Overview
We are a blank check company incorporated
as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more businesses, which we refer to throughout this report as our initial
business combination. We have generated no operating revenues to date and will not generate operating revenues until we consummate
our initial business combination.
Since our initial public offering, we have
concentrated our efforts on identifying and acquiring a business that could benefit from leveraging our extensive operational,
capital markets and investment management experience in the broader travel and leisure industry and that presents potential for
an attractive risk-adjusted return profile under our management. Our management team and the broader KSL Capital Partners platform
has an extensive network of relationships in the travel and leisure industry and significant experience in identifying and executing
acquisitions in travel and leisure, including consumer businesses related thereto. In addition, our management team has a history
of preparing for and executing initial public offerings and scaling early stage investment platforms.
On December 14, 2020, the Company entered
into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Experience Merger Sub, Inc.,
a Delaware corporation and direct wholly-owned subsidiary of the Company (“Merger Sub”), and BLADE Urban Air Mobility,
Inc., a Delaware corporation (“Blade”), providing for, among other things, and subject to the terms and conditions
therein, a business combination between Blade and the Company pursuant to the proposed merger of Merger Sub with and into Blade
with Blade continuing as the surviving entity (the “Merger”).
The proposed Merger is expected to be consummated
after the required approval by the stockholders of the Company and by the stockholders of Blade, and the satisfaction or waiver
of certain other conditions summarized below. At the reference price of $10.00 (the “Reference Price”) per share of
Class A common stock of the Company (the “Company Common Stock”), the total merger consideration of 35,625,000 shares
of Company Common Stock (which amount assumes all of the EIC Options (as defined below) are net exercised) would have a value of
$356,250,000.
Pursuant to the Merger Agreement, at the
effective time of the Merger:
(a) each outstanding share of Blade common
stock (the “Blade Common Stock”) (as of immediately prior to the closing of the Merger (the “Closing”))
that is outstanding as of immediately prior to the effective time of the Merger (other than treasury stock) will be cancelled and
automatically converted into the right to receive a number of shares of Company Common Stock equal to the quotient of (i) (A) the
sum of $356,250,000 plus the aggregate exercise prices of all in the money Blade Options (as defined below) outstanding as of immediately
prior to the effective time of the Merger divided by (B) the fully-diluted common stock of Blade (as calculated pursuant to the
Merger Agreement and including the aggregate number of shares of Blade Common Stock issuable upon the conversion of Blade Preferred
Stock (as defined below) and the aggregate number of Blade Common Stock issuable upon the exercise of the in the money Blade Options
(as defined below)) divided by (ii) the Reference Price (the “Closing Per Share Stock Consideration”);
(b) each outstanding share of Blade Series
Seed preferred stock, Blade Series A preferred stock and Blade Series B preferred stock (collectively, the “Blade Preferred
Stock,” and together with the Blade Common Stock, the “Blade Stock”) that is outstanding as of immediately prior
to the effective time of the Merger will be cancelled and automatically converted into the right to receive a number of shares
of Company Common Stock equal to the Closing Per Share Stock Consideration multiplied by the number of shares of Blade Common Stock
issuable upon the conversion of each such share of Blade Preferred Stock;
(c) each option to acquire Blade Common
Stock (the “Blade Option”) that is outstanding immediately prior to the effective time of the Merger, whether vested
or unvested, will be assumed and automatically converted into an option to purchase a number of shares of Company Common Stock
(an “EIC Option”) equal to the product of (1) the number of shares of Blade Common Stock that were issuable upon exercise
of such Blade Option immediately prior to the effective time multiplied by (2) the Closing Per Share Stock Consideration (rounded
down to the nearest whole number of shares of Company Common Stock, with no cash being payable for any fractional share eliminated
by such rounding), at an exercise price per share of Company Common Stock equal to the quotient obtained by dividing the exercise
price per share of Blade Common Stock under such Blade Option immediately prior to the effective time of the Merger by the Closing
Per Share Exchange Amount (as defined in the Merger Agreement) (rounded up to the nearest whole cent);
(d) Each
Blade Restricted Share (as defined in the Merger Agreement) that is outstanding immediately prior to the effective time of the
Merger will be assumed and automatically converted into the right to receive the Closing Per Share Stock Consideration. Such Closing
Per Share Stock Consideration will be subject to the same vesting restrictions as in effect immediately prior to the effective
time of the Merger (such restrictions are set forth in the applicable award agreement and plan document);
(e) Each
share of common stock of Merger Sub issued and outstanding immediately prior to the effective time of the Merger will no longer
be outstanding and will be converted into one share of common stock of the Surviving Company; and
(f) Each
treasury stock of Blade will be cancelled and retired for no consideration.
Pursuant to the
Company’s amended and restated certificate of incorporation and in accordance with the terms of the Merger Agreement, the
Company will be providing its public stockholders with the opportunity to redeem all or a portion of their shares of Company Common
Stock upon the completion of Merger at a per share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account calculated as of two business days prior to the consummation of the Merger, including interest earned on the funds
held in the trust account not previously released to the Company to pay taxes, divided by the total number of then-outstanding
public shares of Company Common Stock.
Each of Blade,
the Company and Merger Sub have made representations and warranties in the Merger Agreement that are customary for transactions
of this nature. The representations and warranties of the Company, Merger Sub and Blade will not survive the Closing.
The Merger Agreement
includes customary covenants of the parties with respect to operation of the business prior to consummation of the Merger and the
other transactions contemplated under the Merger Agreement (collectively, the “Transactions”) and efforts to satisfy
conditions to consummation of the Transactions. The Merger Agreement also contains additional covenants of the parties, including,
among others, (a) covenants providing for the Company and Blade to use reasonable best efforts to obtain all necessary regulatory
approvals, (b) covenants providing for the Company and Blade to cooperate in the preparation of the Registration Statement, Proxy
Statement and Consent Solicitation Statement (as each such terms are defined in the Merger Agreement) required to be filed in connection
with the Transactions, (c) covenants prohibiting Blade and its subsidiaries from engaging in any transactions involving the securities
of the Company without the prior consent of the Company, except as contemplated in the Merger Agreement, (d) covenants providing
that the Company will keep current and timely file all reports required to be filed or furnished with the U.S. Securities and Exchange
Commission (the “SEC”) and otherwise comply in all material respects with its reporting obligations under applicable
securities laws, (e) covenants prohibiting the parties or their affiliates from soliciting, discussing or entering into agreements
for alternative acquisition proposals, (f) covenants that require the Company to convene a stockholder meeting in order to obtain
its stockholder approval of the Transactions, and (g) covenants that require the Company to obtain “tail” policies
covering individuals who are currently covered by the Company’s, Blade’s or any of Blade’s subsidiaries’
directors’ and officers’ liability insurance policies.
Consummation of
the Transactions is subject to customary conditions of the respective parties.
The Merger Agreement
may be terminated at any time prior to the date of the Closing, as described in the Merger Agreement.
The Merger Agreement
and related agreements are further described in the Form S-4 filed by the Company on filed on January 29, 2021 (as it may be amended
from time to time, the “Form S-4”). For additional information regarding Blade, the Merger Agreement, the Merger and
the Transactions, see the Form S-4.
Other than as specifically
discussed, this report does not assume the closing of the Merger.
Business Strategy
Our business strategy is to utilize our
management team’s existing investment identification and opportunity evaluation experience to identify, acquire and, after
our initial business combination, implement an operating strategy with a view of creating value for our shareholders through growth,
repositioning, operational improvements, capital infusion or future acquisitions. Our focus on value creation will be driven by
a disciplined investment strategy that aims to conduct comprehensive due diligence, thoughtful underwriting and deep strategic
analysis, resulting in a thorough evaluation of each investment opportunity. Mr. Affeldt and KSL Capital Partners are leveraging
their longstanding relationships, network of industry connections and what we believe to be their ability to uncover attractive
opportunities in the travel and leisure industry, including consumer businesses, and support them with market expertise. Initial
business combination opportunities may be sourced through our management team’s and KSL Capital Partners’ network of
travel and leisure owners and investors, operating partners, financial firms, brokers and lenders.
Market Opportunity
We intend to identify and acquire a business
within the travel and leisure industry with an overall transaction value between $500 million and $2.0 billion. We believe
that this sector represents attractive target markets given the size, breadth and prospects for growth, with travel and tourism
having contributed nearly $8.8 trillion to global GDP in 2018 and expected to grow an average of 7.1% annually through 2028. Based
on demographic trends and a developing middle class in emerging economies, long-term demand for travel and leisure industry is
not only resilient but expanding. Consumers are spending increasing amounts on active, experience-based recreation and vacations.
In 2018, the United States’ direct travel and tourism spending was $1.1 trillion, which represented a compounded annual
growth rate of 3.5% since 2000. We believe that favorable macro demographic trends and a growing economy will make the travel
and leisure industry even more attractive in the coming years. Further, we believe that the market landscape is both wide and
deep, with many potential target companies that would make great potential candidates. Our management team is looking to identify
business combination targets which are in need of strategic growth capital, will benefit from becoming a publicly listed company
or which need to repurchase debt, target strategic acquisitions or require working capital.
Acquisition Criteria
We have and intend to continue to seek to
identify companies that have compelling growth potential and a combination of the following characteristics. We have and intend
to continue to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter our initial
business combination with a target business that does not meet these criteria and guidelines. We intend to acquire companies or
assets that we believe have the following attributes:
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Competitive market position. We are seeking candidates that operate in markets with strong fundamentals. We will evaluate the strength of each market based on several factors including competitive dynamics, demand drivers, projected supply growth, and barriers to entry.
