated opportunities.
We expect these networks
will provide our management team with a robust flow of acquisition opportunities. In addition, we anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, which may include investment market participants,
private equity groups, investment banking firms, consultants, accounting firms and large business enterprises. Since the Initial
Public Offering, members of our management team have communicated with their networks of relationships to articulate the parameters
for our search for a target company and a potential business combination and to begin the process of pursuing and reviewing potentially
interesting leads.
Business Strategy
Streaming has fundamentally
changed the music industry and as a result, consumers engage with music in more ways than ever. According to International Federation
of the Phonographic Institute (IFPI), global paid music streaming subscribers totaled 341 million at the end of 2019. While this
represents an increase of 34% from 255 million at the end of 2018, it still represents less than 11% of the 3.5 billion smartphone
users globally, according to Statista. Additionally, technological innovation has helped facilitate the penetration of music listening
across locations, including homes, offices and cars, as well as across devices, including smartphones, tablets, wearables, digital
dashboards, gaming consoles and smart speakers. These technologies represent advancements that are deepening listener engagement
and driving further growth in music consumption. Concurrently, the age of social media and micro-content has given significant
rise to the various ways consumers discover, engage and share music. This increase in consumption across device and format has
led to increased monetization opportunities of music content, supporting the continued growth in music industry revenues.
We believe there are
several macro themes that will dominate the music industry and adjacent ecosystems and present significant opportunities. These
investment themes include, but are not limited to:
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Audio Content: In today’s landscape, consumer-facing companies depend on
music to make meaningful connections with their customers, while film and television similarly depend on music as a key storytelling
medium. As music licensing becomes increasingly enforced, those who hold copyrights have immense leverage across a wide range of
industries. We plan to explore potential target companies serving content creators, IP owners and consumers by unlocking new opportunities
for content discovery and monetization. Our depth and breadth of relationships across the entire audio industry, including recorded
music labels and music publishers, streaming platforms, podcasting platforms, voice platforms, agencies and other emerging platforms,
position us to uniquely source and evaluate opportunities for potential targets in this sector.
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Technology: The dramatic advancements in the music industry are largely driven
by pioneering technology companies. As these advancements continue to reshape the industry, the companies who partner with these
pioneers stand to benefit. Conversely, a company with a proprietary algorithm requires a partner in the music industry in order
to make a meaningful impact in the sector. Through decades of experience in both the music industry and finance, we offer a value-add
which is seldom found among burgeoning tech companies. Given our deep relationships across the broader technology ecosystem, we
plan to evaluate potential target companies that are poised to benefit from strong secular tailwinds including automation, livestreaming,
machine learning and artificial intelligence. Select verticals of interest include royalty free sample libraries (for production
music), music catalog analysis and organization tools, data science and trend research companies, blockchain and other AI-driven
platforms.
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Social: Social media has become a primary means of music discovery, allowing
for consumer engagement and interaction in ways that other traditional platforms, such as radio, cannot. Platforms such as TikTok
and Triller have provided new life to music, while their survival symbiotically depends on that of the music industry. The size
of a user base defines any social platform, and achieving critical mass is of the utmost importance. Music is a tried and tested
way to accelerate this process. We can offer a unique value-add to companies including but not limited to social media networking
apps, social content platforms and online video sharing platforms.
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Consumer: Music plays an important role in the ways brands connect
with their customers. Whether through advertising or the product experience itself, music is a core emotional component that often
bonds or drives the user to the product. By 2026, Gen Z is expected to comprise the largest sector of the U.S. consumer population
according to A.T. Kearney ‘Consumers @ 250 Report’. Music is increasingly becoming an important part of Gen Z’s
lifestyle. According to BI Intelligence / Edison Research ‘The Infinite Dial 2020’, 86% of people in the U.S. aged
between 12 and 34 listen to online audio on at least a monthly basis. Brands that have been able to adapt and adopt music as a
key driver, both in consumer experience and partnerships, have found significant success in recent years. Examples include Beats
by Dre and Peloton. We believe we can provide immediate value to any consumer-facing company with proprietary access to top-level
music and artists, resources and connections within the industry and an ability to navigate, contact and execute music licenses.
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Acquisition Criteria
Consistent with our
business strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective target businesses. We intend to use these criteria and guidelines in evaluating initial business combination opportunities,
but we may decide to enter into our initial business combination with a target business that does not meet any or all of these
criteria and guidelines. We intend to seek to acquire companies that we believe:
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have a defensible market position, with business models that are differentiated from or disruptive
to entrenched competitors and which create barriers to entry against new competitors;
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are at an inflection point and can benefit from our leadership’s knowledge of the target
sectors and robust industry relationships to drive improved financial performance;
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have a strong, experienced management team which would benefit from our leadership’s network
or expertise;
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provide a scalable platform for add-on acquisitions, which we believe will be an opportunity for
our management team to deliver incremental stockholder value after the initial business combination;
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are valued attractively relative to their existing cash flows and potential for operational improvement;
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offer an attractive potential return for our stockholders, weighing potential growth opportunities
and operational improvements in the target business against any identified downside risks; and
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can benefit from being publicly-traded, are prepared to be a publicly-traded company, are capable
of generating consistent returns in excess of cost of capital, and can effectively utilize access to the capital markets.
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These criteria are
not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based,
to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management team
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 in our stockholder
communications related to our initial business combination, which, as discussed in this Report, would be in the form of proxy solicitation
materials or tender offer documents that we would file with the Securities and Exchange Commission (the “SEC”).
Initial Business Combination
The NYSE listing rules
require that we must consummate an initial business combination with one or more operating businesses or assets that together have
an aggregate fair market value equal to at least 80% of the net assets held in the Trust Account (excluding the amount of any deferred
underwriting discount held in trust and taxes payable) at the time of our signing a definitive agreement in connection with our
initial business combination. Our board of directors will make the determination as to the fair market value of our 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 actual and potential sales, earnings, cash flow and/or book value).
Even though our board of directors will rely on generally accepted standards, our board of directors will have discretion to select
the standards employed. In addition, the application of the standards generally involves a substantial degree of judgment. Accordingly,
investors will be relying on the business judgment of the board of directors in evaluating the fair market value of the target
or targets. The proxy solicitation materials or tender offer documents used by us in connection with any proposed transaction will
provide public stockholders with our analysis of our satisfaction of the 80% fair market value test, as well as the basis for our
determinations. If our board of directors is not able to independently determine the fair market value of our initial business
combination (including with the assistance of financial advisors), we will obtain an opinion from an independent investment banking
firm which is a member of Financial Industry Regulatory Authority (FINRA) or an independent valuation or appraisal firm with respect
to the satisfaction of such criteria. While we consider it likely that our board of directors will be able to make an independent
determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or
experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of the
target’s assets or prospects.
We will have until
24 months from the closing of the Initial Public Offering to consummate an initial business combination. We anticipate structuring
our initial business combination so that the post transaction company in which our public stockholders own shares will own or acquire
100% of the 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
will only complete such business combination if the post transaction company owns or acquires 50% or more of the outstanding voting
securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required
to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).
Even if the post transaction company owns or acquires 50% or more of the outstanding voting securities of the target, our stockholders
prior to the initial business combination may collectively own a minority interest in the post transaction company, depending on
valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction in which
we issue a substantial number of new shares in exchange for all of the outstanding capital stock, shares or other equity securities
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 issued and outstanding shares subsequent to our initial business combination. If less than 100% of the outstanding
equity interests or assets of a target business or businesses are owned or acquired by the post transaction company, the portion
of such business or businesses that is owned or acquired is what will be taken into account for purposes of the 80% of net assets
test described above. If the business combination involves more than one target business, the 80% of net assets test will be based
on the aggregate value of all of the transactions and we will treat the target businesses together as the initial business combination
for purposes of a tender offer or for seeking stockholder approval, as applicable.
Prior to the date of
this Report, we filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12
of the Exchange Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current
intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to
the consummation of our initial business combination.
Our Business Combination Process
In evaluating a prospective
target business, we expect to conduct a due diligence review which may encompass, among other things, meetings with incumbent management
and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as applicable, as well as a review
of financial, operational, legal and other information which 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 initial business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can use to complete another business combination. The
company will not pay any consulting fees to members of our management team, or any of their respective affiliates, for services
rendered to or in connection with 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 another
entity pursuant to which such officer or director is or will be required to present a business combination opportunity to such
entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable
for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary
or contractual obligations to present such business combination opportunity to such entity. 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 we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue,
and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect
our ability to complete our initial business combination.