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Strong target management teams. We are seeking candidates who have strong management teams with a proven track record of driving growth, enhancing profitability, making sound strategic decisions, and generating strong free cash flow. We will diligence a target company’s leadership team to evaluate if there are areas that need to be improved or require additional personnel.
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Utilize our management team’s operating expertise. We are focusing on investments in companies whose performance and operations can benefit from our management and strategic operating team’s expertise, including improving operations with enhanced managing capabilities and growing travel and leisure companies, including consumer businesses in both the public and private markets. We are utilizing the depth of our industry relationships to find personnel that supplement and enhance the existing management team’s expertise.
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Ready for the next phase of growth. We are seeking candidates where we believe we can help the company grow strategically, where an acquisition or robust expansion may help facilitate this. We believe that we are well-positioned to evaluate and improve a target company’s growth prospects and to help them realize the opportunities, having invested in and operated companies at various stages of the growth cycle in the past. We are also targeting candidates who will benefit from capital investment to renovate, revitalize, or transform the business.
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Opportunity for operational improvements. We are identifying candidates that we believe would be aided from our strategic operating team’s knowledge and expertise to drive growth and improve operations. This could take the form in helping identify revenue-generating strategies, sales and marketing efforts, evaluating strategic partnerships, or rationalizing expenses.
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Opportunities for bolt-on acquisitions. We intend to acquire one or more businesses that we can grow both organically and through acquisitions. We believe that our ability to source proprietary investment opportunities helps the business create a platform that can grow through future add-on acquisitions.
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Appropriate valuations. We are a disciplined and valuation-centric investor that will invest on terms that we believe provide significant upside potential with limited downside risk
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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 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 annual report, would be in the form of tender offer documents or proxy solicitation
materials that we would file with the SEC.
Initial Business Combination
Our initial business combination must occur
with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the
trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at
the time of the agreement to enter into the initial business combination. If our board is not able to independently determine the
fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking firm that
is a member of the Financial Industry Regulatory Authority, or FINRA, or an independent accounting firm with respect to the satisfaction
of such criteria. Our stockholders may not be provided with a copy of such opinion, nor will they be able to rely on such opinion.
We may, at our option, pursue an acquisition
opportunity jointly with one or more entities or funds affiliated with KSL Capital Partners, which we refer to as an “Affiliated
Joint Acquisition.” Any such parties may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the acquisition by issuing to such parties a class of equity or equity-linked
securities. We refer to this potential future issuance, or a similar issuance to other specified purchasers, as a “specified
future issuance” throughout this report.
The amount and other terms and conditions
of any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified future
issuance and may determine not to do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution
provisions of our Class B common stock, any such specified future issuance would result in an adjustment to the conversion
ratio such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership
at 20% of the sum of the total number of all shares of common stock outstanding upon completion of our initial public offering
plus all shares issued in the specified future issuance, unless the holders of a majority of the then-outstanding shares of Class B
common stock agreed to waive such adjustment with respect to the specified future issuance at the time thereof. We cannot determine
at this time whether a majority of the holders of our Class B common stock at the time of any such specified future issuance
would agree to waive such adjustment to the conversion ratio. If such adjustment is not waived, the specified future issuance would
not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership of holders
of our Class A common stock. If such adjustment is waived, the specified future issuance would reduce the percentage ownership
of holders of both classes of our common stock.
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 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, including an Affiliated Joint Acquisition
as described above. However, 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 an interest in the target or assets sufficient
for the post-transaction company not to be required to register as an investment company under the Investment Company Act of 1940,
as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities
of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue
a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target.
In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial
number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of
our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a
target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses
that is owned or acquired is what will be valued for purposes of the 80% of net assets test. 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 target businesses
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.
Our Acquisition Process
We believe that conducting comprehensive
due diligence on prospective investments is particularly important within the travel and leisure industry. We are utilizing the
diligence, rigor, and expertise of KSL Capital Partners’ platform to evaluate potential targets’ strengths, weaknesses,
and opportunities to identify the relative risk and return profile of any potential target for our initial business combination.
Given our management team’s extensive tenure investing in the travel and leisure industry, we are often familiar with the
prospective target’s end-market, competitive landscape and business model.
In evaluating a prospective initial business
combination, we will conduct a thorough diligence review that will encompass, among other things, meetings with incumbent management
and employees, document reviews, inspection of facilities, and financial analyses as well as a review of other information that
will be made available to us.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with KSL Capital Partners, our sponsor, our officers, or our directors,
subject to certain approvals and consents. In the event we seek to complete our initial business combination with a company that
is affiliated with KSL Capital Partners, our sponsor, officers or directors, 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
our initial business combination is fair to us from a financial point of view. Currently, we are not aware of an affiliate of KSL
Capital Partners that would make a suitable target for our initial business combination.
Each of our officers and directors presently
has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which
such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers
or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she has then-current
fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity
to such entity. All of our officers and certain of our directors are employed by or affiliated with KSL Capital Partners. KSL Capital
Partners is continuously made aware of potential investment opportunities, one or more of which we may desire to pursue for a business
combination. In addition, we may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which an
officer or director has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at
the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified
future issuance to any 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 our company and such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue.
Our officers have agreed not to become
an officer or director of any other special purpose acquisition company with a class of securities registered under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, until we have entered into a definitive agreement regarding our initial
business combination or we have failed to complete our initial business combination by September 17, 2021.
Status as a Public Company
We believe our structure makes us an attractive
business combination partner to target businesses. As an existing public company, we offer a target business an alternative to
the traditional initial public offering through a merger or other business combination. In this situation, the owners of the target
business would exchange their shares of stock in the target business for shares of our stock or for a combination of shares of
our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there are various costs
and obligations associated with being a public company, we believe target businesses will find this method a more certain and cost
effective method to becoming a public company than the typical initial public offering. In a typical initial public offering, there
are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the same extent
in connection with a business combination with us.
Furthermore, once a proposed business combination
is completed, the target business will have effectively become public, whereas an initial public offering is always subject to
the underwriters’ ability to complete the offering, as well as general market conditions, which could delay or prevent the
offering from occurring or could have negative valuation consequences. Once public, we believe the target business would then have
greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests.
It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting
talented employees.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies” including, but not limited to, not being required to comply with the 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 our
initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates
exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Financial Position
With funds available for a business combination
in the amount of $267,318,339, as of December 31, 2020, assuming no redemptions and after payment of up to $9,625,000 of deferred
underwriting fees, before fees and expenses associated with our initial business combination, we offer a target business a variety
of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations
or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our business combination
using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However,
we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting our Initial Business Combination
We are not presently engaged in, and we
will not engage in, any operations until we consummate our initial business combination. We intend to complete our initial business
combination using cash from the proceeds of our initial public offering and the private placement of the private placement warrants,
our capital stock, debt or a combination of these as the consideration to be paid in our initial business combination. We may
seek to complete our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid
for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our business combination or used for redemptions of our Class A common stock, we may apply the balance
of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other assets, companies or for working capital.
We may seek to raise additional funds through
a private offering of debt or equity securities in connection with the completion of our initial business combination (which may
include a specified future issuance), and we may complete our initial business combination using the proceeds of such offering
rather than using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would expect
to complete such financing only simultaneously with the completion of our business combination. In the case of an initial business
combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the
business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval
of such financing. There are no prohibitions on our ability to raise funds privately, including pursuant to any specified future
issuance, or through loans in connection with our initial business combination.
The time required to select and evaluate
a target business and to structure and complete our initial business combination, and the costs associated with this process, are
not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation
of a prospective target business with which our 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.
Sources of Target Businesses
Proprietary transaction opportunities may
originate as a result of the business relationships, direct outreach, and deal sourcing activities of our management team and KSL
Capital Partners. In addition to the proprietary deal flow, target business candidates are brought to our attention from various
unaffiliated sources, including investment banking firms, consultants, accounting firms, private equity groups, large business
enterprises, and other market participants. 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 this report and know what types of businesses
we are targeting. Our management team and KSL Capital Partners, as well as their affiliates, may also bring to our attention target
business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions
they may have, as well as attending trade shows or conventions. Some of our officers and directors may enter into employment or
consulting agreements with the post-transaction company following our initial business combination. The presence or absence of
any such fees or arrangements will not be used as a criterion in our selection process of an acquisition candidate. In no event
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 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).
We are not prohibited from pursuing an initial
business combination with a business combination target that is affiliated with KSL Capital Partners, our sponsor, officers or
directors or making the acquisition through a joint venture or other form of shared ownership with our sponsor, officers or directors.
In the event we seek to complete our initial business combination with a business combination target that is affiliated with our
sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm 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. If any of our officers
or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which
he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination
opportunity to such entity prior to presenting such business combination opportunity to us. Any such entity may co-invest with
us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the
acquisition by making a specified future issuance to any such entity.
Lack of Business Diversification
For an indefinite period of time after the
completion of our initial business combination, the prospects for our success may depend entirely on the future performance of
a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one
or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of
being in a single line of business. In addition, we intend to focus our search for an initial business combination in a single
industry. By completing our business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited Ability to Evaluate the Target’s Management
Team
Although we intend to closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our business combination with that
business, our assessment of the target business’ management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members
of our management team or of our board, if any, in the target business cannot presently be stated with any certainty. While it
is possible that one or more of our directors will remain associated in some capacity with us following our business combination,
it is presently unknown if any of them will devote their full efforts to our affairs subsequent to our business combination. Moreover,
there can be no assurances that members of our management team will have significant experience or knowledge relating to the operations
of the particular target business. The determination as to whether any members of our board of directors will remain with the combined
company will be made at the time of our initial business combination.