Sources of Target Business
We anticipate that
target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers and
private investment funds. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested
on an unsolicited basis, since many of these sources will have read the prospectus from the Initial Public Offering and know what
types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our attention
target business candidates of which they become aware through their business contacts as a result of formal or informal inquiries
or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary
deal flow opportunities that would not otherwise necessarily be available to us as a result of the track record and business relationships
of our officers and directors. While we do not presently anticipate engaging the services of professional firms or other individuals
that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, 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 a finder’s fee is customarily
tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the Trust Account. In no
event, however, will our Sponsor or any of our existing officers or directors, or any entity with which they are affiliated, be
paid any finder’s fee, consulting fee or other compensation by the company prior to, or for any services they render in order
to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is). In addition,
since the date that our securities were first listed on NYSE, we have paid an affiliate of our Sponsor $15,000 per month for office
space, utilities, secretarial and administrative support services provided to members of our management team. Any such payments
prior to our initial business combination are made from funds held outside the Trust Account. Other than the foregoing, there will
be no finder’s fees, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation paid
by us to our Sponsor, officers or directors, or any affiliate of our Sponsor or officers prior to, or in connection with any services
rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that
it is).
We are not prohibited
from pursuing an initial business combination with a business combination target that is affiliated with our Sponsor, officers
or directors, or any of their respective affiliates, or from completing the business combination through a joint venture or other
form of shared ownership with our Sponsor, officers or directors, or any of their respective affiliates. In the event we seek to
complete our initial business combination with a business combination target that is affiliated with our Sponsor, officers or directors,
or any of their respective affiliates, we, or a committee of independent directors, will obtain an opinion from an independent
investment banking firm which is a member of FINRA or an independent accounting firm, that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we may encounter competition from other entities having a
business objective similar to ours, including other special purpose acquisition companies, private equity groups and leveraged
buyout funds, public companies and operating businesses seeking strategic acquisitions. Many of these entities are well established
and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of
these competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target
businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing
the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise
their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants,
and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors
may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Human Capital Resources
We currently have two
officers. These individuals are not obligated to devote any specific number of hours to our matters, but they intend to devote
as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount
of time they will devote in any time period will vary based on whether a target business has been selected for our initial business
combination and the stage of the initial business combination process we are in. We do not intend to have any full-time employees
prior to the completion of our initial business combination.
Our Website
Our corporate website
address is www.musicacquisition.com. The information contained
on or accessible through our corporate website or any other website that we may maintain is not incorporated by reference into
this report.
Periodic Reporting and Audited Financial
Statements
We have registered
our units, Class A common stock and Public Warrants under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and have reporting obligations, including the requirement that we file annual, quarterly and current reports with
the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited
and reported on by our independent registered public accountants.
We will provide stockholders
with audited financial statements of the prospective target business as part of the proxy solicitation materials or tender offer
documents sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will
need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial
statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements
may limit the pool of potential target businesses we may conduct an initial business combination with because some targets may
be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete
our initial business combination within the prescribed time frame. We cannot assure you that any particular target business identified
by us as a potential business combination candidate will have financial statements prepared in accordance with the requirements
outlined above, or that the potential target business will be able to prepare its financial statements in accordance with the requirements
outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business.
While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We will be required
to evaluate our internal control procedures for our second completed fiscal year as required by the Sarbanes-Oxley Act. Only in
the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company,
will we be required to have our internal control procedures audited. A target business may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
On February 2, 2021,
we filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of
the Exchange Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current
intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to
the consummation of our initial business combination.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the 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 (1) the last day of the fiscal year (a) following the fifth anniversary of the completion
of the Initial Public Offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in
which we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common stock that
are held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter, and (2) the
date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
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 end of that fiscal year’s second fiscal
quarter, or (2) our annual revenues equal or exceed $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 end of that fiscal year’s second fiscal
quarter. 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.
Summary of Risk Factors
Our business is subject
to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors,” that represent
challenges that we face in connection with the successful implementation of our strategy. The occurrence of one or more of the
events or circumstances described in the section titled “Risk Factors,” alone or in combination with other events or
circumstances, may adversely affect our ability to effect a business combination, and may have an adverse effect on our business,
cash flows, financial condition and results of operations. Such risks include, but are not limited to:
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We are a newly formed company without an operating history;
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Stockholders may lack the opportunity to vote on our proposed business combination;
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Holders of our securities lack protections normally afforded to investors of blank check companies;
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The fact that there may be a deviation from our acquisition criteria;
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Our potential issuance of equity and/or debt securities to complete a business combination;
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The fact that we lack working capital;
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The potential for third-party claims that have the effect of reducing the per-share redemption
price;
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The potential of a negative interest rate for securities in which we invest the funds held in the
Trust Account;
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The potential for our stockholders being held liable for claims by third parties against us;
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We may be unable to enforce our Sponsor’s indemnification obligations;
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The ability of warrant holders to obtain a favorable judicial forum for disputes with our company;
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Our dependence on key personnel;
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Potential conflicts of interest involving of our Sponsor, officers and directors;
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The potential of the delisting of our securities by NYSE;
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If shares of ours are redeemed and warrants expire worthless;
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The fact that our competitors may have advantages over us in seeking a business combination;
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Our ability or inability to obtain additional financing;
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Our initial stockholders controlling a substantial interest in us;
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The potential that warrants we issue might have an adverse effect on the market price of our Class A
common stock;
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Redemptions of warrants at disadvantageous times for holders;
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Our grant of registration rights’ having an adverse effect on the market price of our Class A
common stock;
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The impact of COVID-19 and related risks;
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The potential for changes in laws or regulations;
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The potential for adverse tax consequences to business combinations; and
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The existence of exclusive forum provisions in our amended and restated certificate of incorporation.
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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 herein, before making a decision to invest in our units. 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.
Risks Related to the Process of Consummating
a Business Combination and Post-Business Combination Risks
Our public stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination
even though a majority of our stockholders do not support such a combination.
We may choose not to
hold a stockholder vote to approve our initial business combination if the business combination would not require stockholder approval
under applicable law or stock exchange listing requirements. Except for as required by applicable law or stock exchange listing
requirements, the decision as to whether we will seek stockholder approval of a proposed initial business combination or will allow
stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a
variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to
seek stockholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of our common
stock do not approve of the initial business combination we complete.
Your only opportunity to affect the
investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares
from us for cash.
At the time of your
investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of any target business.
Since our board of directors may complete a business combination without seeking stockholder approval, public stockholders may
not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your
only opportunity to affect the investment decision regarding our initial business combination may be limited to exercising your
redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed
to our public stockholders in which we describe our initial business combination.
If we seek stockholder approval of our
initial business combination, our initial stockholders and management team have agreed to vote in favor of such initial business
combination, regardless of how our public stockholders vote.
Immediately following
the completion of our Initial Public Offering, our initial stockholders own 20% of our outstanding common stock. Our initial stockholders
and management team also may from time to time purchase Class A common stock prior to our initial business combination. Our amended
and restated certificate of incorporation provides that, if we seek stockholder approval of an initial business combination, such
initial business combination will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting,
including the founder shares. As a result, in addition to our initial stockholders’ founder shares, we would need 8,625,001,
or 37.5%, of the 23,000,000 public shares sold in the Initial Public Offering to be voted in favor of an initial business combination
in order to have our initial business combination approved (assuming all outstanding shares are voted and the over-allotment option
is not exercised). Accordingly, if we seek stockholder approval of our initial business combination, the agreement by our initial
stockholders and management team to vote in favor of our initial business combination will increase the likelihood that we will
receive the requisite stockholder approval for such initial business combination.
The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which
may make it difficult for us to enter into an initial business combination with a target.
We may seek to enter
into an initial business combination agreement with a prospective target that requires as a closing condition that we have a minimum
net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to
meet such closing condition and, as a result, would not be able to proceed with the initial business combination. Furthermore,
we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either
immediately prior to or upon consummation of our initial business combination (so that we are not subject to the SEC’s “penny
stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our
initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible
assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition, each as described above, we
would not proceed with such redemption and the related business combination and may instead search for an alternate business combination.
Prospective targets will be aware of these risks and, thus, may be reluctant to enter into an initial business combination 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
is submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion
of the cash in the Trust Account or arrange for third-party financing. Raising additional third-party financing may involve dilutive
equity issuances or the incurrence of indebtedness at higher than desirable levels. In addition, the amount of the deferred underwriting
commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business
combination. The per share amount we will distribute to stockholders who properly exercise their redemption rights will not be
reduced by the deferred underwriting commission and after such redemptions, the amount held in trust will continue to reflect our
obligation to pay the entire deferred underwriting commissions. The above considerations may limit our ability to complete the
most desirable business combination available to us or optimize our capital structure.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business
combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business
combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to
have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the funds in the Trust Account
until we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open
market; however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with your exercise
of redemption rights until we liquidate or you are able to sell your shares in the open market.
The requirement that we complete our
initial business combination within 24 months after the closing of our Initial Public Offering may give potential target businesses
leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential
business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete
our initial business combination on terms that would produce value for our stockholders.
Any potential target
business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial
business combination within 24 months from the closing of our Initial Public Offering. 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 end of timeframe described above. In addition, we may have limited time to conduct due diligence
and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
Our search for a business combination,
and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the
COVID-19 pandemic.
The COVID-19 pandemic
has resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide, and the business
of any potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore,
we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the
ability to have meetings with potential investors or the target company’s personnel, and vendors and services providers are
unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search
for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new
information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact,
among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of
time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate
a business combination, may be materially adversely affected.
The COVID-19 pandemic
may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those
related to the market of our securities and cross border transactions.
We may not be able to complete our initial
business combination within 24 months after the closing of our Initial Public Offering, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able
to find a suitable target business and complete our initial business combination within 24 months after the closing of our Initial
Public Offering. Our ability to complete our initial business combination may be negatively impacted by general market conditions,
volatility in the capital and debt markets and the other risks described herein. For example, the COVID-19 pandemic continues to
grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments,
it could limit our ability to complete our initial business combination, including as a result of increased market volatility,
decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the COVID-19
pandemic may negatively impact businesses we may seek to acquire. If we have not completed our initial business combination within
such time period or during any Extension Period, we will: (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held
in the Trust Account (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the
number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, subject
in each case, to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
If we seek stockholder approval of our
initial business combination, our Sponsor, initial stockholders, directors and officers or their affiliates may enter into certain
transactions, including purchasing shares or warrants from the public, which may influence the outcome of a proposed business combination
and reduce the public “float” of our securities.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our Sponsor, initial stockholders, directors and officers or their affiliates may purchase
public shares or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior
to or following the completion of our initial business combination, although they are under no obligation to do so. There is no
limit on the number of shares our initial stockholders, directors and officers or their affiliates may purchase in such transactions,
subject to compliance with applicable law and NYSE rules. Additionally, at any time at or prior to our initial business combination,
subject to applicable securities laws (including with respect to material non-public information), our initial stockholders, directors
and officers or their affiliates may enter into transactions with investors and others to provide them with incentives to acquire
public shares, vote their public shares in favor of our initial business combination or not redeem their public shares. However,
other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions and
have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will be used to purchase
shares or public warrants in such transactions.
In the event that our
Sponsor, initial stockholders, directors and officers or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required
to revoke their prior elections to redeem their shares. The purpose of any such transactions could be to (i) vote such shares in
favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination,
(ii) satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount
of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met or
(iii) reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders
for approval in connection with our initial business combination. Any such transactions may result in the completion of our initial
business combination that may not otherwise have been possible. In addition, if such transactions are consummated, the public “float”
of our Class A common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which
may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers
are subject to such reporting requirements.
In addition, if such
purchases are made, the public “float” of our Class A common stock or public warrants and the number of beneficial
holders of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading
of our securities on a national securities exchange.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures
for tendering its shares, such shares may not be redeemed.
We will comply with
the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination.
Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable,
such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination, will describe
the various procedures that must be complied with in order to validly tender or submit public shares for redemption. For example,
we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold
their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer
agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender
offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the date on which
the vote on the proposal to approve the initial business combination is to be held. In addition, if we conduct redemptions in connection
with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit a written
request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such
shares is included. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or
tender offer materials, as applicable, its shares may not be redeemed.
Because of our limited resources and
the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business
combination. If we do not complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the Trust Account that are available for distribution to public stockholders, and our warrants will expire worthless.
We expect to encounter
competition from other entities having a business objective similar to ours, including private investors (which may be individuals
or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types
of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in
identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess similar or greater technical, human and other resources to ours or more local industry knowledge
than we do, and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there are numerous target businesses we could potentially acquire with the net proceeds of our Initial Public Offering
and the sale of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses
that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage
in pursuing the acquisition of certain target businesses. Furthermore, we are obligated to offer holders of our public shares the
right to redeem their shares for cash at the time of our initial business combination in conjunction with a stockholder vote or
via a tender offer. Target companies will be aware that this may reduce the resources available to us for our initial business
combination. Additionally, our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably
by target businesses. Any of these obligations may place us at a competitive disadvantage in successfully negotiating and completing
a business combination. If we do not complete our initial business combination, our public stockholders may receive only their
pro rata portion of the funds in the Trust Account that are available for distribution to public stockholders, and our warrants
will expire worthless.
If the net proceeds of our Initial Public
Offering not being held in the Trust Account are insufficient to allow us to operate for at least the 24 months following the closing
of our Initial Public Offering, it could limit the amount available to fund our search for a target business or businesses and
complete our initial business combination, and we will depend on loans from our Sponsor or management team to fund our search and
to complete our initial business combination.
Of the net proceeds
of our Initial Public Offering, only $1,000,000 are available to us initially outside of the Trust Account. We believe that, since
the closing of our Initial Public Offering, the funds available to us outside of the Trust Account are sufficient to allow us to
operate for at least the 24 months following such closing; however, we cannot assure you that our estimate is accurate. Of the
funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search
for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision
(a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for
transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular
proposed business combination, although we do not have any current intention to do so. If we entered into a letter of intent or
merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit
such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct
due diligence with respect to, a target business.
In the event that our
Initial Public Offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the Trust
Account. In such case, the amount of funds we intend to be held outside the Trust Account would decrease by a corresponding amount.
Conversely, in the event that the Initial Public Offering expenses are less than our estimate of $1,000,000, the amount of funds
we intend to be held outside the Trust Account would increase by a corresponding amount. The amount held in the Trust Account will
not be impacted as a result of such increase or decrease. If we are required to seek additional capital, we would need to borrow
funds from our Sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our Sponsor, members
of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such
advances would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our initial
business combination. Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination entity at
a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Prior
to the completion of our initial business combination, we do not expect to seek advances or loans from parties other than our Sponsor
or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against
any and all rights to seek access to funds in our Trust Account. If we do not complete our initial business combination because
we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. Consequently,
our public stockholders may only receive an estimated $10.00 per share, or possibly less, on our redemption of our public shares,
and our warrants will expire worthless.
Subsequent to our completion of our
initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges
that could have a significant negative effect on our financial condition, results of operations and the price of our securities,
which could cause you to lose some or all of your investment.
Even if we conduct
extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all
material issues that may be present within a particular target business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not
later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations,
or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies
certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary
risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that
we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges
of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing
debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial business combination
or thereafter. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant holders following
the initial business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders
are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due
to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the
business combination contained an actionable material misstatement or material omission.
We may not have sufficient funds to
satisfy indemnification claims of our directors, officers, employees and agents.
We have agreed to indemnify
our officers, directors, employees and agents to the fullest extent permitted by law. However, our officers, directors, employees
and agents have agreed to waive any right, title, interest or claim of any kind in or to any monies in the Trust Account and to
not seek recourse against the Trust Account for any reason whatsoever. Accordingly, any indemnification provided will be able to
be satisfied by us only if (i) we have sufficient funds outside of the Trust Account or (ii) we consummate an initial business
combination. Our obligation to indemnify our officers, directors, employees and agents may discourage stockholders from bringing
a lawsuit against our officers, directors, employees or agents for breach of their fiduciary duty. These provisions also may have
the effect of reducing the likelihood of derivative litigation against our officers, directors, employees and agents, even though
such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may
be adversely affected to the extent we pay the costs of settlement and damage awards against our officers, directors, employees
and agents pursuant to these indemnification provisions.
If, after we distribute the proceeds
in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be
viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us
to claims of punitive damages.
If, after we distribute
the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board of directors may
be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, by paying public stockholders
from the Trust Account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If, before distributing the proceeds
in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and
the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing
the proceeds in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law,
and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the Trust Account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to
be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete
our initial business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations
that we are not subject to.
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In order not to be
regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that
we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities do not
include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and
complete a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not
plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses
or assets or to be a passive investor.
We do not believe that
our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust
Account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the
Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the
trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds
to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than
on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment
company” within the meaning of the Investment Company Act. Our Initial Public Offering is not intended for persons who are
seeking a return on investments in government securities or investment securities. The Trust Account is intended as a holding place
for funds pending the earliest to occur of either: (i) the completion of our initial business combination; (ii) the redemption
of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation
to modify the substance or timing of our obligation to allow redemption in connection with an initial business combination or to
redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our
Initial Public Offering; or (iii) absent an initial business combination within 24 months from the closing of our Initial Public
Offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity, our return of the funds held in the Trust Account to our public stockholders as part of our redemption of the public
shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we
were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional
expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we do not complete
our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the Trust Account
that are available for distribution to public stockholders, and our warrants will expire worthless.