Following a business combination, to the
extent that we deem it necessary, we may seek to recruit additional managers to supplement the incumbent management team of the
target business. There can be no assurances that we will have the ability to recruit additional managers, or that additional managers
will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve our Initial
Business Combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by law or applicable
stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented in the table
below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is
currently required under Delaware law for each such transaction.
Type of Transaction
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Whether
Stockholder
Approval
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under NASDAQ’s listing rules, stockholder
approval would be required for our initial business combination if, for example:
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we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding;
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any of our directors, officers or substantial stockholders (as defined by NASDAQ rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or
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the issuance or potential issuance of common stock will result in our undergoing a change of control.
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Permitted Purchases of our Securities
In the event we seek stockholder approval
of our business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender
offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions
or in the open market either prior to or following the completion of our initial business combination. However, they have no current
commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions.
None of the funds in the trust account will be used to purchase shares in such transactions. They will not make any such purchases
when they are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited
by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder,
although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise
its redemption rights. In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately
negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders
would be required to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases,
if any, would constitute a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction
subject to the going-private rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases
that the purchases are subject to such rules, the purchasers will comply with such rules.
The purpose of such purchases would 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 or (ii) to satisfy a closing condition in an agreement with a target that requires us to have
a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement
would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases are made,
the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be
reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities
exchange.
Our sponsor, officers, directors and/or
their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and
contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the
trust account or vote against the business combination. Our sponsor, officers, directors, advisors or their affiliates will only
purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers,
directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made
to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for
manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements
that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or
their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5
of the Exchange Act.
Redemption Rights for Public Stockholders upon Completion
of our Initial Business Combination
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
as of two business days prior to the consummation of the initial business combination including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares,
subject to the limitations described herein. The amount in the trust account as of December 31, 2020, was approximately $10.06 per
public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the
deferred underwriting commissions we will pay to the underwriters. Our sponsor, officers and directors have entered into a letter
agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any
public shares held by them in connection with the completion of our business combination.
Manner of Conducting Redemptions
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by
means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct
a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the
transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange
listing requirement. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers
with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or
seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure a business
combination transaction with a target company in a manner that requires stockholder approval, we will not have discretion as to
whether to seek a stockholder vote to approve the proposed business combination. We intend to conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements
or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for
our securities on NASDAQ, we are required to comply with such rules.
If a stockholder vote is not required and
we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated
certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement of our business
combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our
Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5
under the Exchange Act.
In the event that we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender
offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number
of public shares which are not purchased by our sponsor, which number will be based on the requirement that we will only redeem
our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior
to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which
may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than
we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder approval of the
transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business
or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, we will
complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor
of the business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding
capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company
entitled to vote at such meeting. Our sponsor, officers and directors will count toward this quorum and have agreed to vote their
founder shares and any public shares purchased during or after our initial public offering in favor of our initial business combination.
For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect
on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our sponsor, officers
and directors’ founder shares, we would need 10,312,501, or 37.5%, of the 27,500,000 public shares sold in our initial public
offering to be voted in favor of a transaction (assuming all outstanding shares are voted) in order to have our initial business
combination approved (assuming the over-allotment option is not exercised). We intend to give approximately 30 days (but not
less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall
be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our sponsor,
officers and directors, may make it more likely that we will consummate our initial business combination. Each public stockholder
may elect to redeem its public shares irrespective of whether they vote for or against the proposed transaction.
Our amended and restated certificate of
incorporation provides that we will only redeem our public shares so long as (after such redemption) our net tangible assets will
be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or
any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners,
(ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the retention
of cash to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate
cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate
amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A
common stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption upon Completion of
our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding the foregoing, if we seek
stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more
than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.”
We believe this restriction discourages stockholders from accumulating large blocks of shares, and subsequent attempts by such
holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us
or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms.
Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our initial public offering
could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management at a premium
to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than
15% of the shares sold in our initial public offering, we believe we limit the ability of a small group of stockholders to unreasonably
attempt to block our ability to complete our business combination, particularly in connection with a business combination with
a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, our amended
and restated certificate of incorporation does not restrict our stockholders’ ability to vote all of their shares (including
Excess Shares) for or against our business combination.
Tendering Stock Certificates in Connection with
a Tender Offer or Redemption Rights
We may require our public stockholders seeking
to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either
tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders,
or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy
materials, or to deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to
holders of our public shares in connection with our initial business combination will indicate whether we are requiring public
stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our
tender offer materials until the close of the tender offer period, or up to two days prior to the vote on the business combination
if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given
the relatively short exercise period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with
the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost
on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise
redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless
of the timing of when such delivery must be effectuated.
Any request to redeem such shares, once
made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting
set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights,
such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated
that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after
the completion of our business combination.
If our initial business combination is not
approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any
certificates delivered by public holders who elected to redeem their shares.
If our initial proposed business combination
is not completed, we may continue to try to complete a business combination with a different target by September 17, 2021.
Redemption of Public Shares and Liquidation
if no Initial Business Combination
Our amended and restated certificate of
incorporation provides that we have until September 17, 2021 to complete our initial business combination. If we are unable to
complete our business combination by September 17, 2021, we will: (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned
on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest to pay
dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination by September
17, 2021.
Our sponsor, officers and directors have
waived their rights to liquidating distributions from the trust account with respect to any founder shares held by them if we fail
to complete our initial business combination by September 17, 2021. However, if our sponsor, officers or directors acquire public
shares in or after our initial public offering, they will be entitled to liquidating distributions from the trust account with
respect to such public shares if we fail to complete our initial business combination within such time period.
Our sponsor, officers and directors have
agreed, pursuant to a letter agreement with us (filed as an exhibit to the registration statement of which this report forms a
part), that they will not propose any amendment to our amended and restated certificate of incorporation that would modify (i) the
substance or timing of our obligation to redeem 100% of our public shares if we do not complete our by September 17, 2021 or (ii) the
other provisions relating to stockholders’ rights or pre-initial business activities, unless we provide our public stockholders
with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes divided by the number of then outstanding public shares.
However, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001
either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees
and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right
is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement
(described above) we would not proceed with the amendment or the related redemption of our public shares.
We expect to use the amounts held
outside the trust account ($846,068 as of December 31, 2020) to pay for all costs and expenses associated with implementing
our plan of dissolution, as well as payments to any creditors, if we do not complete an initial business combination by
September 17, 2021, although there can be no assurances that there will be sufficient funds for such purpose. However, if
those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the
extent that there is any interest accrued in the trust account not required to pay taxes on interest income earned on the
trust account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued
interest to pay those costs and expenses.
If we were to expend all of the net proceeds
of our initial public offering and the sale of the private placement warrants, other than the proceeds deposited in the trust account,
the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.06 (based on the trust account
balance as of December 31, 2020). The proceeds deposited in the trust account could, however, become subject to the claims of our
creditors which would have higher priority than the claims of our public stockholders. There can be no assurances that the actual
per-share redemption amount received by stockholders will not be substantially less than $10.06 (based on the trust account balance
as of December 31, 2020). Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us
to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims
must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay
such amounts, if any, there can be no assurances that we will have funds sufficient to pay or provide for all creditors’
claims.
Although we have and will continue to have
all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with
us waiving any right, title, interest and claim of any kind in or to any monies held in the trust account for the benefit of our
public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that
they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach
of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case
in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any
third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform
an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed
a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any
alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement
of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those
of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing
to execute a waiver. Marcum LLP, our independent registered public accounting firm will not execute agreements with us waiving
such claims to the monies held in the trust account.
In addition, there is no guarantee that
such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts
or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor has agreed that it will
be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective
target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account
to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the
date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of
interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights
to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering
against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to
be unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third
party claims We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and
believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such indemnification
obligations. Therefore, there can be no assurances that our sponsor would be able to satisfy those obligations. As a result, if
any such claims were successfully made against the trust account, the funds available for our initial business combination and
redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business
combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of
our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target
businesses.
In the event that the proceeds in the trust
account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the
amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the
cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent
directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations
and there can be no assurances that our sponsor would be able to satisfy those obligations. Accordingly, there can be no assurances
that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.00 per public share.
We seek to reduce the possibility that our
sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers,
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under
our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. We may have access to use the amounts held outside the trust account ($846,068 as of December 31, 2020) to pay any such potential
claims but these amounts may be spent on expenses incurred as result of being a public company or due diligence expenses on prospective
business combination candidates. In the event that we liquidate and it is subsequently determined that the reserve for claims and
liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors.
Under the DGCL, stockholders may be held
liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our business combination by September 17, 2021 may be considered a liquidating distribution under Delaware
law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it
makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can
be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our business combination by September 17, 2021, is not considered a liquidating distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of
creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating
distribution. If we are unable to complete our business combination by September 17, 2021, we will: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to
$100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention
to redeem our public shares as soon as reasonably possible following September 17, 2021 and, therefore, we do not intend to comply
with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received
by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section 280,
Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years.