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
NYSE corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first
fiscal year end following our listing on 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, which requires an annual
meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination,
they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section
211(c) of the DGCL.
The grant of registration rights to
our initial stockholders and holders of our private placement warrants may make it more difficult to complete our initial business
combination, and the future exercise of such rights may adversely affect the market price of our shares of Class A common stock.
The holders of the
founder shares, private placement warrants and warrants that may be issued upon conversion of working capital loans (and any Class
A common stock issuable upon the exercise of the private placement warrants and warrants that may be issued upon conversion of
working capital loans and upon conversion of the founder shares) will be entitled to registration rights pursuant to the registration
rights agreement dated as of February 2, 2021, which requires us to register such securities and any other securities of the company
acquired by them prior to the consummation of our initial business combination for resale. The holders of these securities are
entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders
have certain “piggy-back” registration rights with respect to registration statements filed subsequent to our completion
of our initial business combination. We will bear the cost of registering these securities. The registration and availability of
such a significant number of securities for trading in the public market may have an adverse effect on the market price of our
Class A common stock. In addition, the existence of the registration rights may make our initial business combination more costly
or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the
combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common stock
that is expected when the shares of common stock owned by our initial stockholders, holders of our private placement warrants or
holders of our working capital loans or their respective permitted transferees are registered.
Because we are neither limited to evaluating
a target business in a particular industry sector, nor have we selected any specific target businesses with which to pursue our
initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Our efforts to identify
a prospective initial business combination target will not be limited to a particular industry, sector or geographic region. While
we may pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on the ability of
our management team to identify, acquire and operate a business or businesses that can benefit from our management team’s
established relationships and operating experience. Our amended and restated certificate of incorporation prohibits us from effectuating
a business combination with another blank check company or similar company with nominal operations. Because we have not yet selected
any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks
of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects.
To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations
with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record
of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development
stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business,
we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate
time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to
control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment
in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available,
in a business combination target. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant
holders following the initial business combination could suffer a reduction in the value of their securities. Such stockholders
or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the
reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as
applicable, relating to the business combination contained an actionable material misstatement or material omission.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial
business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which
we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which
we enter into our initial business combination will not have all of these positive attributes. If we complete our initial business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval of
our initial business combination if the target business does not meet our general criteria and guidelines. If we do not complete
our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the Trust Account
that are available for distribution to public stockholders, and our warrants will expire worthless.
We are not required to obtain an opinion
from an independent accounting or investment banking firm, and consequently, you may have no assurance from an independent source
that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete
our initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment
banking firm, which is a member of FINRA, or an independent accounting firm, that such an 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.
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 hereof to issue any notes or other debt securities, or to otherwise incur outstanding debt following
the Initial Public Offering, we may choose to incur substantial debt to complete our initial business combination. We and our officers
have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest
or claim of any kind in or to the monies held in the Trust Account. As such, no issuance of debt will affect the per share amount
available for redemption from the Trust Account. Nevertheless, the incurrence of debt could have a variety of negative effects,
including:
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default and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest
payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on
demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting
our ability to obtain such financing while the debt is outstanding;
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our inability to pay dividends on our Class A common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will
reduce the funds available for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions
and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who
have less debt.
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We may only be able to complete one
business combination with the proceeds of our Initial Public Offering and the sale of the private placement warrants, which will
cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
The net proceeds from
our Initial Public Offering and the private placement of warrants have provided us with $221,950,000 (including the net proceeds
from the underwriters’ over-allotment option that was exercised in full) that we may use to complete our initial business
combination (after taking into account $8,050,000 in connection with the over-allotment option exercised in full of deferred underwriting
commissions being held in the Trust Account).
We may effectuate our
initial business combination with a single target business or multiple target businesses simultaneously or within a short period
of time. However, we may not be able to effectuate our initial business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack
of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different industries or different areas of a single industry.
Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset, or
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dependent upon the development or market acceptance of a single or limited number of products,
processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination
and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to
simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that
our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make it more
difficult for us, and delay our ability, to complete our initial business combination. We do not, however, intend to purchase multiple
businesses in unrelated industries in conjunction with our initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due
diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of
the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We may seek acquisition opportunities
with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete
our initial business combination with an early stage company, a financially unstable business or an entity lacking an established
record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine.
These risks include investing in a business without a proven business model and with limited historical financial data, volatile
revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our officers and
directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain
or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of
these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely
impact a target business.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
In pursuing our business
combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public
information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial business combination on the basis of limited information, which may result in a business combination with a company that
is not as profitable as we suspected, if at all.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination
with which a substantial majority of our stockholders or warrant holders do not agree.
Our amended and restated
certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem
our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 either immediately prior to
or upon consummation of our initial business combination (so that we are not subject to the SEC’s “penny stock”
rules). In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration
to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention
of cash to satisfy other conditions. As a result, we may be able to complete our initial business combination even though a substantial
majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder
approval of our initial business combination and do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our Sponsor, officers
and directors or any of their affiliates. In the event the aggregate cash consideration we would be required to pay for all shares
of Class A common stock that are validly submitted for redemption, plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed business combination, exceed the aggregate amount of cash available to us, we will not complete the
business combination or redeem any shares in connection with such initial business combination, all shares of Class A common stock
submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business
combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other
governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and
restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial
business combination that our stockholders may not support.
In order to effectuate
a business combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters
and governing instruments, including their warrant agreements. For example, special purpose acquisition companies have amended
the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business
combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash
and/or other securities. The provisions of our amended and restated certificate of incorporation that relate to our pre-business
combination activity (and corresponding provisions of the agreement governing the release of funds from our Trust Account) may
be amended with the approval of holders of at least 65% of our outstanding common stock. We may also amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then
outstanding public warrants. In addition, our amended and restated certificate of incorporation requires us to provide our public
stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated
certificate of incorporation to modify the substance or timing of our obligation to allow redemption in connection with an initial
business combination, or to redeem 100% of our public shares if we do not complete an initial business combination within 24 months
of the closing of our Initial Public Offering or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity. To the extent any of such amendments would be deemed to fundamentally change
the nature of the securities offered through the registration statement for our Initial Public Offering, we would register, or
seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our charter
or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business
combination.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement
governing the release of funds from our Trust Account) may be amended with the approval of holders of at least 65% of our outstanding
common stock, which is a lower amendment threshold than that of some other special purpose acquisition companies. It may be easier
for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business
combination that some of our stockholders may not support.
Our amended and restated
certificate of incorporation provides that any of its provisions related to pre-business combination activity (including the requirement
to deposit proceeds of our Initial Public Offering and the sale of the private placement warrants into the Trust Account and not
release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein)
may be amended if approved by holders of at least 65% of our outstanding common stock entitled to vote thereon and corresponding
provisions of the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of
at least 65% of our outstanding common stock entitled to vote thereon. In all other instances, our amended and restated certificate
of incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable
provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who collectively beneficially own 20% of our
outstanding common stock upon the closing of our Initial Public Offering, may participate in any vote to amend our amended and
restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As
a result, we may be able to amend the provisions of our amended and restated certificate of incorporation which will govern our
pre-business combination behavior more easily than some other special purpose acquisition companies, and this may increase our
ability to complete our initial business combination with which you do not agree. Our stockholders may pursue remedies against
us for any breach of our amended and restated certificate of incorporation.
Our initial stockholders,
officers and directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment to our amended
and restated certificate of incorporation to modify the substance or timing of our obligation to allow redemption in connection
with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination
within 24 months from the closing of our Initial Public Offering or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their
public shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the Trust Account, including interest earned on the funds held in the Trust Account (net of permitted withdrawals),
divided by the number of then outstanding public shares, subject to the limitations described herein. Our stockholders are not
parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against
our Sponsor, officers and directors for any breach of these agreements. As a result, in the event of a breach, our public stockholders
would need to pursue a stockholder derivative action, subject to applicable law.
Certain agreements related to our Initial
Public Offering may be amended without stockholder approval.
Each of the agreements
related to our Initial Public Offering to which we are a party, other than the warrant agreement and the investment management
trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement
among us and our initial stockholders, officers and directors; the registration rights agreement among us and our initial stockholders;
the private placement warrants purchase agreement between us and our Sponsor; and the administrative services agreement among us,
our Sponsor and an affiliate of our Sponsor. These agreements contain various provisions that our public stockholders might deem
to be material. For example, our letter agreement and the underwriting agreement contain certain lock-up provisions with respect
to the founder shares, private placement warrants and other securities held by our initial stockholders, Sponsor, officers and
directors. Amendments to such agreements would require the consent of the applicable parties thereto and would need to be approved
by our board of directors, which may do so for a variety of reasons, including to facilitate our initial business combination.
While we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial business
combination, it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties,
chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection with the consummation
of our initial business combination will be disclosed in our proxy solicitation or tender offer materials, as applicable, related
to such initial business combination, and any other material amendment to any of our material agreements will be disclosed in a
filing with the SEC. Any such amendments would not require approval from our stockholders, may result in the completion of our
initial business combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment
in our securities. For example, amendments to the lock-up provision discussed above may result in our initial stockholders selling
their securities earlier than they would otherwise be permitted, which may have an adverse effect on the price of our securities.
We may be unable to obtain additional
financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel
us to restructure or abandon a particular business combination. If we do not complete our initial business combination, our public
stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to public
stockholders, and our warrants will expire worthless.
Although we believe
that the net proceeds of our Initial Public Offering and the sale of the private placement warrants are sufficient to allow us
to complete our initial business combination, because we have not yet selected any specific target business, we cannot ascertain
the capital requirements for any particular transaction. If the net proceeds of our Initial Public Offering and the sale of the
private placement warrants prove to be insufficient, either because of the size of our initial business combination, the depletion
of the available net proceeds in search of a target business, the obligation to redeem for cash a significant number of shares
from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions
to purchase shares in connection with our initial business combination, we may be required to seek additional financing or to abandon
the proposed business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. The
current economic environment has made it especially difficult for companies to obtain acquisition financing. To the extent that
additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to
either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate.
If we do not complete our initial business combination, our public stockholders may only receive their pro rata portion of the
funds in the Trust Account that are available for distribution to public stockholders, and our warrants will expire worthless.
In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing
to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse
effect on the continued development or growth of the target business. None of our officers, directors or stockholders is required
to provide any financing to us in connection with or after our initial business combination.
A provision of our warrant agreement
may make it more difficult for use to consummate an initial business combination.
Unlike some other blank
check companies, if
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(i)
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we issue additional shares of Class A common stock or equity-linked securities for capital
raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20
per share,
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(ii)
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the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial
business combination (net of redemptions), and
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(iii)
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the Market Value is below $9.20 per share,
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then the exercise price of the warrants
will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption
trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price. This may make it more difficult for us to consummate an initial business combination with a target business.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy rules
require that the proxy statement with respect to the vote on an initial business combination include historical and pro forma financial
statement disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether
or not they are required under the tender offer rules. These financial statements may be required to be prepared in accordance
with, or be reconciled to, accounting principles generally accepted in the United States of America (“GAAP”), or international
financial reporting standards as issued by the International Accounting Standards Board (“IFRS”), depending on the
circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the
pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time
for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within
the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing an initial business combination.
Section 404 of the
Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on
Form 10-K for our second completed fiscal year. Only in the event we are deemed to be a large accelerated filer or an accelerated
filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public
accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company
makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies
because a target business with which we seek to complete our initial business combination may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
If we effect our initial business combination
with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect
us.
If we pursue a target
company with operations or opportunities outside of the United States for our initial business combination, we may face additional
burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial
business combination, we would be subject to a variety of additional risks that may negatively impact our operations. Furthermore,
we would be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing
to and completing our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction
approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange
rates.
If we effect our initial
business combination with such a company, we would be subject to any special considerations or risks associated with companies
operating in an international setting, including any of the following:
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costs and difficulties inherent in managing cross-border business operations;
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rules and regulations regarding currency redemption;
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complex withholding or other tax regimes which may apply in connection with our business combination
or to our structure following our business combination;
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laws governing the manner in which future business combinations may be effected;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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challenges in managing and staffing international operations;
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tax issues, including limits on our ability to change our tax residence from the United States,
potential changes in the applicable tax laws in the United States and/or relevant non-U.S. jurisdictions and variations in tax
laws as compared to the United States;
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currency fluctuations and exchange controls;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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underdeveloped or unpredictable legal or regulatory systems;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks and wars; and
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deterioration of political relations with the United States.
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We may not be able
to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination,
or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact our business,
financial condition and results of operations.
Our initial business combination and
our structure thereafter may not be tax-efficient to our stockholders and warrant holders. As a result of our business combination,
our tax obligations may be more complex, burdensome and uncertain.
Although we will attempt
to structure our initial business combination in a tax-efficient manner, tax structuring considerations are complex, the relevant
facts and law are uncertain and may change, and we may prioritize commercial and other considerations over tax considerations.
For example, in connection with our initial business combination and subject to any requisite stockholder approval, we may structure
our business combination in a manner that requires stockholders and/or warrant holders to recognize gain or income for tax purposes.
We do not intend to make any cash distributions to stockholders or warrant holders to pay taxes in connection with our business
combination or thereafter. Accordingly, a stockholder or a warrant holder may need to satisfy any liability resulting from our
initial business combination with cash from its own funds or by selling all or a portion of such holder’s shares or warrants.
In addition, we may effect a business combination with a target company in another jurisdiction or reincorporate in a different
jurisdiction (including, but not limited to, the jurisdiction in which the target company or business is located). As a result,
stockholders and warrant holders may be subject to additional income, withholding or other taxes with respect to their ownership
of us after our initial business combination.
Furthermore, we may
effect a business combination with a target company that has business operations outside of the United States and, possibly, business
operations in multiple jurisdictions. If we effect such a business combination, we could be subject to significant income, withholding
and other tax obligations in a number of jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions.
Due to the complexity of tax obligations and filings in other jurisdictions, we may have a heightened risk related to audits or
examinations by taxing authorities. This additional complexity and risk could have an adverse effect on our after-tax profitability
and financial condition.
Risks Related to an Investment in our
Securities
The securities in which we invest the
proceeds held in the Trust Account could bear a negative rate of interest, which could reduce the interest income available for
payment of taxes or reduce the value of the assets held in trust such that the per-share redemption amount received by 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. 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 of very low or negative yields, the amount of interest income (which we may use to
pay our taxes, if any) would be reduced. In the event that we are unable to complete our initial business combination, our public
stockholders are entitled to receive their pro-rata share of the proceeds then held in the Trust Account, plus any interest income
(less up to $100,000 of interest to pay dissolution expenses). If the balance of the Trust Account is reduced below $200,000,000
as a result of negative interest rates, the amount of funds in the Trust Account available for distribution to our public stockholders
may be reduced below $10.00 per share.
You will not have any rights or interests
in funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be
forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders
will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) our completion of an initial business
combination, and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem,
subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a stockholder
vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to allow
redemption in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our
initial business combination within 24 months from the closing of our Initial Public Offering or with respect to any other material
provisions relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of our
public shares if we do not complete an initial business combination within 24 months from the closing of our Initial Public Offering,
subject to applicable law and as further described herein. In addition, if we do not complete an initial business combination within
24 months from the closing of our Initial Public Offering, Delaware law may require that we submit a plan of dissolution to our
then-existing stockholders for approval prior to the distribution of the proceeds held in our Trust Account. In that case, public
stockholders may be forced to wait beyond 24 months from the closing of our Initial Public Offering before they receive funds from
our Trust Account. In no other circumstances will a public stockholder have any right or interest of any kind in the Trust Account.
Holders of warrants will not have any right to the proceeds held in the Trust Account with respect to the warrants. Accordingly,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
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 are listed
on the NYSE. Following the date that the Class A common stock and warrants are eligible to trade separately, we anticipate that
the Class A common stock and warrants will be separately listed on the NYSE. Although after giving effect to our Initial Public
Offering we expect to meet, on a pro forma basis, the minimum initial listing standards set forth in the NYSE listing standards,
we cannot assure you that our securities will continue to be listed on the NYSE in the future or prior to our initial business
combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain
certain financial, distribution and share price levels. Generally, we must maintain a minimum average global market capitalization
and a minimum number of holders of our securities. Additionally, in connection with our initial business combination, we will be
required to demonstrate compliance with NYSE’s initial listing requirements, which are more rigorous than NYSE’s continued
listing requirements, in order to continue to maintain the listing of our securities on the NYSE. For instance, our share 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
million, the aggregate market value of our publicly-held shares would be required to be at least $40 million and we would be required
to have a minimum of 400 round lot holders and 1,100,000 publicly held shares. We cannot assure you that we will be able to meet
those initial listing requirements at that time.