However, because we are a blank check company, rather than an operating company, and our operations 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. As described above, pursuant to the obligation contained in our underwriting agreement,
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any
claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the
extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such
lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions
in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as to any
claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor
will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or
an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority
over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, there can be no assurances
we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be
viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent
conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore,
our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith,
thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior
to addressing the claims of creditors. There can be no assurances that claims will not be brought against us for these reasons.
Our public stockholders will be entitled
to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do not complete
our business combination by September 17, 2021, subject to applicable law, (ii) in connection with a stockholder vote to
approve an amendment to our amended and restated certificate of incorporation to modify the substance or timing of our obligation
to redeem 100% of our public shares if we have not consummated an initial business combination by September 17, 2021 or (iii) our
completion of an initial business combination, and then only in connection with those shares of our common stock that such stockholder
properly elected to redeem, subject to the limitations described in this report. In no other circumstances will a stockholder
have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with
our initial business combination, a stockholder’s voting in connection with the business combination alone will not result
in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must
have also exercised its redemption rights as described above.
Competition
In identifying, evaluating and selecting
a target business for our business combination, we have encountered, and may continue to encounter, intense competition from other
entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will
be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition
of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future
dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place
us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We currently have two officers. These individuals
are not obligated to devote any specific number of hours to our matters but they devote as much of their time as they deem necessary
to our affairs and intend to continue doing so until we have completed our initial business combination. The amount of time they
devote in any time period may 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.
Corporate Information
Our executive offices are located at 100 St. Paul St., Suite
800, Denver Colorad0, 80206, and our telephone number at that location is 1-720-284-6400.
You should carefully consider all of
the risks described below, together with the other information contained in this report, including the financial statements. If
any of the following risks occur, our business, financial condition or results of operations may be materially and adversely affected.
In that event, the trading price of our securities could decline, and an investor could lose all or part of their investment. The
risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respects
to us and our business. For risk factors related to the Merger, see the Form S-4.
We are an early stage company with limited operating history
and no revenues, and you have little basis on which to evaluate our ability to achieve our business objective.
We are an early stage company with limited
operating results and no revenues. Because we lack significant operating history, you have little basis upon which to evaluate
our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
We may be unable to complete our business combination. If we fail to complete our business combination, we will never generate
any operating revenues.
Our public stockholders may not be afforded an opportunity
to vote on our proposed business combination, which means we may complete our initial business combination even if a majority of
our public stockholders do not support such a combination.
We may not hold a stockholder vote to approve
our initial business combination unless the business combination would require stockholder approval under applicable law or stock
exchange listing requirements or if we decide to hold a stockholder vote for business or other legal reasons. Except as required
by law, the decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders
to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors,
such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval.
Accordingly, we may complete our initial business combination even if holders of a majority of our public shares do not approve
of the business combination we complete. Please see the section of this report entitled “Business—Stockholders May
Not Have the Ability to Approve our Initial Business Combination” for additional information.
If we seek stockholder approval of our initial business combination,
our sponsor, officers and directors have agreed to vote in favor of such initial business combination, regardless of how our public
stockholders vote.
Our sponsor, officers and directors have
agreed to vote their founder shares, as well as any public shares purchased during or after our initial public offering, in favor
of our initial business combination. As a result, in addition to our sponsor, officers and directors’ founder shares, we
would need 10,312,501, or 37.5%, of the 27,500,000 public shares sold in our initial public offering to be voted in favor of a
transaction (assuming all outstanding shares are voted) in order to have our initial business combination approved. Our initial
stockholders own 20% of our issued and outstanding shares of common stock. Accordingly, if we seek stockholder approval of our
initial business combination, it is more likely that the necessary stockholder approval will be received than would be the case
if our sponsor, officers and directors agreed to vote their founder shares in accordance with the majority of the votes cast by
our public stockholders.
Your only opportunity to affect the investment decision regarding
a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we
seek stockholder approval of the business combination.
You may not be provided with an opportunity
to evaluate the specific merits or risks of one or more target businesses. 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, if we do not seek stockholder approval, your only opportunity to
affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within
the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders
in which we describe our initial business combination.
The ability of our public stockholders to redeem their shares
for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for
us to enter into a business combination with a target.
We may seek to enter into a business combination
transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain
amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition
and, as a result, would not be able to proceed with the business combination. 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 upon consummation of our initial business
combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny
stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our
initial business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible
assets to be less than $5,000,001 upon completion of our initial business combination 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 a business combination transaction with us.
The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize
our capital structure.
At the time we enter into an agreement for
our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will
need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If
our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to
meet such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption
than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account
or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable
business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable
to the underwriters will not be adjusted for any shares that are redeemed in connection with a business combination. The per-share
amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting
commission and after such redemptions, the per-share value of shares held by non-redeeming stockholders will reflect our obligation
to pay the deferred underwriting commissions.
The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares could increase the probability that our initial business combination would
be unsuccessful and that public stockholders would have to wait for liquidation in order to redeem their stock.
If our business combination agreement requires
us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business
combination is unsuccessful, public stockholders would not receive their pro rata portion of the trust account until we liquidate
the trust account. If public stockholders are in need of immediate liquidity, they could attempt to sell their stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either
situation, public stockholders may suffer a material loss on their investment or lose the benefit of funds expected in connection
with our redemption until we liquidate or they are able to sell their stock in the open market.
The requirement that we complete our initial business combination
within the prescribed time frame may give potential target businesses leverage over us in negotiating a business combination and
may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline,
which could undermine our ability to complete our 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
by September 17, 2021. Consequently, such target business may obtain leverage over us in negotiating a business combination, knowing
that if we do not complete our initial business combination with that particular target business, we may be unable to complete
our initial business combination with any target business. This risk will increase as we get closer to the timeframe described
above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms
that we would have rejected upon a more comprehensive investigation.
We may not be able to complete our initial business combination
within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would
redeem our public shares and liquidate. In this case our public stockholders may only receive $10.06 per share, (based on the balance
of our trust account as of December 31, 2020), or less than such amount in certain circumstances, and our warrants will expire
worthless.
Our amended and restated certificate of
incorporation provides that we must complete our initial business combination by September 17, 2021. We may not be able to find
a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial
business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the
other risks described herein. If we have not completed our initial business combination within such time period, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay
our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in
each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
In such case, our public stockholders may only receive $10.06 per share (based on the balance of our trust account as of December
31, 2020), or less than such amount in certain circumstances, and our warrants will expire worthless.
If we seek stockholder approval of our initial business combination,
our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from public stockholders, which may
influence a vote on a proposed business combination and reduce the public “float” of our Class A common stock.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer
rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares 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. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record
holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the
event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required
to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of
the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination, or
to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of
cash at the closing of our business combination, where it appears that such requirement would otherwise not be met. This may result
in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases are made,
the public “float” of our Class A common stock and the number of beneficial holders of our securities may be
reduced, possibly making it difficult to maintain the quotation, listing or trading of our securities on a national securities
exchange.
If a stockholder fails to receive notice of our offer to
redeem our public shares in connection with our business combination, or fails to comply with the procedures for tendering its
shares, such shares may not be redeemed.
We will comply with the tender offer rules
or proxy rules, as applicable, when conducting redemptions in connection with our business combination. Despite our compliance
with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not
become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will describe the various
procedures that must be complied with in order to validly tender or redeem public shares. For example, we may require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents
mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the
event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder
fails to comply with these or any other procedures, its shares may not be redeemed.
Our public stockholders will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. To liquidate their investment, therefore, they may
be forced to sell their public shares or warrants, potentially at a loss.
Our public stockholders will be entitled
to receive funds from the trust account only upon the earliest to occur of: (i) our completion of an initial business combination,
and then only in connection with those shares of our common stock that such stockholder properly elected to redeem, subject to
the limitations described in this report, (ii) the redemption of any public shares properly submitted 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 redeem 100% of our public shares if we do not complete our initial business combination by September 17, 2021 and (iii) the
redemption of our public shares if we are unable to complete an initial business combination by September 17, 2021, subject to
applicable law and as further described herein. In addition, if we are unable to complete an initial business combination by September
17, 2021 for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders
for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced
to wait beyond September 17, 2021 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. Accordingly, to liquidate an investment, our public stockholders may
be forced to sell their public shares or warrants, potentially at a loss.
NASDAQ may delist our securities from trading on its exchange,
which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our units, Class A common stock and
warrants are currently listed on NASDAQ. There can be no assurances that our securities will continue to be listed on NASDAQ in
the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ prior to our initial
business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain a minimum
amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public
holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance with
NASDAQ’s initial listing requirements, which are more rigorous than NASDAQ’s continued listing requirements, in order
to continue to maintain the listing of our securities on NASDAQ. For instance, our stock price would generally be required to be
at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and we would
be required to have a minimum of 300 round lot holders (with at least 50% of such round lot holders holding securities with a market
value of at least $2,500) of our securities. There can be no assurances that we will be able to meet those initial listing requirements
at that time.
If NASDAQ delists our securities from trading
on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could
be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The National Securities Markets Improvement
Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as “covered securities.” Since our units, our Class A common stock and warrants are listed on
NASDAQ, they are covered securities. Although the states are preempted from regulating the sale of our securities, the federal
statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a
state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State
of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to
use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed
on NASDAQ, our securities would not be covered securities and we would be subject to regulation in each state in which we offer
our securities.