If NYSE delists any
of our securities from trading on its exchange and we are not able to list such securities on another national securities exchange,
we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock is a “penny stock” which will require
brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading
activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as “covered securities.” Because our units are, and we expect that eventually our
Class A common stock and warrants will be, listed on the NYSE, our units do, and our Class A common stock and warrants will, qualify
as covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal
statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a
state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State
of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to
use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed
on the NYSE, our securities would not qualify as covered securities under the statute and we would be subject to regulation in
each state in which we offer our securities.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds
of our Initial Public Offering and the sale of the private placement warrants are intended to be used to complete an initial business
combination with a target business that has not been selected, we may be deemed to be a “blank check” company under
the United States securities laws. However, because we have net tangible assets in excess of $5,000,000 upon the completion of
our Initial Public Offering and the sale of the private placement warrants and have filed a Current Report on Form 8-K, including
an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank
check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among
other things, this means our units are immediately tradable and we have a longer period of time to complete our initial business
combination than do companies subject to Rule 419. Moreover, if our Initial Public Offering were subject to Rule 419, that rule
would prohibit the release of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust
Account were released to us in connection with our completion of an initial business combination.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares
in excess of 15% of our Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than
an aggregate of 15% of the shares sold in our Initial Public Offering without our prior consent, which we refer to as the “Excess
Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess
Shares) for or against our initial business combination. Your inability to redeem the Excess Shares will reduce your influence
over our ability to complete our initial business combination and you could suffer a material loss on your investment in us if
you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to
the Excess Shares if we complete our initial business combination. And as a result, you will continue to hold that number of shares
exceeding 15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially
at a loss.
If third parties bring claims against
us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share.
Our placing of funds
in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors,
service providers (other than our independent registered public accounting firm), prospective target businesses and other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the Trust Account for the benefit of our public stockholders, such parties may not execute such agreements, or even if
they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited
to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability
of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in
the Trust Account. If any third-party refuses to execute an agreement waiving such claims to the monies held in the Trust Account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third-party
that has not executed a waiver if management believes that such third-party’s engagement would be significantly more beneficial
to us than any alternative. The underwriters of our Initial Public Offering will not execute agreements with us waiving such claims
to the monies held in the Trust Account.
Examples of possible
instances where we may engage a third-party that refuses to execute a waiver include the engagement of a third-party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any
reason. Upon redemption of our public shares, if we do not complete our initial business combination within the prescribed timeframe,
or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide
for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption.
Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per public share initially
held in the Trust Account, due to claims of such creditors. Pursuant to the letter agreement, the form of which was filed as an
exhibit to the registration statement for our Initial Public Offering, our Sponsor has agreed that it will be liable to us if and
to the extent any claims by a third-party for services rendered or products sold to us, or a prospective target business with which
we have entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement,
reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per
public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per public share
due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims
by a third-party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account
(whether or not such waiver is enforceable), nor will it apply to any claims under our indemnity of the underwriters of our Initial
Public Offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our Sponsor
to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to
satisfy its indemnity obligations and we believe that our Sponsor’s only assets are securities of our company. Therefore,
we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully
made against the Trust Account, the funds available for our initial business combination and redemptions could be reduced to less
than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce
the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available
for distribution to our public stockholders.
In the event that the
proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per public share
held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per public share due to reductions
in the value of the trust assets, in each case less taxes payable, and our Sponsor asserts that it is unable to satisfy its obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do
so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount
recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our Sponsor to
reserve for such indemnification obligations and we believe it is unlikely that our Sponsor would be able to satisfy those obligations.
If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account
available for distribution to our public stockholders may be reduced below $10.00 per share.
Our stockholders may be held liable
for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of the funds in 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 Initial Public
Offering may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set
forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day
notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders,
any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after
the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible
following the 24th month from the closing of our Initial Public Offering in the event we do not complete our initial
business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not
be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies
with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the
stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess
all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to
the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary
of such date. Furthermore, if the pro rata portion of the funds in 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 Initial Public Offering is not considered a liquidating distribution under Delaware law and such redemption distribution
is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances
that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could
then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
You will not be permitted to exercise
your warrants unless we register and qualify the underlying Class A common stock or certain exemptions are available.
If the issuance of
the Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration or qualification
under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise such warrants
and such warrants may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase
of units will have paid the full unit purchase price solely for the Class A common stock included in the units.
We are not registering
the Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time.
However, under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business
days, after the closing of our initial business combination, we will use our reasonable best efforts to file with the SEC a registration
statement covering the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants
and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business
combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants until
the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be
able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the
registration statement or prospectus for our Initial Public Offering, the financial statements contained or incorporated by reference
therein are not current or correct or the SEC issues a stop order.
If the shares of Class
A common stock issuable upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant
agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be
required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants
be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise
their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the
state of the exercising holder, or an exemption from registration or qualification is available.
If our Class A common
stock is at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition
of “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of
warrants who seek to exercise their warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance
with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file or maintain in effect a registration
statement or register or qualify the shares underlying the warrants under applicable state securities laws, and in the event we
do not so elect, we will use our best efforts to register or qualify the shares underlying the warrants under applicable state
securities laws to the extent an exemption is not available.
In no event will we
be required to net cash settle any warrant, or issue securities (other than upon a cashless exercise as described above) or other
compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants
under the Securities Act or applicable state securities laws.
You may only be able to exercise your
public warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares
of Class A common stock from such exercise than if you were to exercise such warrants for cash.
The warrant agreement
provides that in the following circumstances holders of warrants who seek to exercise their warrants will not be permitted to do
so for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act:
(i) if the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act in
accordance with the terms of the warrant agreement; (ii) if we have so elected and our Class A common stock is at the time
of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered
securities” under Section 18(b)(1) of the Securities Act; and (iii) if we have so elected and we call the public warrants
for redemption. If you exercise your public warrants on a cashless basis, you would pay the warrant exercise price by surrendering
the warrants in exchange for a number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product
of (A) the number of shares of Class A common stock underlying the warrants and (B) the excess of the “fair market value”
of our Class A common stock (as defined in the next sentence) over the exercise price of the warrants by (y) the fair market value.
The “fair market value” of our Class A common stock for such purposes is the average last reported sales price of our
Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise
is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result,
you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
We may issue additional shares of Class
A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive plan after
completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the founder
shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
contained in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders
and likely present other risks.
Our amended and restated
certificate of incorporation authorizes the issuance of up to 380,000,000 shares of Class A common stock, par value $0.0001 per
share, 20,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value
$0.0001 per share. Immediately after our Initial Public Offering, there are 357,000,000 and 14,250,000 authorized but unissued
shares of Class A common stock and Class B common stock, respectively, available for issuance. The Class B common stock is automatically
convertible into Class A common stock at the time of the closing of the initial business combination, initially at a one-for-one
ratio but subject to adjustment as set forth herein and in our amended and restated certificate of incorporation. Immediately after
our Initial Public Offering, there are no shares of preferred stock issued and outstanding.
We may issue a substantial
number of additional shares of Class A common stock or shares of preferred stock to complete our initial business combination or
under an employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common
stock to redeem the warrants upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our
initial business combination as a result of the anti-dilution provisions as set forth therein. However, our amended and restated
certificate of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional
securities that would entitle the holders thereof to (i) receive funds from the Trust Account or (ii) vote as a class with our
public shares (a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate of
incorporation to (x) extend the time we have to consummate a business combination beyond 24 months from the closing of our Initial
Public Offering or (y) amend the foregoing provisions. These provisions of our amended and restated certificate of incorporation,
like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote. The issuance
of additional shares of common stock or shares of preferred stock:
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may significantly dilute the equity interest of investors in our Initial Public Offering, which
dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A common
stock on a greater than one-to-one basis upon conversion of the Class B common stock;
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may subordinate the rights of holders of Class A common stock if shares of preferred stock are
issued with rights senior to those afforded our Class A common stock;
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could cause a change in control if a substantial number of shares of our Class A 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;
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may have the effect of delaying or preventing a change of control of us by diluting the share ownership
or voting rights of a person seeking to obtain control of us; and
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may adversely affect prevailing market prices for our Class A common stock and/or warrants.
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Unlike some other similarly structured
special purpose acquisition companies, our initial stockholders will receive additional shares of Class A common stock if we issue
certain shares to consummate an initial business combination.
The founder shares
will automatically convert into shares of Class A common stock at the time of the closing of the initial business combination on
a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like,
and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked
securities are issued or deemed issued in connection with our initial business combination, the number of shares of Class A common
stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the total number
of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class
A common stock by public stockholders), including the total number of shares of Class A common stock issued, or deemed issued or
issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection
with or in relation to the consummation of the initial business combination, excluding any shares of Class A common stock or equity-linked
securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller
in the initial business combination and any private placement warrants issued to our Sponsor, officers or directors upon conversion
of working capital loans, provided that such conversion of founder shares will never occur on a less than one-for-one basis. This
is different than some other similarly structured special purpose acquisition companies in which the initial stockholders will
only be issued an aggregate of 20% of the total number of shares to be outstanding prior to our initial business combination.