Our stockholders will not be entitled to protections normally
afforded to investors of some 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 had net tangible assets in excess of $5,000,000 at the time of our initial public offering,
we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly,
investors are not afforded the benefits or protections of those rules. Among other things, this means our securities are tradable
and we have a longer period of time to complete our business combination than do companies subject to Rule 419. Moreover,
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, which we refer to as the “Excess Shares.” However, our amended
and restated certificate of incorporation does not restrict our stockholders’ ability to vote all of their shares (including
Excess Shares) for or against our business combination. Your inability to redeem the Excess Shares will reduce your influence over
our ability to complete our 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 business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in
order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
Because of our limited resources and the significant competition
for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we are
unable to complete our initial business combination, our public stockholders may receive only approximately $10.06 per share (based
on the balance of our trust account as of December 31, 2020), or less than such amount in certain circumstances, and our warrants
will expire worthless.
We expect to encounter intense competition
from other entities having a business objective similar to ours, including private investors (which may be individuals or investment
partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses
we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying
and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many
of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous
target businesses we could potentially acquire with the net proceeds from 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, because we are obligated to
pay cash for the shares of Class A common stock which our public stockholders redeem in connection with our initial business
combination, target companies will be aware that this may reduce the resources available to us for our initial business combination.
This may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete
our initial business combination, our public stockholders may only receive approximately $10.06 per share (based on the balance
of our trust account as of December 31, 2020), or less than such amount in certain circumstances, and our warrants will expire
worthless.
If the net proceeds of our initial public offering and the
sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate until September
17, 2021, we may be unable to complete our initial business combination, in which case our public stockholders may only receive
approximately $10.06 per share (based on the balance of our trust account as of December 31, 2020), or less than such amount in certain
circumstances, and our warrants will expire worthless.
The funds available to us outside of the
trust account may not be sufficient to allow us to operate until September 17, 2021, assuming that our initial business combination
is not completed during that time. We believe that, the funds available to us outside of the trust account are sufficient to allow
us to operate until September 17, 2021; however, there can be no assurances that our estimate is accurate. Of the funds available
to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target
business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions
with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination,
although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid
for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a
result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with
respect to, a target business. If we are unable to complete our initial business combination, our public stockholders may only
receive approximately $10.06 per share (based on the balance of our trust account as of December 31, 2020), or less than such amount
in certain circumstances, and our warrants will expire worthless.
If funds available to us outside of the trust account are
insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial
business combination and we will depend on loans from our sponsor or management team to fund our search for a business combination,
to pay our taxes and to complete our initial business combination. If we are unable to obtain these loans, we may be unable to
complete our initial business combination.
As of December 31, 2020, we had $846,068
held outside the trust account that is available to us to fund our working capital requirements. If we are required to seek additional
capital, we would need to borrow funds from our sponsor, management team or other third parties to operate, or we may be forced
to liquidate. None of our sponsor, members of our management team nor any of their affiliates is under any obligation to advance
funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds
released to us upon completion of our initial business combination. We do not expect to seek loans from parties other than our
sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver
against any and all rights to seek access to funds in our trust account. If we are unable to obtain these loans, we may be unable
to complete our initial business combination. If we are unable to complete our initial business combination because we do not have
sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In such case, our public
stockholders may only receive approximately $10.06 per share (based on the balance of our trust account as of December
31, 2020), or less than such amount in certain circumstances, and our warrants will expire worthless.
Subsequent to the completion of our initial business combination,
we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant
negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all
of your investment.
Even if we conduct extensive due diligence
on a target business with which we combine, there can be no assurances that this diligence will surface all material issues that
may be present inside a particular target business, that it would be possible to uncover all material issues through a customary
amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a
result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even
though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges
of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature
may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held
by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to
remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
If third parties bring claims against us, the proceeds held
in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per
share.
Our placing of funds in the trust account
may not protect those funds from third-party claims against us. Although we have sought and will continue to seek to have all vendors,
service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing claims
against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to
a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it
and will only enter into an agreement with a third party that has not executed a waiver if management believes that such third
party’s engagement would be significantly more beneficial to us than any alternative. Making such a request of potential
target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse
to execute such a waiver, it may limit the field of potential target businesses that we might pursue. Marcum LLP our independent
registered public accounting firm will not execute agreements with us waiving such claims to the monies held in the trust account.
Examples of possible instances where we
may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise
or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee
that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public
shares, if we are unable to complete our business combination within the prescribed timeframe, or upon the exercise of a redemption
right in connection with our business combination, we will be required to provide for payment of claims of creditors that were
not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption
amount received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims
of such creditors. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services
rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement,
reduce the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes. This liability will not apply with respect to any
claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims
under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then our
sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified
whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets
are securities of our company. We have not asked our sponsor to reserve for such indemnification obligations. Therefore, there
can be no assurances that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully
made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less
than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers will indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our independent directors may decide not to enforce the indemnification
obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to
our public stockholders.
In the event that the proceeds in the trust
account are reduced below the lesser of (i) $10.00 per public share or (ii) such lesser amount per share held in the
trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each
case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether
to take legal action against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent
directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such
legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors
determine that a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification obligations,
the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per
share.
If, after we distribute the proceeds in the trust account
to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is
not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive
damages.
If, after we distribute the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or
bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having
breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive
damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the trust account
to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is
not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share
amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may
be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
If we are deemed to be an investment company under the Investment
Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may
make it difficult for us to complete our business combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, including:
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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 business combination.
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In addition, we may have imposed upon us
burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily
in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S.
government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business combination
and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets
with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our principal activities
subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States
“government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity
of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment
Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is
not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and
by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses
in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company”
within the meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest
to occur of: (i) the completion of our primary business objective, which is a business combination; (ii) the redemption
of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of
incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our
initial business combination by September 17, 2021; or (iii) absent a business combination, our return of the funds held
in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest the proceeds
as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment
Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted
funds and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination,
our public stockholders may only receive approximately $10.06 per share (based on the balance of our trust account as of December
31, 2020), or less than such amount in certain circumstances, and our warrants will expire worthless.
Changes in laws or regulations, or a failure to comply with
any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and
regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or
regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.
Our stockholders may be held liable for claims by third parties
against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held
liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination by September 17, 2021 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 September 17, 2021 in the event we do not complete
our business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not be complying with Section 280,
Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following
our dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited
to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers,
investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the
DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be
barred after the third anniversary of the dissolution. There can be no assurances that we will properly assess all claims that
may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination by September 17, 2021 is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the
statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three
years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders until after
the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
In accordance with NASDAQ corporate governance
requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following
our listing on NASDAQ (or until December 31, 2020). Under Section 211(b) of the DGCL, we are, however, required to hold an
annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made
by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to
the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL,
which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of
our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court
of Chancery in accordance with Section 211(c) of the DGCL.
We have not registered the shares of Class A common
stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration
may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its
warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We have not registered the shares of Class A
common stock issuable upon exercise of the warrants issued in our initial public offering under the Securities Act or any state
securities laws at this time. However, under the terms of the warrant agreement, we will use our reasonable best efforts to file,
and within 60 business days following our initial business combination to have declared effective, a registration statement under
the Securities Act covering such shares and maintain a current report 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. There can be
no assurances 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 the report, the financial statements contained or incorporated by reference
therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants issued
in our initial public offering are not registered under the Securities Act, we will be required to permit holders to exercise their
warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated
to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered
or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding
the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange
such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we
may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in
accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain
in effect a registration statement, but we will be required to use our best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any warrant. If the
issuance of the shares upon exercise of the warrants issued in our initial public offering is not so registered or qualified or
exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant
may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will
have paid the full unit purchase price solely for the shares of Class A common stock included in the units. If and when the
warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying
shares of Class A common stock for sale under all applicable state securities laws.
The grant of registration rights to our initial stockholders
may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect
the market price of our Class A common stock.
Pursuant to the agreement entered into concurrently
with the issuance and sale of the securities in our initial public offering, our initial stockholders and their permitted transferees
can demand that we register their founder shares, after those shares convert to our Class A common stock at the time of our
initial business combination. In addition, holders of our private placement warrants and their permitted transferees can demand
that we register the private placement warrants and the Class A common stock issuable upon exercise of the private placement
warrants, and holders of warrants that may be issued upon conversion of working capital loans may demand that we register such
warrants or the Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities.
The registration and availability of such a significant number of securities for trading in the public market may have an adverse
effect on the market price of our Class A common stock. In addition, the existence of the registration rights may make our
initial business combination more costly or difficult to conclude. This is because the shareholders of the target business may
increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on
the market price of our Class A common stock that is expected when the common stock owned by our initial stockholders, holders
of our private placement warrants or holders of our working capital loans or their respective permitted transferees are registered.
Because we are not limited to a particular industry, sector
or any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits
or risks of any particular target business’ operations.
Although we expect to focus our search
for a target business in the travel and leisure industry, we may seek to complete a business combination with an operating company
in any industry or sector. However, we will not, under our amended and restated certificate of incorporation, be permitted to
complete our business combination with another blank check company or similar company with nominal operations. To the extent we
complete our 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 revenues 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, there can be
no assurances that we will properly ascertain or assess all 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 who choose to remain stockholders following the business combination
could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Past performance by our management team and KSL Capital Partners
may not be indicative of future performance of an investment in us.
Information regarding performance by, or
businesses associated with our management team and KSL Capital Partners and its affiliates is presented for informational purposes
only. Past performance by our management team and KSL Capital Partners 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. Our officers and directors have not had management experience with special purpose acquisition corporations
in the past. You should not rely on the historical record of our management team’s and KSL Capital Partners’ performance
as indicative of our future performance of an investment in us or the returns we will, or are likely to, generate going forward.
Furthermore, an investment in us is not an investment in KSL Capital Partners.
We have identified a material weakness in our
internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results
of operations and financial condition accurately and in a timely manner.
After discussion with our
independent registered public accounting firm following the issuance of the SEC Staff Statement on April 12, 2021, our management and
our audit committee concluded that, in light of the SEC Staff Statement, it was appropriate to restate our previously issued and audited
financial statements as of and for the years ended December 31, 2020.
Our management is responsible
for establishing and maintaining adequate internal controls over financial reporting designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our
management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes
and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in
this Report, we have identified a material weakness in our internal control over financial reporting related to the accounting for a significant
and unusual transaction related to the warrants we issued in connection with our initial public offering in September 2019. As a result
of this material weakness, our management has concluded that our internal control over financial reporting was not effective as of December 31,
2020. This material weakness resulted in a material misstatement of our warrant liabilities, change in fair value of warrant liabilities,
additional paid-in capital, accumulated deficit and related financial disclosures as of and for the year ended December 31, 2020.
As described in Item 9A. “Controls
and Procedures,” we have concluded that our internal control over financial reporting was ineffective as of December 31, 2020 because
material weaknesses existed in our internal control over financial reporting. We have taken a number of measures to remediate the material
weaknesses described therein; however, if we are unable to remediate our material weaknesses in a timely manner or we identify additional
material weaknesses, we may be unable to provide required financial information in a timely and reliable manner and we may incorrectly
report financial information. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions
or investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities. Failure to timely
file will cause us to be ineligible to utilize short form registration statements on Form S-3 or Form S-4, which may impair our ability
to obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition. In either case, there
could result a material adverse effect on our business. The existence of material weaknesses or significant deficiencies in internal control
over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the
trading price of our stock. In addition, we will incur additional costs to remediate material weaknesses in our internal control over
financial reporting, as described in Item 9A. “Controls and Procedures”.
We can give no assurance that
the measures we have taken and plan to take in the future will remediate the material weakness identified or that any additional material
weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal
control over financial reporting or circumvention of these controls.
We may face litigation and other risks as a
result of the material weakness in our internal control over financial reporting.
Following the issuance of
the SEC Staff Statement, after consultation with our independent registered public accounting firm, our management and our audit committee
concluded that it was appropriate to restate our previously issued audited financial statements as of December 31, 2020 and for the period
from May 24, 2019 (inception) through December 31, 2020. As part of the restatement, we identified a material weakness in our internal
controls over financial reporting.
As a result of such material
weakness, the restatement, the change in accounting for the warrants, and other matters raised or that may in the future be raised by
the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities
laws, contractual claims or other claims arising from the restatement and material weaknesses in our internal control over financial reporting
and the preparation of our financial statements. As of the date of this Report, we have no knowledge of any such litigation or dispute.
However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether
successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability
to complete a business combination.
We may seek business combination opportunities in industries
or sectors which may or may not be outside of our management’s area of expertise.
We will consider a business combination
outside of our management’s area of expertise if a business combination candidate is presented to us and we determine that
such candidate offers an attractive acquisition opportunity for our company. Although our management will endeavor to evaluate
the risks inherent in any particular business combination candidate, there can be no assurances that we will adequately ascertain
or assess all 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. In the event we elect to pursue an acquisition outside of the areas of our management’s
expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information
contained in this report regarding the areas of our management’s expertise would not be relevant to an understanding of the
business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all the significant
risk factors. Accordingly, any stockholders who choose to remain stockholders following our business combination could suffer a
reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria and guidelines
that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination with
a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria
and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our
initial business combination will not have all of these positive attributes. If we complete our initial business combination with
a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable
to complete our initial business combination, our public stockholders may only receive approximately $10.06 per share (based on the
balance of our trust account as of December 31, 2020), or less than such amount in certain circumstances, and our warrants will
expire worthless.
We may seek business combination opportunities with an early
stage company, a financially unstable business or an entity lacking an established record of revenue or earnings, which could subject
us to volatile revenues or earnings or difficulty in retaining key personnel.
To the extent we complete our initial business
combination with an early stage company, a financially unstable business or an entity lacking an established record of revenues
or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks
include investing in a business without a proven business model and with limited historical financial data, volatile revenues
or earnings and difficulties in obtaining and retaining key personnel. 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 the significant risk
factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control
and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion from an independent
investment banking firm or from an independent accounting firm, and consequently, you may have no assurance from an independent
source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our business combination
with an affiliated entity or our board cannot independently determine the fair market value of the target business or businesses,
we are not required to obtain an opinion from an independent investment banking firm that is a member of FINRA or from an independent
accounting firm that the price we are paying is fair to our company from a financial point of view. If no opinion is obtained,
our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards
generally accepted by the financial community. Such standards used will be disclosed in our proxy solicitation or tender offer
materials, as applicable, related to our initial business combination.
We may issue additional common stock or preferred stock to
complete our initial business combination or under an employee incentive plan after completion of our initial business combination.
We may also issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio greater than
one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended
and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely present
other risks.
Our amended and restated certificate of
incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, par value $0.0001 per share, 10,000,000
shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per
share. As of December 31, 2020, there were 72,500,000 and 3,125,000 authorized but unissued shares of Class A common stock
and Class B common stock, respectively, available for issuance, which amount does not take into account the shares of Class A
common stock reserved for issuance upon exercise of any outstanding warrants or the shares of Class A common stock issuable
upon conversion of Class B common stock. There are no shares of preferred stock issued and outstanding. Shares of Class B
common stock are convertible into shares of our Class A common stock initially at a one-for-one ratio but subject to adjustment
as set forth herein, including in certain circumstances in which we issue Class A common stock or equity-linked securities
related to our initial business combination.
We may issue a substantial number of additional
shares of common or preferred stock to complete our initial business combination (including pursuant to a specified future issuance)
or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate
of incorporation provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial
business combination activity). We may also issue shares of Class A common stock to redeem the warrants or upon conversion
of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result
of the anti-dilution provisions contained in our amended and restated certificate of incorporation. However, our amended and restated
certificate of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional
shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote
on any initial business combination. The issuance of additional shares of common or preferred stock may significantly dilute the
equity interest of investors in our initial public offering;
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may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants.
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Resources could be wasted in researching acquisitions that
are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.06 per
share (based on the balance of our trust account as of December 31, 2020), or less than such amount in certain circumstances, and
our warrants will expire worthless.
The investigation of each specific target
business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments requires
substantial management time and attention and substantial costs for accountants, attorneys and others. The cost incurred up to
the point that we decide not to complete a specific initial business combination likely would not be recoverable. Furthermore,
if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for
any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred
which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable
to complete our initial business combination, our public stockholders may only receive approximately $10.06 per share (based on
the balance of our trust account as of December 31, 2020), or less than such amount in certain circumstances, and our warrants
will expire worthless.
Our ability to successfully complete our initial business
combination and to be successful thereafter will be totally dependent upon the efforts of members of our management team, some
of whom may join us following our initial business combination. The loss of such people could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully complete our
business combination is dependent upon the efforts of members of our management team. The role of members of our management team
in the target business, however, cannot presently be ascertained. Although some members of our management team may remain with
the target business in senior management or advisory positions following our business combination, it is likely that some or all
of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage
after our initial business combination, there can be no assurances that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to
have to expend time and resources helping them become familiar with such requirements.
In addition, the officers and directors
of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination
target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role
of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an
acquisition candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Members of our management team may negotiate employment or
consulting agreements with a target business in connection with a particular business combination. These agreements may provide
for them to receive compensation following our business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Members of our management team may be able
to remain with the company after the completion of our business combination only if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation
of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or
our securities for services they would render to us after the completion of the business combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe
the ability of such individuals to remain with us after the completion of our business combination will not be the determining
factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however,
that any members of our management team will remain with us after the completion of our business combination. There can be no assurances
that any members of our management team will remain in senior management or advisory positions with us. The determination as to
whether any members of our management team will remain with us will be made at the time of our initial business combination.
We may have a limited ability to assess the management of
a prospective target business and, as a result, may complete our initial business combination with a target business whose management
may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value
of our stockholders’ investment in us.
When evaluating the desirability of effecting
our initial business combination with a prospective target business, our ability to assess the target business’s management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should
the target’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations
and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain
stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely
to have a remedy for such reduction in value.
Our officers and directors allocate their time to other businesses,
thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest
could have a negative impact on our ability to complete our initial business combination.
The Partners of KSL Capital Partners, including
certain of our directors, have fiduciary responsibility to dedicate substantially all their business time to its affairs and its
portfolio companies and, as a portfolio investment within KSL Capital Partners’ platform, we should receive substantial time
and support from the KSL Capital Partners platform. However, this responsibility does not require any of our officers or directors
to commit his or her full time to our affairs in particular, 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, including other business endeavors
for which he or she may be entitled to substantial compensation. We do not intend to have any full-time employees prior to the
completion of our initial business combination. In addition, certain of our officers and directors are employed by or affiliated
with KSL Capital Partners, which makes investments in securities or other interests of or relating to companies in industries we
may target for our initial business combination. Our independent directors also serve as officers or board members for other entities.