Resources could be wasted in researching
business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we do not complete our initial business combination, our public stockholders may only receive
their pro rata portion of the funds in the Trust Account that are available for distribution to public stockholders, and our warrants
will expire worthless.
We anticipate that
the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys
and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed
transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may
fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event
will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we do not complete our initial business combination, our public stockholders may
only receive their pro rata portion of the funds in the Trust Account that are available for distribution to public stockholders,
and our warrants will expire worthless.
We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then
outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be
shortened and the number of shares of Class A common stock purchasable upon exercise of a warrant could be decreased, all without
your approval.
Our warrants will be
issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent,
and us. The warrant agreement provides that (a) the terms of the warrants may be amended without the consent of any holder (i)
for the purpose of curing any ambiguity, or curing or, correcting or supplementing any defective provision contained therein or
adding or changing any other provisions with respect to matters or questions arising thereunder as the parties may deem necessary
or desirable and that the parties deem shall not adversely affect the interest of the registered holders of the warrants, and (ii)
to provide for the delivery of an alternative issuance described above and (b) all other modifications or amendments require the
vote or written consent of at least a majority of the then outstanding public warrants and, solely with respect to any amendment
to the terms of the private placement warrants or warrants issued upon conversion of working capital loans or any provision of
the warrant agreement with respect to the private placement warrants or warrants issued upon conversion of working capital loans,
at least a majority of the then outstanding private placement warrants and warrants issued upon conversion of working capital loans.
Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least a majority of
the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants
with the consent of at least a majority of the then outstanding public warrants is unlimited, examples of such amendments could
be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at
a ratio different than initially provided), shorten the exercise period or decrease the number of shares of Class A common stock
purchasable upon exercise of a warrant.
We may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability
to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per
warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted
for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading
day period ending on the third trading day prior to proper notice of such redemption provided that on the date we give the notice
of such redemption to the warrant holders. We will not redeem the warrants unless an effective registration statement under the
Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants is effective and a current prospectus
relating to those shares of Class A common stock is available throughout the 30-day redemption period, except if the warrants may
be exercised on a cashless basis and such cashless exercise is exempt from registration under the Securities Act. If and when the
warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying
securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to (i) exercise
your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants
at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price
which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value
of your warrants. None of the private placement warrants will be redeemable by us for cash so long as they are held by the initial
purchasers or their permitted transferees.
Our warrants may have an adverse effect
on the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business combination.
We have issued warrants
to purchase up to 11,500,000 shares of our Class A common stock, inclusive of the full exercise of the underwriters’ over-allotment
option, as part of the units offered in the Initial Public Offering and, simultaneously with the closing of our Initial Public
Offering, we issued in a private placement an aggregate of 6,600,000 warrants, inclusive of the full exercise of the underwriters’
over-allotment option, each exercisable to purchase one share of Class A common stock at $11.50 per share, subject to adjustment
as described herein. In addition, if our Sponsor or an affiliate of our Sponsor or certain of our officers and directors makes
any working capital loans, such lender may convert those loans into up to an additional 1,500,000 private placement warrants, at
the price of $1.00 per warrant. To the extent we issue common stock to effectuate a business transaction, the potential for the
issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants could make us a less
attractive acquisition vehicle to a target business. Such warrants, when exercised, will increase the number of issued and outstanding
shares of Class A common stock and reduce the value of the Class A common stock issued to complete the business transaction. Therefore,
our warrants may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
Because each unit contains one-half
of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than units of other special purpose
acquisition companies.
Each unit contains
one-half of one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units,
and only whole units will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest
in a share, we will, upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued
to the warrant holder. This is different from other offerings similar to ours whose units include one common share and one whole
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-half
of the number of shares compared to units that each contain a whole warrant to purchase one share, thus making us, we believe,
a more attractive business combination partner for target businesses. Nevertheless, this unit structure may cause our units to
be worth less than if it included a warrant to purchase one whole share.
A market for our securities may not
develop, which would adversely affect the liquidity and price of our securities.
The price of our securities
may vary significantly due to one or more potential business combinations and general market or economic conditions, including
as a result of the COVID-19 pandemic and other events (such as terrorist attacks, natural disasters or a significant outbreak of
other infectious diseases). Following our Initial Public Offering, the price of our securities may vary significantly due to one
or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for our
securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market
can be established and sustained.
Our warrant agreement designates the
courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability
of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement
provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way
to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York
or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction,
which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the
foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by
the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice
of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within
the scope the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the
United States District Court for the Southern District of New York (a “foreign action”) in the name of any holder of
our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located
in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an “enforcement
action”), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon
such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This choice-of-forum
provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement
inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional
costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business,
financial condition and results of operations and result in a diversion of the time and resources of our management and board of
directors.
An investment in our Initial Public
Offering may result in uncertain or adverse U.S. federal income tax consequences.
An investment in our
Initial Public Offering may result in uncertain U.S. federal income tax consequences. For instance, because there are no authorities
that directly address instruments similar to the units we have issued in our Initial Public Offering, the allocation an investor
makes of the purchase price of a unit between the share of our Class A common stock and the one-half of one warrant to purchase
Class A common stock included in each unit could be challenged by the Internal Revenue Service (“IRS”) or the courts.
Furthermore, the U.S. federal income tax consequences of a cashless exchange of warrants is unclear under current law. Finally,
it is unclear whether the redemption rights with respect to our shares of Class A common stock suspend the running of a U.S. holder’s
holding period for purposes of determining whether any gain or loss realized by such holder on the sale or exchange of Class A
common stock is long-term capital gain or loss and for determining whether any dividend we pay would be considered “qualified
dividend income” for U.S. federal income tax purposes. Each prospective investor is urged to consult its own tax advisors
with respect to these and other tax consequences when purchasing, holding or disposing of our securities.
Risks Related to our Leadership Team
and Their Influence
Past performance by our management team
and their affiliates may not be indicative of future performance of an investment in us.
Information regarding
performance by, or businesses associated with, our management team or businesses associated with them is presented for informational
purposes only. Past performance by our management team is not a guarantee either (i) of success with respect to any business combination
we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should
not rely on the historical record of the performance of our management team or businesses associated with them as indicative of
our future performance of an investment in us or the returns we will, or is likely to, generate going forward.
We may seek business combination opportunities
in industries or sectors that may be outside of our management’s areas of expertise.
We will consider a
business combination outside of our management’s areas of expertise if a business combination candidate is presented to us
and we determine that such candidate offers an attractive business combination opportunity for our company. Although our management
will endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will
adequately ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will
not ultimately prove to be less favorable to investors in our Initial Public Offering than a direct investment, if an opportunity
were available, in a business combination candidate.
Involvement of members of our management
and companies with which they are affiliated in civil disputes and litigation or governmental investigations unrelated to our business
affairs could materially impact our ability to consummate an initial business combination.
Members of our management
team and companies with which they are affiliated have been, and in the future will continue to be, involved in a wide variety
of business affairs, including transactions, such as sales and purchases of businesses, and ongoing operations. As a result of
such involvement, members of our management and companies with which they are affiliated in the past have been, and may in the
future be, involved in civil disputes and litigation and governmental investigations relating to their business affairs unrelated
to our company. Any such claims or investigations may be detrimental to our reputation and could negatively affect our ability
to identify and complete an initial business combination in a material manner and may have an adverse effect on the price of our
securities.
We are dependent upon our 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 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 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 officers. The unexpected loss of the services of one or more of our directors or officers could
have a detrimental effect on us.
Our ability to successfully complete
our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some
of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully
complete our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in
the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our initial business combination, it is likely that some or all of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial
business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals
may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time
and resources helping them become familiar with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business
combination may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to
receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest in
determining whether a particular business combination is the most advantageous.
Our key personnel may
be able to remain with our company after the completion of our initial business combination only if they are able to negotiate
employment or consulting agreements in connection with our initial business combination. Such negotiations would take place simultaneously
with the negotiation of our initial business combination and could provide for such individuals to receive compensation in the
form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
Such negotiations also could make such key personnel’s retention or resignation a condition to any such agreement. The personal
and financial interests of such individuals may influence their motivation in identifying and selecting a target business, subject
to their fiduciary duties under Delaware law.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business
whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the
desirability of effecting our initial business combination with a prospective target business, our ability to assess the target
business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target business’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target business’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders or warrant holders who choose to remain stockholders or warrant holders following our initial business combination
could suffer a reduction in the value of their securities. Such security holders are unlikely to have a remedy for such reduction
in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a
duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws
that the proxy solicitation or tender offer materials, as applicable, relating to the business combination contained an actionable
material misstatement or material omission.