If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs
in excess of their current commitment levels, it could limit their ability to devote time to our affairs, which may have a negative
impact on our ability to complete our initial business combination.
Certain of our officers and directors are now, and all of
them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted
by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business
opportunity should be presented.
Until we consummate our initial business
combination, we will continue to engage in the business of identifying and combining with one or more businesses. Our sponsor and
officers and directors are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles)
that are engaged in a similar business.
Our officers and directors also may become
aware of business opportunities which may be appropriate for presentation to us and the other entities in the future to which they
owe certain fiduciary or contractual duties, including KSL Capital Partners. Accordingly, they may have conflicts of interest in
determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor
and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and
such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
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
(subject to certain approvals and consents) 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, or we may acquire a target business through an
Affiliated Joint Acquisition with one or more affiliates of KSL Capital Partners. We do not have a policy that expressly prohibits
any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons
or entities may have a conflict between their interests and ours.
We may engage in a business combination with one or more
target businesses that have relationships with entities that may be affiliated with our sponsor, officers, directors or existing
holders which may raise potential conflicts of interest.
In light of the involvement of our sponsor,
officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers
or directors. 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 disinterested directors. Despite our agreement to obtain an opinion from an independent
investment banking firm that is a member of FINRA, or from an independent accounting firm, regarding the fairness to our company
from a financial point of view of a business combination with one or more domestic or international businesses affiliated with
our officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the
business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Moreover, we may, at our option, pursue
an Affiliated Joint Acquisition opportunity with an entity affiliated with KSL Capital Partners. Any such parties may co-invest
with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete
the acquisition by making a specified future issuance to any such parties.
Since our sponsor, officers and directors will lose their
entire investment in us if our business combination is not completed, a conflict of interest may arise in determining whether a
particular business combination target is appropriate for our initial business combination.
As of the date of this report, our sponsor,
officers and directors own an aggregate of 6,875,000 founder shares. In addition, our sponsor owns 5,000,000 private placement
warrants, each exercisable into one Class A common stock at a price of $11.50 per share. Such founder shares and private
placement warrants will be worthless if we do not complete an initial business combination.
Holders of founder shares have agreed (A)
to vote any shares owned by them in favor of any proposed business combination and (B) not to redeem any founder shares in connection
with a stockholder vote to approve a proposed initial business combination. In addition, we may obtain loans from our sponsor,
affiliates of our sponsor or an officer or director. The personal and financial interests of our officers and directors may influence
their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing
the operation of the business following the initial business combination.
We may issue notes or other debt securities, or otherwise
incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and
thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the
date of this report to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur
substantial debt to complete our business combination. We have agreed that we will not incur any indebtedness unless we have obtained
from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such,
no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless, the incurrence
of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
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other disadvantages compared to our competitors who have less debt.
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We may only be able to complete one business combination
with the proceeds of our initial public offering and the sale of the 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.
As of December 31, 2020, $267,318,339
was available for completing our initial business combination (which excludes up to approximately $9,625,000 for the payment of
deferred underwriting commission).
We may complete our business combination
with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not
be able to complete our business combination with more than one target business because of various factors, including the existence
of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present
operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By
completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic,
competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible
spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations
in different industries or different areas of a single industry. In addition, we intend to focus our search for an initial business
combination in a single industry. Accordingly, the prospects for our success may be:
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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 developments, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to our business combination.
We may attempt to simultaneously complete business combinations
with multiple prospective targets, which may hinder our ability to complete our business combination and give rise to increased
costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire
several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us,
and delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional
risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if
there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services
or products of the acquired companies in a single operating business. If we are unable to adequately address these risks, it could
negatively impact our profitability and results of operations.
We may attempt to complete our initial business combination
with a private company about which little information is available, which may result in a business combination with a company that
is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we
may seek to complete our initial business combination with a privately held company. Very little public information generally exists
about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination
on the basis of limited information, which may result in a business combination with a company that is not as profitable as we
suspected, if at all.
Our management may not be able to maintain control of a target
business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new
management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure a 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 an interest in the target sufficient for
the post-transaction company not to be required to register as an investment company under the Investment Company Act. We will
not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post
business combination company, depending on valuations ascribed to the target and us in the business combination transaction. For
example, we could pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as
a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction
could own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority
stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s
stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our
control of the target business. We cannot provide assurance that, upon loss of control of a target business, new management will
possess the skills, qualifications or abilities necessary to profitably operate such business.
We do not have a specified maximum redemption threshold.
The absence of such a redemption threshold may make it possible for us to complete a business combination with which a substantial
majority of our stockholders do not agree.
Our amended and restated certificate of
incorporation does not provide a specified maximum redemption threshold, except that we will only redeem our public shares so long
as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation
of our initial business combination and after payment of underwriters’ fees and commissions (such that we are not subject
to the SEC’s “penny stock” rules). As a result, we may be able to complete our 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 business combination
pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers,
directors, advisors or their affiliates. In the event the aggregate cash consideration we would be required to pay for all shares
of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the
business combination or redeem any shares, all shares of 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 complete our initial business combination, we
may seek to amend our amended and restated certificate of incorporation or other governing instruments, including our warrant agreement,
in a manner that will make it easier for us to complete our initial business combination but that our stockholders or warrant holders
may not support.
In order to complete a business combination,
blank check companies have, in the recent past, amended various provisions of their charters and governing instruments, including
their warrant agreement. For example, blank check companies have amended the definition of business combination, increased redemption
thresholds, changed industry focus and, with respect to their warrants, amended their warrant agreements to require the warrants
to be exchanged for cash and/or other securities. There can be no assurances that we will not seek to amend our charter or other
governing instruments or change our industry focus in order to complete 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 65% of our common stock, which is a lower
amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and
restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business combination that
some of our stockholders may not support.
Some other blank check companies have a
provision in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s
pre-business combination activity, without approval by a certain percentage of the company’s stockholders. In those companies,
amendment of these provisions requires approval by between 90% and 100% of the company’s public stockholders. 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 private placement of warrants into the trust account
and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein) may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding provisions
of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our
common stock entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended
by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL
or applicable stock exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated
certificate of incorporation or in our initial business combination. Our initial stockholders, which beneficially own 20% of our
common stock, will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement
and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended
and restated certificate of incorporation which govern our pre-business combination behavior more easily than some other blank
check companies, and this may increase our ability to complete a business combination with which you do not agree. Our stockholders
may pursue remedies against us for any breach of our amended and restated certificate of incorporation. Our sponsor, officers
and directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment to our amended and
restated certificate of incorporation that would affect (i) the substance or timing of our obligation to redeem 100% of our
public shares if we do not complete our initial business combination by September 17, 2021 or (ii) the other provisions relating
to stockholders’ rights or pre-initial business activities, unless we provide our public stockholders with the opportunity
to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable),
divided by the number of then outstanding public shares. These agreements are contained in a letter agreement that we have entered
into with our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries of, these agreements
and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any breach of these
agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject
to applicable law.
We may be unable to obtain additional financing to complete
our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination.
If the net proceeds of our initial public
offering and the sale of the private placement warrants prove to be insufficient to allow us to complete our initial business combination,
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 repurchase 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. There can
be no assurances that such financing will be available on acceptable terms, if at all. To the extent that additional financing
proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure
the transaction or abandon that particular business combination and seek an alternative target business candidate. The failure
to secure additional financing could have a material adverse effect on the continued development or growth of the target business.
None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial
business combination. If we are unable to complete our initial business combination, our public stockholders may only receive approximately
$10.06 per share (based on the balance of our trust account as of December 31, 2020), or less than such amount in certain circumstances,
and our warrants will expire worthless.
Our initial stockholders may exert a substantial influence
on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders own 20% of our
issued and outstanding shares of common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation
and approval of major corporate transactions. If our initial stockholders purchase any units in our initial public offering or
if our initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions,
this would increase their control. Factors that would be considered in making such additional purchases would include consideration
of the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected
by certain of our initial stockholders, is and will be divided into three classes, each of which will generally serve for a term
of three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to
elect new directors prior to the completion of our 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 and our initial stockholders, because
of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will
continue to exert control at least until the completion of our business combination.
We may amend the terms of the warrants in a manner that may
be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding public warrants.
As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares
of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants are issued in registered form
under a warrant agreement between American Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective
provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change
that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public
warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment.
Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public
warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the
warrants, convert the warrants into cash, shorten the exercise period or decrease the number of shares of our Class A common
stock purchasable upon exercise of a warrant.
We may redeem unexpired warrants prior to their exercise
at a time that is disadvantageous to its holder, thereby making the warrants worthless.
We have the ability to redeem outstanding
warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that
the last reported sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending
on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions
are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register
or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants
could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your
warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption,
is likely to be substantially less than the market value of your warrants.
In addition, we may redeem your warrants
after they become exercisable for $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided
that holders will be able to exercise their warrants prior to redemption for a number of shares of Class A common stock to
be determined based on the redemption date and the fair market value of our Class A common stock. Any such redemption may
have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants
are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent increase in the
value of the Class A common stock had your warrants remained outstanding.
Our warrants and founder shares may have an adverse effect
on the market price of our Class A common stock and make it more difficult to complete our business combination.