The officers and directors of an acquisition
candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key
personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition
candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although
we contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition
candidate following our initial business combination, it is possible that members of the management of an acquisition candidate
will not wish to remain in place.
Our officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our
affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for a business combination and their other 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. Our independent directors also serve as officers and board members for other
entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time
to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which
may have a negative impact on our ability to complete our initial business combination.
Our officers and directors presently
have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly,
may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Following the completion
of our Initial Public Offering and until we consummate our initial business combination, we intend to engage in the business of
identifying and combining with one or more businesses. Each of our officers and directors presently has, and any of them in the
future may have, additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is
or will be required to present a business combination opportunity to such entity. Accordingly, they may have conflicts of interest
in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our
favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated
certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer
unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of the company
and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to
pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal
obligation.
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, our
directors or officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from
engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have
a conflict between their interests and ours.
The personal and financial
interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and
completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting
a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of a
particular business combination are appropriate and in our stockholders’ best interest. If this were the case, it would be
a breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such
individuals for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may
make against them for such reason.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, officers, directors
or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our Sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our
Sponsor, officers, directors or existing holders. Our directors also serve as officers and board members for other entities. Such
entities may compete with us for business combination opportunities. Our Sponsor, officers and directors are not currently aware
of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated,
and there have been no substantive discussions concerning a business combination with any such entity or entities. Although we
will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction
if we determined that such affiliated entity met our criteria for a business combination and such transaction was approved by a
majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent investment
banking firm which is a member of FINRA or an independent accounting firm regarding the fairness to our company from a financial
point of view of a business combination with one or more domestic or international businesses affiliated with our Sponsor, officers,
directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the business combination
may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since our Sponsor, officers and directors
will lose their entire investment in us if our initial business combination is not completed (other than with respect to public
shares they acquired during or after our Initial Public Offering), a conflict of interest may arise in determining whether a particular
business combination target is appropriate for our initial business combination.
On November 25, 2020,
our Sponsor purchased an aggregate of 5,750,000 founder shares in exchange for a capital contribution of $25,000, or approximately
$0.004 per share. Prior to the initial investment in the company of $25,000 by the Sponsor, the company had no assets, tangible
or intangible. The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company
by the number of founder shares issued. The number of founder shares outstanding was determined based on the expectation that the
total size of our Initial Public Offering would be a maximum of 23,000,000 units if the underwriters’ over-allotment option
was exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after our Initial Public
Offering. 750,000 of the founder shares have been forfeited in connection with the full exercise of the underwriters’ over-allotment
option. On January 27, 2021, our Sponsor transferred 25,000 shares to each of our independent directors, at their original purchase
price. The founder shares will be worthless if we do not complete an initial business combination. In addition, our Sponsor has
purchased an aggregate of 6,600,000 private placement warrants, inclusive of the full exercise of the underwriters’ over-allotment
option, each exercisable for one share of Class A common stock at $11.50 per share, subject to adjustment as described herein,
for an aggregate purchase price of $6,600,000, or $1.00 per warrant, that will also be worthless if we do not complete our initial
business combination within the allocated time period. In addition, we may obtain loans from our Sponsor, affiliates of our Sponsor
or an officer or director. The personal and financial interests of our officers and directors may influence their motivation in
identifying and selecting a target business combination, completing an initial business combination and influencing the operation
of the business following the initial business combination. This risk may become more acute as the 24-month anniversary of the
closing of our Initial Public Offering nears, which is the deadline for our completion of an initial business combination.
Our management may not maintain control
of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our
initial business combination so that the post-transaction company in which our public stockholders own shares will own less than
100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target business sufficient for us not to be required to register as an investment company under the Investment Company Act.
We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of
the outstanding 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.
For example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as
a result of the issuance of a substantial number of new shares of Class A common stock, our stockholders immediately prior to such
transaction could own less than a majority of our outstanding Class A common stock subsequent to such transaction. In addition,
other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share
of the company’s shares than we initially acquired. Accordingly, this may make it more likely that our management will not
maintain control of the target business.
Our initial stockholders control a substantial
interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that
you do not support.
Upon closing of our
Initial Public Offering, our initial stockholders own 20% of our issued and outstanding common stock. Accordingly, they may exert
a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments
to our amended and restated certificate of incorporation. If our initial stockholders purchase any units in our Initial Public
Offering or if our initial stockholders purchase any additional Class A common stock in the aftermarket or in privately negotiated
transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers or
directors, have any current intention to purchase additional securities, other than as disclosed herein.
Factors that would
be considered in making such additional purchases would include consideration of the current trading price of our Class A common
stock. In addition, our board of directors, whose members were elected by our Sponsor, is and will be 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. We may
not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial business combination,
in which case all of the current directors will continue in office until at least the completion of the business combination. 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 at our first annual general meeting and our initial stockholders, because of their ownership
position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to have substantial
influence at least until the completion of our initial business combination.
Our initial stockholders paid an aggregate
of $25,000, or approximately $0.004 per founder share and, accordingly, you will experience immediate and substantial dilution
from the purchase of our shares of Class A common stock to the benefit of our Sponsor and certain of our directors and officers.
The difference between
the Initial Public Offering price per share (allocating all of the unit purchase price to the share of Class A common stock and
none to the warrant included in the unit) and the pro forma net tangible book value per share of our Class A common stock after
our Initial Public Offering constitutes the dilution to you and the other investors in our Initial Public Offering. Our initial
stockholders acquired the founder shares at a nominal price, significantly contributing to this dilution. Upon the closing of our
Initial Public Offering, the public stockholders incurred an immediate and substantial dilution of approximately 91.8% (or $9.18
per share, assuming no exercise of the underwriters’ over-allotment option), the difference between the pro forma net tangible
book value per share after our Initial Public Offering of $0.82 and the initial offering price of $10.00 per unit. This dilution
will increase to the extent that the anti-dilution provisions of the founder shares result in the issuance of shares of Class A
common stock on a greater than one-to-one basis upon conversion of the founder shares at the time of our initial business combination
and will become exacerbated to the extent that public stockholders seek redemptions from the trust for their public shares. In
addition, because of the anti-dilution protection in the founder shares, any equity or equity-linked securities issued in connection
with our initial business combination would be disproportionately dilutive to our Class A common stock. Moreover, although we are
of the view that our Sponsor, directors and officers paid fair value for the founder shares, there is no assurance that a taxing
authority would agree with us, and, if a taxing authority were to successfully assert otherwise, we may be subject to material
withholding and other tax liabilities that could adversely affect our financial condition.
Provisions in our amended and restated
certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing
to pay in the future for our shares of Class A common stock and could entrench management.
Our amended and restated
certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider
to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of preferred stock, which may make more difficult the removal of management and
may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated
certificate of incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative
action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director,
officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or
employees arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or
(iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may
be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the
State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and
the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination),
(B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or (C) for which the Court
of Chancery does not have subject matter jurisdiction. If an action is brought outside of Delaware, the stockholder bringing the
suit will be deemed to have consented to service of process on such stockholder’s counsel. Although we believe this provision
benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies,
a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may limit our stockholders’
ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents and have the
effect of discouraging lawsuits against us or such persons, although our stockholders will not be deemed to have waived our compliance
with federal securities laws and the rules and regulations thereunder.
Notwithstanding the
foregoing, 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.
General Risk Factors
We are a blank check company with no
operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check
company established under the laws of the State of Delaware with no operating results, and did not commence operations until obtaining
funding through our Initial Public Offering. Because we lack an operating history, you have no basis upon which to evaluate our
ability to achieve our business objective of completing our initial business combination. We have no plans, arrangements or understandings
with any prospective target business concerning a business combination and may be unable to complete our initial business combination.
If we fail to complete our initial business combination, we will never generate any operating revenues.
Changes in laws or regulations, or a
failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete
our initial business combination, and results of operations.
We are subject to laws
and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain
SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes
could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with
applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
We are an emerging growth company and
a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive
to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain
information they may deem important. We could be an emerging growth company for up to five years, although circumstances could
cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates equals or
exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth
company as of the end of such fiscal year. We cannot predict whether investors will find our securities less attractive because
we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions,
the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our
securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of
such extended transition period which means that when a standard is issued or revised and it has different application dates for
public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
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 that year’s second fiscal quarter, or (2) our annual revenues
equal or exceed $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 that year’s second fiscal quarter. 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.
Cyber incidents or attacks directed
at us could result in information theft, data corruption, operational disruption and/or financial loss.
We will depend on digital
technologies, including information systems, infrastructure and cloud applications and services, including those of third parties
with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.