We issued warrants to purchase 9,166,667
shares of our Class A common stock as part of the units sold in initial public and, simultaneously with the closing of our
initial public offering, we issued private placement warrants to purchase an aggregate of 5,000,000 shares of Class A common
stock at $11.50 per share, subject to adjustment as provided herein. Our initial stockholders currently own 6,875,000 founder shares.
The founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment as set
forth herein. In addition, if our sponsor makes any working capital loans, up to $1,500,000 of such loans may be converted into
warrants, at the price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the private placement
warrants, including as to exercise price, exercisability and exercise period.
To the extent we issue shares of Class A
common stock to complete a business combination, the potential for the issuance of a substantial number of additional shares of
Class A common stock upon exercise of these warrants and conversion rights could make us a less attractive acquisition vehicle
to a target business. Any such issuance will increase the number of issued and outstanding shares of our Class A common stock
and reduce the value of the shares of Class A common stock issued to complete the business combination. Therefore, our warrants
and founder shares may make it more difficult to complete a business combination or increase the cost of acquiring the target business.
The private placement warrants are identical
to the warrants sold as part of the units in our initial public offering except that, so long as they are held by our sponsor or
its permitted transferees, (i) they will not be redeemable by us (except for a number of shares of Class A common stock),
(ii) they (including the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited
exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination
and (iii) they may be exercised by the holders on a cashless basis.
A provision of our warrant agreement may make it more difficult
for use to consummate an initial business combination.
Unlike most blank check companies, if 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, then the exercise price of
the warrants will be adjusted to be equal to 115% of the Newly Issued Price and the $18.00 redemption trigger price will be adjusted
to 180% of the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a
target business.
A market for our securities may not fully develop, which
would adversely affect the liquidity and price of our securities.
The price of our securities may vary significantly
due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market
for our securities may not be sustained. You may be unable to sell your securities unless a market can be fully developed and
sustained.
Because we must furnish our stockholders with target business
financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective
target businesses.
The federal proxy rules require that a proxy
statement with respect to a vote on a business combination meeting certain financial significance tests include target historical
and/or pro forma financial statement disclosure. We will include the same financial statement disclosure in connection with our
tender offer documents, whether or not they are required under the tender offer rules. These financial statements may be required
to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America,
or GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending
on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of
the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool
of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for
us to disclose such financial statements in accordance with federal proxy rules and complete our initial business combination within
the prescribed time frame.
We are an emerging growth company within the meaning of the
Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies,
this could make our securities less attractive to investors and may make it more difficult to compare our performance with other
public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not
limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30
before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot
predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors
find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be
lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our
securities may be more volatile.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The
JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended
transition period, which means that when a standard is issued or revised and it has different application dates for public or private
companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging
growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible
because of the potential differences in accountant standards used.
Compliance obligations under the Sarbanes-Oxley Act may make
it more difficult for us to complete our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley
Act requires that we evaluate and report on our system of internal controls beginning with this Annual Report on Form 10-K.
As long as we maintain our status as an emerging growth company, we will not be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank
check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other
public companies because a target company with which we seek to complete our business combination may not be in compliance with
the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control
of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such acquisition.
Provisions in our amended and restated certificate of incorporation
and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for
our Class A common stock and could entrench management.
Our amended and restated certificate of
incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their
best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate
the terms of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage
transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions
under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
Our amended and restated certificate of incorporation requires,
to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other
employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in
the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to
service of process on such stockholder’s counsel, which may have the effect of discouraging lawsuits against our directors,
officers, other employees or stockholders.
Our amended and restated certificate of
incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our
directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only
in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be
deemed to have consented to service of process on such stockholder’s counsel except any action (A) as to which the Court
of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court
of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days
following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court
of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising
under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have
concurrent jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall
be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This
choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect
to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the
rules and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in our amended
and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our amended and restated certificate of
incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability
created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply
to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have
exclusive jurisdiction.
If we complete our initial business combination with a company
with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively
impact our operations.
If we complete our initial business combination
with a company with operations or opportunities outside of the United States, we would be subject to any special considerations
or risks associated with companies operating in an international setting, including any of the following:
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higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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longer payment cycles and challenges in collecting accounts receivable;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration of political relations with the United States; and
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government appropriations of assets.
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We may not be able to adequately address
these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact our results of operations
and financial condition.
If we acquire an operating company or business in the travel
and leisure industry, our future operations may be subject to risks associated with this sector.
While we may pursue an initial business
combination target in any business or industry, we expect to focus our search on acquiring an operating company or business in
the travel and leisure industry. Because we have not yet identified or approached any specific target business, we cannot provide
specific risks of any business combination. However, risks inherent in investments in this sector may include, but are not limited
to, the following:
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adverse changes in international, national, regional or local economic, demographic and market conditions;
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competition for consumer disposable leisure time dollars;
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competition from other investors in companies and businesses in the travel and leisure industry with significant capital;
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the adverse effects of high fuel costs on the domestic and international travel and leisure industry market;
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fluctuations in interest rates, which could adversely affect our ability to obtain financing on favorable terms or at all;
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the outbreaks of illnesses, or the perceived risk of such outbreaks, in locations where a target business may operate;
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unanticipated increases in operating expenses, including, without limitation, insurance costs, labor costs, construction materials, energy prices and costs of compliance with laws, regulations and governmental policies;
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changes in ownership, maintenance or room rates of, or popular travel patterns and guest demographics in areas where a target business may operate;
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changes in, and changes in enforcement of, laws, regulations and governmental policies, including, without limitation, health, safety, environmental, zoning and tax laws and governmental fiscal policies, and changes in the related costs of compliance with laws, regulations and governmental policies;
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reductions in resort occupancy during major renovations or as a result of damage or other causes;
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the financial condition of the airline industry, as well as elimination of, or reduction in, airline service to locations where a target business may operate facilities;
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litigation and other legal proceedings;
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the ability to effectively adopt or adapt to new or improved technologies;
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the ability to attract and retain highly skilled employees;
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environmental risks, including risks associated with severe weather on the travel and leisure industry; and
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civil unrest, labor strikes, acts of God, including earthquakes, floods and other natural disasters and acts of war or terrorism, which may result in uninsured losses.
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Any of the foregoing could have an adverse
impact on our operations following a business combination. However, our efforts in identifying prospective target businesses will
not be limited to the travel and leisure industry. Accordingly, if we acquire a target business in another industry, these risks
will likely not affect us and we will be subject to other risks attendant with the specific industry in which we operate or target
business which we acquire, none of which can be presently ascertained.
The travel and leisure industry can be significantly adversely
affected by a variety of uncontrollable events.
The environment for travel and tourism can
be significantly adversely affected in the U.S., globally or in specific regions as a result of a variety of factors beyond our
control, including: adverse weather conditions arising from short-term weather patterns or long-term change, catastrophic events
or natural disasters (such as excessive heat or rain, hurricanes, typhoons, floods, tsunamis and earthquakes); health concerns;
international, political or military developments; and terrorist attacks. For example, the recent outbreak of the COVID-19 which
originated in Wuhan, China and has spread throughout China and to other countries, including the United States, may severely disrupt
domestic and international travel. The extent that the COVID-19 outbreak will spread widely and its impact on the travel and leisure
industry will depend on future developments, which are highly uncertain and unpredictable.
If the COVID-19 outbreak lasts for a longer
period than expected, it may impact our ability to search for and acquire a target company. Potential target companies may
defer or end discussions for a potential business combination with us if the COVID-19 virus materially adversely affects their
business operations and, therefore, the valuation of their business. Although this depression in valuation, may assist us
in finding attractive transactions, we may be unable to complete a business combination if continued concerns relating to COVID-19
virus restrict travel or the target company’s personnel, vendors and services providers are unavailable to negotiate and
consummate a transaction in a timely manner. If the disruptions posed by COVID-19 or other matters of global concern continue for
an unexpectedly long period of time, our ability to consummate a business combination may be materially adversely affected.
Our warrants are accounted for as derivative
liabilities and are recorded at fair value with changes in fair value for each period reported in earnings, which may have an adverse
effect on the market price of our common stock or may make it more difficult for us to consummate an initial business combination.
We issued 9,166,667 public
warrants and, simultaneously with the closing of our initial public offering, we issued in a private placement, 5,000,000 private placement
warrants. We are accounting for both the public warrants and the private placement warrants as a warrant liability. At each reporting
period (1) the accounting treatment of the warrants will be re-evaluated for proper accounting treatment as a liability or equity and
(2) the fair value of the liability of the public and private warrants will be remeasured and the change in the fair value of the liability
will be recorded as other income (expense) in our income statement. Changes in the inputs and assumptions for the valuation model we use
to determine the fair value of such liability may have a material impact on the estimated fair value of the embedded derivative liability.
The share price of our common stock represents the primary underlying variable that impacts the value of the liability related to the
warrants, which are accounted for as derivative instruments. Additional factors that impact the value of the warrants as derivative instruments
include the volatility of our stock price, discount rates and stated interest rates. As a result, our consolidated financial statements
and results of operations will fluctuate quarterly, based on various factors, such as the share price of our common stock, many of which
are outside of our control. In addition, we may change the underlying assumptions used in our valuation model, which could in result in
significant fluctuations in our results of operations. If our stock price is volatile, we expect that we will recognize non-cash gains
or losses on our warrants or any other similar derivative instruments each reporting period and that the amount of such gains or losses
could be material. The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock.