Item 1. Business
Overview
We are a blank check company 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 (“Business Combination”). We were formed as Automalyst LLC, a Delaware limited
liability company on March 13, 2018, and converted into a Delaware corporation on August 24, 2020. We consummated an
initial public offering (“Public Offering”) on October 14, 2020.
We intend to use the cash proceeds from
our Public Offering and Private Placement (as defined below) as well as additional issuances, if any, of our capital stock, debt
or a combination of cash, stock and debt, including the Private Investment in a Public Company (“PIPE Investment”),
to complete the Business Combination. We have neither engaged in any operations nor generated any revenue to date. Based on our
business activities, the Company is a “shell company” as defined under the Exchange Act of 1934 (the “Exchange
Act”) because we have no operations and nominal assets consisting almost entirely of cash.
The Company’s management team is
led by Tilman Fertitta, our Co-Chairman and Chief Executive Officer, and Richard Handler, our Co-Chairman and President. Mr. Fertitta
is the sole shareholder, Chairman and Chief Executive Officer of TJF, LLC (“TJF Sponsor”) and Mr. Handler is the
Chief Executive Officer of Jefferies Financial Group Inc. (“JFG Sponsor”), and its largest operating subsidiary, Jefferies
Group LLC, a global investment banking firm. The Company’s sponsors are TJF Sponsor and JFG Sponsor (collectively, the “Sponsors”).
On October 14, 2020 we consummated
a $500,000,000 Public Offering consisting of 50,000,000 units at a price of $10.00 per unit (“Unit”). Each Unit consists
of one share of the Company’s Class A common stock, $0.0001 par value (the “Class A common stock”)
and one-third of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to
purchase one share of Class A common stock at a price of $11.50 per share. Simultaneously, with the closing of the Public
Offering, we consummated a $12,000,000 private placement (the “Private Placement”) of an aggregate of 8,000,000 warrants
(“Sponsor Warrants”) at a price of $1.50 per warrant. The Sponsor Warrants are identical to the Public Warrants sold
as part of the Units in the Public Offering except that, so long as they are held by our Sponsors or their permitted transferees,
(i) they are not redeemable by us, (ii) they (including the Class A common stock issuable upon exercise of these
warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our Sponsors until 30 days after
the completion of our initial Business Combination and (iii) they may be exercised by the holders on a cashless basis.
Prior
to the Public Offering, in 2018, JFG, through a subsidiary, purchased 100% of the membership interest in the Company for $1,000.
On August 24, 2020, TJF purchased 51.7% membership interest in the Company for $1,070. Simultaneously, the Company converted
from a limited liability company to a corporation and its previously outstanding membership interests converted into shares of
Class B common stock. The total number of authorized shares of all classes of capital stock to 401,000,000, of which 380,000,000
shares are Class A common stock; 20,000,000 shares are Class B shares at par value $0.0001 per share (the “Founder
Shares”); and 1,000,000 shares are preferred stock at par value $0.0001 per share. The Sponsors held an aggregate of 11,500,000
Class B shares based on the proportional interest in the Company. On September 16, 2020, the Company conducted a 1:1.25
stock split of the Founder Shares so that a total of 14,375,000 Founder Shares were issued
and outstanding. An aggregate of 1,875,000 Founder Shares were forfeited because the underwriters did not exercise their
over-allotment option. As of December 31, 2020, JFG and TJF owned an aggregate of 12,500,000 Founder Shares based on their
proportional interest in the Company.
Upon the closing of the Public Offering
and Private Placement, $500,000,000 from the net proceeds of the sale of the Units in the Public Offering and the Private Placement
(including $17,500,000 of deferred underwriting commissions) was placed in a U.S.-based trust account maintained by Continental
Stock Transfer & Trust Company, acting as trustee (the “Trust Account”). The Company’s second amended
and restated certificate of incorporation provides that, other than the withdrawal of interest to pay tax obligations, none of
the funds held in the Trust Account will be released until the earliest of: (i) the completion of the Business Combination;
(ii) the redemption of any shares of Class A common stock included in the Units being sold in the Public Offering (“Public
Shares”) properly submitted in connection with a stockholder vote to amend the Company’s second amended and restated
certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares
if the Company does not complete the Business Combination by October 14, 2022 (within 24 months from the closing of the Public
Offering); or (iii) the redemption of the Public Shares if the Company is unable to complete the Business Combination by October 14,
2022, subject to applicable law. The proceeds held in the Trust Account can only be invested in permitted United States “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment
Company Act”), having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. As of December 31,
2020, we had a balance in cash and investments held in trust of $500,078,624. As of December 31, 2020, no funds had been withdrawn
from the Trust Account to pay taxes. We expect to pay our franchise tax liability of $71,388 from the trust earnings in the first
quarter of 2021.
The remaining $12,000,000 held outside
of trust was used to pay underwriting commissions of $10,000,000, loans to our Sponsors, and deferred offering and formation costs.
As of December 31, 2020, we had an unrestricted balance of $1,017,406 to satisfy our working capital purposes.
Proposed Business Combination
On January 24, 2021, our board of
directors, unanimously approved an agreement and plan of merger, dated January 24, 2021, by and among the Company, Helios
Sun Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), HMAN Group Holdings Inc., a Delaware
corporation (“Hillman Holdco”) and CCMP Sellers’ Representative, LLC, a Delaware limited liability company in
its capacity as the Stockholder Representative thereunder (in such capacity, the “Stockholder Representative”) (as
it may be amended and/or restated from time to time, the “Merger Agreement”). If the Merger Agreement is adopted by
our stockholders and the transactions under the Merger Agreement are consummated, Merger Sub will merge with and into Hillman Holdco
with Hillman Holdco surviving the merger as a wholly owned subsidiary of the Company (the “Proposed Transaction”).
Hillman Holdco is a holding company that indirectly holds all of the issued and outstanding capital stock of The Hillman Group, Inc.,
which, together with its direct and indirect subsidiaries (Hillman Holdco, The Hillman Group, Inc. and its direct and indirect
subsidiaries, collectively, “Hillman” and each such entity, a “Hillman Group Entity”), is in the business
of providing hardware-related products and related merchandising services to retail markets in North America. In connection with
the consummation of the Proposed Transaction, the Company will be renamed “Hillman Solutions Corp.” and is referred
to herein as “New Hillman” as of the time following such change of name.
Consummation of the
Proposed Transaction is subject to customary conditions of the respective parties, including the approval of the Merger Agreement,
the Proposed Transaction and certain other actions related thereto by our stockholders and Hillman Holdco’s stockholders,
and the availability of a minimum amount of cash in the Trust Account (and/or from other specified sources, if necessary), after
giving effect to redemptions by the Company’s public stockholders, if any. The Merger Agreement may also be terminated by
either party under certain circumstances.
For additional information
regarding Hillman Holdco, Hillman, the Merger Agreement and the Proposed Transaction, see the Proxy Statement/Prospectus initially
filed by the Company on February 3, 2021.
Other than as specifically
discussed, this report does not assume the closing the Business Combination.
Subscription Agreements
Concurrently with
the execution of the Merger Agreement on January 24, 2021, we entered into the subscription agreements with certain institutional
investors, including JFG Sponsor (the “PIPE Investors”), pursuant to which, among other things, we agreed to issue
and sell in private placements an aggregate of 37,500,000 shares of our Class A common stock to the PIPE Investors for $10.00
per share (the “PIPE Private Placement”).
The PIPE Private Placement
investment is expected to close substantially concurrently with the Closing. In connection with the Closing, all of our issued
and outstanding shares of Class A common stock, including the shares of Class A common stock issued to the PIPE Investors,
will be exchanged, on a one-for-one basis, for shares of New Hillman common stock.
The shares of New
Hillman common stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act in
reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. We will grant the PIPE Investors certain
registration rights in connection with the PIPE Private Placement. The PIPE Private Placement is contingent upon, among other things,
the closing of the Proposed Transaction.
A&R Letter Agreement
In connection with the
execution of the Merger Agreement, the Company, our Sponsors, each member of our Board and each of our executive officers entered
into an amended and restated letter agreement (the “A&R Letter Agreement”). Like the letter agreements entered
into by such persons in connection with our initial public offering or their appointment to the board, pursuant to the A&R
Letter Agreement each of our Sponsors, directors and members of the management team have agreed to (i) waive their redemption
rights with respect to their founder shares (as defined below) and public shares in connection with the completion of the Proposed
Transaction; (ii) waive their redemption rights with respect to their founder shares and public shares in connection with
a stockholder vote to approve an amendment to the second amended and restated certificate of incorporation to modify the substance
or timing of the Company’s obligation to redeem 100% of the public shares if the Company does not complete a Business Combination
by October 14, 2022, or to provide for redemption in connection with a Business Combination and (iii) waive their rights
to liquidating distributions from the Trust Account with respect to their founder shares if the Company fails to complete a Business
Combination by October 14, 2022, although they will be entitled to redemption or liquidating distributions from the Trust
Account with respect to any public shares they hold if the Company fails to complete a Business Combination within the prescribed
time frame; (iv) vote any founder shares held by them and any public shares purchased during or after the IPO (including in
open market and privately-negotiated transactions) in favor of the Proposed Transaction, (v) not to transfer or sell (subject
to certain limited exceptions) (1) the founder shares until the earlier of (A) one year after the completion
of our initial business combination or (B) subsequent to our initial business combination, (x) if the reported closing
price of our Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading-day period commencing at least 150 days after
our initial business combination, or (y) the date on which we complete a liquidation, merger, capital stock exchange, reorganization
or other similar transaction that results in all of our stockholders having the right to exchange their shares of common stock
for cash, securities or other property, or (2) the private placement warrants and the Class A common stock underlying
such warrants, until 30 days after the completion of our initial business combination.
In addition, the A&R Letter Agreement
provides that, at the Closing, (i) our Sponsors will waive any adjustment to the conversion ratio set forth in our governing
documents or any other anti-dilution or similar protection with respect to the shares of Class B common stock (whether resulting
from the PIPE Private Placement or otherwise), and (ii) the Sponsors will forfeit an aggregate of 2,828,000 shares of our
Class B common stock otherwise issuable to them upon conversion of their founder shares and that the TJF Founder will forfeit
an additional 1,000,000 shares of our Class B common stock otherwise issuable to it upon conversion of its founder shares.
Hillman Holdco Voting and Support Agreement
In connection with the execution of the Merger
Agreement, certain Hillman Holdco stockholders (the “Hillman Holdco supporting stockholders”) entered into a voting
and support agreement with the Company. Under the Hillman Holdco voting and support agreement, the Hillman Holdco supporting stockholders
agreed that they will not transfer, and will deliver a written consent with respect to their shares of Hillman Holdco common stock
in favor of the adoption and approval of the Merger Agreement and the transactions contemplated by the Merger Agreement, promptly
following the time at which the registration statement of the shares issuable in connection with the Proposed Transaction shall
have been declared effective.
Registration Rights Agreement
At the Closing, New Hillman, our Sponsors
and the Hillman Holdco supporting stockholders will enter into an Amended and Restated Registration Rights Agreement (the “A&R
Registration Rights Agreement”), pursuant to which, among other things, (i) New Hillman will agree to register for resale,
pursuant to Rule 415 under the Securities Act, certain shares of New Hillman common stock and other equity securities of New
Hillman that are held by the parties thereto from time to time, (ii) our Sponsors and the Hillman Holdco supporting stockholders
will be granted certain registration rights and (iii) our Sponsors will reaffirm the lock-up they agreed to in the A&R
Letter Agreement and the Hillman Holdco supporting stockholders will agree to a lock-up under which they will not sell, for the
period set forth therein, the shares of New Hillman common stock they will receive in the Business Combination.
In addition, the A&R Registration Rights
Agreement will provide for shelf, demand and piggyback registration rights. In addition, the A&R Registration Rights Agreement
will provide that, notwithstanding such registration rights, affiliates of CCMP shall not transfer any securities of New Hillman
for six months following the Closing and each Sponsor shall not transfer its Founder Shares for one year after the Closing,
subject to certain customary expectations.
Effecting Our Initial Business Combination
General
We are not presently engaged in, and we
will not engage in, any operations for an indefinite period of time. We intend to effectuate our initial Business Combination using
cash held in the Trust Account, our equity, debt or a combination of these as the consideration. We may seek to complete our initial
Business Combination with a company or business that may be financially unstable or in its early stages of development or growth,
which would subject us to the numerous risks inherent in such companies and businesses.
If our initial Business Combination is
paid for using equity or debt securities, or not all of the funds released from the Trust Account are used for payment of the consideration
in connection with our initial Business Combination or used for redemptions of our Class A common stock, we may apply the
balance of the cash released to us from the Trust Account for general corporate purposes, including for maintenance or expansion
of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing
our initial Business Combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through
a private offering of debt or equity securities in connection with the completion of our initial Business Combination, and we may
effectuate our initial Business Combination using the proceeds of such offering rather than using the amounts held in the Trust
Account. In addition, we intend to target businesses with enterprise values that are greater than we could acquire with the net
proceeds of the Public Offering and the Private Placement, and, as a result, if the cash portion of the purchase price exceeds
the amount available from the Trust Account, net of amounts needed to satisfy any redemptions by public stockholders, we may be
required to seek additional financing to complete such proposed initial Business Combination. Subject to compliance with applicable
securities laws, we would expect to complete such financing only simultaneously with the completion of our initial Business Combination.
In the case of an initial Business Combination funded with assets other than the Trust Account assets, our proxy materials or tender
offer documents disclosing the initial Business Combination would disclose the terms of the financing and, only if required by
law, we would seek stockholder approval of such financing. There is no limitation on our ability to raise funds through the issuance
of equity or equity-linked securities or through loans, advances or other indebtedness in connection with our initial Business
Combination, including pursuant to forward purchase agreements or backstop agreements. At this time, we are not a party to any
arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities or
otherwise. None of our Sponsors, officers, directors or stockholders are required to provide any financing to us in connection
with or after our initial Business Combination.
Selection of a target business and
structuring of our initial Business Combination
Nasdaq rules require that we must
complete one or more Business Combinations having an aggregate fair market value of at least 80% of the value of the assets held
in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account)
at the time of our signing a definitive agreement in connection with our initial Business Combination. The fair market value of
our initial Business Combination will be determined by our board of directors based upon one or more standards generally accepted
by the financial community, such as a discounted cash flow valuation, a valuation based on trading multiples of comparable public
businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors
is not able to independently determine the fair market value of our initial Business Combination (including with the assistance
of financial advisors), we will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent
accounting firm with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will
not be able to make an independent determination of the fair market value of our initial Business Combination, it may be unable
to do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of
uncertainty as to the value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated
industries in conjunction with our initial Business Combination. Subject to this requirement, our management will have virtually
unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted
to effectuate our initial Business Combination with another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial
Business Combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion
of such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account for
purposes of Nasdaq’s 80% of net assets test.
To the extent we effect our initial Business
Combination with a company or business that may be financially unstable or in its early stages of development or growth we may
be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks
inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risk
factors.
In evaluating a prospective business target,
we expect to conduct a due diligence review, which may encompass, among other things, meetings with incumbent ownership, management
and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial
and other information that will be made available to us.
The time required to select and evaluate
a target business and to structure and complete our initial Business Combination, and the costs associated with this process, are
not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation
of, and negotiation with, a prospective target business with which our initial Business Combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to complete another Business Combination.
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 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 Sponsors, officers and directors
have entered into the A&R 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 initial Business Combination.
Manner of Conducting Redemptions
We will provide our public stockholders
with the opportunity to redeem all or a portion of their Public Shares upon the completion of our initial Business Combination
either (i) in connection with a stockholder meeting called to approve the initial Business Combination or (ii) without
a stockholder vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial
Business Combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of
factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval
under applicable law or stock exchange listing requirements. Asset acquisitions and stock purchases would not typically require
stockholder approval while direct mergers with our Company where we do not survive and any transactions where we issue more than
20% of our outstanding common stock or seek to amend our second amended and restated certificate of incorporation would require
stockholder approval. So long as we obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with
Nasdaq’s shareholder approval rules. We currently intend to hold a stockholder meeting to approve the Proposed Transaction.
The requirement that we provide our public
stockholders with the opportunity to redeem their Public Shares by one of the two methods listed above is contained in provisions
of our second amended and restated certificate of incorporation and apply whether or not we maintain our registration under the
Exchange Act or our listing on Nasdaq. Such provisions may be amended if approved by holders of 65% of our common stock entitled
to vote thereon.
If we provide our public stockholders with
the opportunity to redeem their Public Shares in connection with a stockholder meeting, as we plan to do in connection with the
Proposed Transaction, we will:
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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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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:
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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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Submission of our Initial Business Combination
to a Stockholder Vote
If we seek stockholder approval, as
we currently intend to do for the Proposed Transaction, we will complete our initial Business Combination only if a majority
of the outstanding shares of common stock voted are voted in favor of the initial Business Combination. A quorum for such
meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the Company
representing a majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote at
such meeting. Our Sponsors will count towards this quorum and, pursuant to the A&R Letter Agreement, our Sponsors,
officers and directors have agreed to vote their Founder Shares and any Public Shares purchased during or after the Public
Offering (including in open market and privately-negotiated transactions) in favor of our initial Business Combination. For
purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect
on the approval of our initial Business Combination once a quorum is obtained. As a result, in addition to our
Sponsors’ Founder Shares and Public Shares they have purchased, we would need only 17,250,001, or 34.5%, of the 50,000,000 Public Shares sold in the Public
Offering to be voted in favor of an initial Business Combination (assuming all outstanding shares are voted) in order to have
our initial Business Combination approved. We intend to give 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
Sponsors, 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 initial Business Combination or whether they
were a stockholder on the record date for the stockholder meeting held to approve the initial Business Combination.
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, as we currently intend to do in connection with the Proposed Transaction,
and we do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, our second
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 the Public Offering, which we refer to as the “Excess Shares.” Such restriction shall also be applicable to
our affiliates. We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent
attempts by such holders to use their ability to exercise their redemption rights against a proposed initial Business Combination
as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or
on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold
in the 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 more than 15% of the shares sold in the Public Offering without our prior consent, we believe we will limit the
ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial Business Combination,
particularly in connection with an initial Business Combination with a target that requires as a closing condition that we have
a minimum net worth or a certain amount of cash. However, we will not restrict our stockholders’ ability to vote all of their
shares (including Excess Shares) for or against our initial Business Combination.
Redemption of Public Shares and Liquidation
if no Initial Business Combination
Our second amended and restated certificate
of incorporation provides that we have until October 14, 2022 (24 months from the closing of the Public Offering) to complete
our initial Business Combination. If we are unable to complete our initial Business Combination within such period, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business
days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account including interest 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 initial Business Combination within the 24-month time period.
Competition
In identifying, evaluating and selecting
a target business for our Business Combination, we may encounter intense competition from other entities having a business objective
similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses
seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting
Business Combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than us. Our ability to acquire larger target businesses is limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation
to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available
to us for our initial Business Combination and our outstanding warrants, and the future dilution they potentially represent, may
not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully
negotiating an initial Business Combination.
Facilities
We currently maintain our executive offices
at 1510 West Loop South, Houston, Texas 77027. The cost for this space is included in the $20,000 per month fee that we pay Fertitta
Entertainment, Inc., (an affiliate of TJF Sponsor) for office space, utilities and secretarial and administrative services.
We consider our current office space adequate for our current operations.
Employees
We currently have five officers. Members
of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much
of their time as they deem necessary to our affairs until we have completed our initial Business Combination. The amount of time
they devote in any time period will vary based on whether a target business has been selected for our initial Business Combination
and the stage of the 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.
Available Information
We are required to file Annual Reports
on Form 10-K and Quarterly Reports on Form 10-Q with the U.S. Securities and Exchange Commission (the “SEC”)
on a regular basis, and are required to disclose certain material events in a Current Report on Form 8-K. The public may read
and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549.
The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that
file electronically with the SEC. The SEC’s Internet website is located at http://www.sec.gov.
Risk Factors Summary
An investment in our securities involves
a high degree of risk and uncertainties. You should consider carefully all of the risks described below, together with the other
information contained in this prospectus, before making a decision to invest in our units. If any of the following events
occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading
price of our securities could decline, and you could lose all or part of your investment. Such risks include, but are not limited
to:
• We are a blank check company
with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business
objective.
• Our public stockholders may
not be afforded an opportunity to vote on our proposed initial business combination, and even if we held a vote, holders of
our founder shares will participate in such vote, which means we may complete our initial Business Combination even though a
majority of our public stockholders do not support such a combination.
• If we seek stockholder
approval of our initial business combination, our sponsors and members of our management team have agreed to vote in favor of
such initial Business Combination, regardless of how our public stockholders vote.
• Your only opportunity to
affect the investment decision regarding a potential Business Combination may be limited to the exercise of your redemption
rights, unless we seek stockholder approval of the initial Business Combination.
• The ability of our public
stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination
targets, which may make it difficult for us to enter into an initial Business Combination with a target.
• 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.
• The ability of our public
stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that
our initial Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem
your stock.
• The requirement that we
complete our initial Business Combination within 24 months after the closing of our initial public offering may give
potential target businesses leverage over us in negotiating a Business Combination and may decrease the time we have in which
to conduct due diligence on potential Business Combination targets, in particular as we approach our dissolution deadline,
which could undermine our ability to complete our initial Business Combination on terms that would produce value for our
stockholders.
• Our search for a Business
Combination, and any target business with which we ultimately consummate a Business Combination, may be materially adversely
affected by the coronavirus (COVID-19) pandemic and the status of debt and equity markets.
• We may not be able to complete
our initial Business Combination within 24 months after the closing of our initial public offering, in which case we
would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which
case our public stockholders may receive only $10.00 per share, or less than such amount in certain circumstances, and our
warrants will expire worthless..
• If we seek stockholder
approval of our initial Business Combination, our sponsors, directors, officers, advisors and their affiliates may elect to
purchase public shares or warrants, which may influence a vote on a proposed initial Business Combination and reduce the
public “float” of our Class A common stock or public warrants.
• Since our sponsors, officers
and directors will lose their entire investment in us if our initial Business Combination is not completed, a conflict of
interest may arise in determining whether a particular Business Combination target is appropriate for our initial Business
Combination.
• If a stockholder fails to
receive notice of our offer to redeem our public shares in connection with our initial Business Combination, or fails to
comply with the procedures for submitting or tendering its shares, such shares may not be redeemed.
• Because of our limited
resources and the significant competition for Business Combination opportunities, it may be more difficult for us to complete
our initial Business Combination. If we are unable to complete our initial Business Combination within the prescribed time
period, our public stockholders may receive only approximately $10.00 per public share, or less in certain circumstances, on
the liquidation of our Trust Account 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 for the 24 months after the closing of this offering, it could limit the amount available to fund
our search for a target business or businesses and our ability to complete our initial Business Combination, and we will
depend on loans from our sponsors, their affiliates or members of our management team to fund our search and to complete our
initial Business Combination.
• You will not have any rights
or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your
investment, you may be forced to sell your public shares or warrants, potentially at a loss.
• You will not be entitled to
protections normally afforded to investors of many other blank check companies.
• 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.
• 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.
For risk factors related to the Proposed Transaction, see
the Proxy Statement/Prospectus initially filed by us on February 3, 2021.
Item 1A. Risk Factors
An investment in our securities involves
a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained
in this Annual Report on Form 10-K and the prospectus associated with our initial public offering, before making a decision
to invest in our securities. If any of the following events occur, our business, financial condition and operating results may
be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part
of your investment. For risk factors related to the Proposed Transaction, see the Proxy Statement/Prospectus initially filed by
us on February 3, 2021.
Forward-looking statements are based on
our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance
that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number
of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance
to be materially different from those expressed or implied by these forward-looking statements. Our forward-looking statements
include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions
or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations
of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intends,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “would” and similar expressions may identify forward-looking statements,
but the absence of these words does not mean that a statement is not forward-looking. Factors that might cause or contribute to
such forward-looking statements include, but are not limited to, those set forth herein and should be read in conjunction with
our financial statements and related notes thereto included elsewhere in this report.
We are a blank check company with
no operating history and no revenues, and our stockholders have no basis on which to evaluate our ability to achieve our business
objective.
We are a blank check company with no operating
results. Because we lack an operating history, our stockholders have no basis upon which to evaluate our ability to achieve our
business objective of completing our initial Business Combination with one or more target businesses. Except for the Proposed Transaction,
we have no plans, arrangements or understandings with any prospective target business concerning a Business Combination and may
be unable to complete our initial Business Combination. If we fail to complete our initial Business Combination, we will never
generate any operating revenues.
Our public stockholders may not be
afforded an opportunity to vote on our proposed initial Business Combination, and even if we hold a vote, holders of our Founder
Shares will participate in such vote, which means we may complete our initial Business Combination even though a majority of our
public stockholders do not support such a combination.
We may choose not to hold a stockholder
vote to approve our initial Business Combination unless the initial Business Combination would require stockholder approval under
applicable law or stock exchange listing requirements. In such case, the decision as to whether we will seek stockholder approval
of a proposed initial Business Combination or will allow stockholders to sell their shares to us in a tender offer will be made
by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the
terms of the transaction would otherwise require us to seek stockholder approval. Even if we seek stockholder approval, the holders
of our Founder Shares will participate in the vote on such approval. Accordingly, we may complete our initial Business Combination
even if holders of a majority of our outstanding Public Shares do not approve of the initial Business Combination we complete.
If we seek stockholder approval of
our initial Business Combination, our Sponsors have agreed to vote in favor of such initial Business Combination, regardless of
how our public stockholders vote.
Pursuant to the A&R Letter Agreement,
our Sponsors, officers and directors have agreed to vote their Founder Shares, as well as any Public Shares purchased (including
in open market and privately-negotiated transactions), in favor of our initial Business Combination. As a result, in addition to
our Sponsors’ Founder Shares and the Public Shares they have purchased, we would need only 17,250,001, or 34.5%, of the 50,000,000
Public Shares to be voted in favor of an initial Business Combination (assuming all outstanding shares are voted) in order to have
our initial Business Combination approved. Our Sponsors own shares representing 22.4% of our outstanding shares of common stock.
Accordingly, if we seek stockholder approval of our initial Business Combination, the agreement by our Sponsors, officers and directors
to vote in favor of our initial Business Combination will increase the likelihood that we will receive the requisite stockholder
approval for such initial Business Combination.
Our stockholders’ only opportunity
to affect the investment decision regarding a potential Business Combination will be limited to the exercise of their redemption
rights, unless we seek stockholder approval of the initial Business Combination.
If we do not seek stockholder approval,
our stockholders’ only opportunity to affect the investment decision regarding a potential business combination may be limited
to exercising their redemption rights in connection with the closing of our initial Business Combination.
The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which
may make it difficult for us to enter into an agreement for an initial Business Combination with a target.
We may seek to enter into an initial Business
Combination agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain
amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition
and, as a result, would not be able to proceed with the initial Business Combination. Furthermore, in no event will we redeem our
Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial
Business Combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible
asset or cash requirement that 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 consummation
of our initial Business Combination or such greater amount necessary to satisfy a closing condition as described above, we would
not proceed with such redemption and the related Business Combination and may instead search for an alternate Business Combination.
Prospective targets will be aware of these risks and, thus, may be reluctant to enter into an initial Business Combination agreement
with us.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable Business
Combination or optimize our capital structure.
At the time we enter into an agreement
for our initial Business Combination, we will not know how many stockholders may exercise their redemption rights, and therefore
will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption.
If our initial Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase
price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the Trust Account
to meet such requirements, or arrange for third-party financing. In addition, if a larger number of shares are submitted for redemption
than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account
or arrange for third-party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution
provision of the Founder Shares results in the issuance of Class A shares on a greater than one-to-one basis upon conversion
of the Founder Shares at the time of our Business Combination. The above considerations may limit our ability to complete the most
desirable Business Combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions
payable to the underwriters is not required to be adjusted for any shares that are redeemed in connection with an initial Business
Combination. The per-share amount we will distribute to stockholders who properly exercise their redemption rights will not be
reduced by deferred underwriting commissions 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 our public stockholders would have to wait for liquidation in order to redeem their
stock.
If our initial Business Combination agreement
requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, the probability that our initial Business Combination would be unsuccessful is increased. If our initial Business
Combination is unsuccessful, our public stockholders would not receive their pro rata portion of the Trust Account until
we liquidate the Trust Account. If our 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, our public stockholders may suffer a material loss on their investment or lose the benefit
of funds expected in connection with their exercise of redemption rights until we liquidate or they are able to sell their stock
in the open market.
The requirement that we complete
our initial Business Combination by October 14, 2022, may give potential target businesses leverage over us in negotiating
an initial Business Combination and may decrease our ability to conduct due diligence on potential business combination targets,
in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial Business Combination
on terms that would produce value for our stockholders.
Any potential target business with which
we enter into negotiations concerning an initial Business Combination will be aware that we must complete our initial Business
Combination by October 14, 2022. Consequently, such target business may have leverage over us in negotiating an initial Business
Combination, knowing that if we do not complete our initial Business Combination with that particular target business, we may be
unable to complete our initial Business Combination with any target business. This risk will increase as we get closer to the timeframe
described above. In addition, we may have limited time to conduct due diligence and may enter into our initial Business Combination
on terms that we would have rejected upon a more comprehensive investigation.
Our search for a business combination, and any target
business with which we ultimately consummate a business combination, may be materially adversely affected by the recent coronavirus
(COVID-19) outbreak and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus was reported
to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including
the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19)
a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary
Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to
COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. The
COVID-19 outbreak has, and a significant outbreak of other infectious diseases could result in a widespread health crisis that
could adversely affect the economies and financial markets worldwide, and the operations and financial position of any potential
target business with which we consummate a business combination could be materially and adversely affected. Furthermore, we may
be unable to complete a business combination if ongoing concerns relating to COVID-19 continue to restrict travel; limit the ability
to have meetings with potential investors or the target company’s personnel; or prevent vendors and services from being able
to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination
will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge
concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed
by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination,
or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely
affected.
In addition, our ability to consummate a transaction may be
dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including as a
result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable
to us or at all.
We may not be able to complete our
initial Business Combination by October 14, 2022, 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 which case our public stockholders may receive only $10.00 per share,
or less than such amount in certain circumstances, and our warrants will expire worthless.
Our second amended and restated certificate
of incorporation provides that we must complete our initial Business Combination by October 14, 2022 (within 24 months from
the closing of the Public Offering). 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, political considerations, 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 10 business days thereafter, redeem the Public Shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest 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 receive
only $10.00 per share, and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less
than $10.00 per share on the redemption of their shares. See “—If third parties bring claims against us, the proceeds
held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00
per share” and other risk factors below.
If we seek stockholder approval of
our initial Business Combination, our Sponsors, directors, officers, advisors and their affiliates may elect to purchase shares
or warrants from public holders, which may influence a vote on a proposed initial Business Combination and reduce the public “float”
of our Class A common stock or public warrants.
If we seek stockholder approval of our
initial Business Combination and we do not conduct redemptions in connection with our initial Business Combination pursuant to
the tender offer rules, our Sponsors, directors, officers, advisors or their affiliates may purchase shares or public warrants
or a combination thereof, in privately-negotiated transactions or in the open market, either prior to or following the completion
of our initial Business Combination, although they are under no obligation to do so. However, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None
of the funds in the Trust Account will be used to purchase shares or public warrants in such transactions.
Such a purchase may include a contractual
acknowledgement that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof
and therefore agrees not to exercise its redemption rights. In the event that our Sponsors, directors, officers, advisors or their
affiliates purchase shares in privately-negotiated transactions from public stockholders who have already elected to exercise their
redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose
of such purchases could be to vote such shares in favor of the initial Business Combination and thereby increase the likelihood
of obtaining stockholder approval of the initial Business Combination, or to satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial Business Combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be
to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for
approval in connection with our initial Business Combination. Any such purchases of our securities may result in the completion
of our initial Business Combination that may not otherwise have been possible. Any such purchases will be reported pursuant to
Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
In addition, if such purchases are made,
the public “float” of our Class A common stock or public warrants and the number of beneficial holders of our
securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities
on a national securities exchange.
If a stockholder fails to receive
notice of our offer to redeem our Public Shares in connection with our initial Business Combination, or fails to comply with the
procedures for submitting or tendering its shares, such shares may not be redeemed.
We will comply with the proxy rules or
tender offer rules, as applicable, when conducting redemptions in connection with our initial Business Combination. Despite our
compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable, such
stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents,
as applicable, that we will furnish to holders of our Public Shares in connection with our initial Business Combination will describe
the various procedures that must be complied with in order to validly tender or submit Public Shares for redemption. For example,
we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold
their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer
agent, or to deliver their shares to our transfer agent electronically prior to the date set forth in the proxy materials or tender
offer documents, as applicable. In the case of proxy materials, this date may be up to two business days prior to the vote on the
proposal to approve the initial Business Combination. In addition, if we conduct redemptions in connection with a stockholder vote,
we intend to require a public stockholder seeking redemption of its Public Shares to also submit a written request for redemption
to our transfer agent two business days prior to the vote in which the name of the beneficial owner of such shares is included.
In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials,
as applicable, its shares may not be redeemed.
Our stockholders do not have any
rights or interests in funds from the Trust Account, except under certain limited circumstances. To liquidate their investment,
therefore, stockholders may be forced to sell their Public Shares or warrants, potentially at a loss.
Our public stockholders are entitled to
receive funds from the Trust Account only upon the earliest to occur of: (i) our completion of an initial Business Combination,
and then only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject
to the limitations described herein, (ii) the redemption of any Public Shares properly submitted in connection with a stockholder
vote to amend our second 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 October 14, 2022, or to provide
for redemption in connection with a Business Combination and (iii) the redemption of our Public Shares if we are unable to
complete an initial Business Combination by October 14, 2022, subject to applicable law and as further described herein. In
addition, if our plan to redeem our Public Shares if we are unable to complete an initial Business Combination by October 14,
2022, is not completed 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 24 months from the closing of the public offering before they receive funds from our Trust Account.
In no other circumstances will a public stockholder have any right or interest of any kind in the Trust Account. Holders of warrants
will not have any right to the proceeds held in the Trust Account with respect to the warrants. Accordingly, to liquidate their
investment, 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 securities are listed on Nasdaq. There
can be no assurance 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, following our initial public offering, 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 $4.0 million, we would be required to have a minimum
of 300 round lot holders of our securities and we would be required to have a market value of listed securities of $50.0
million There can be no assurance 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.” Our units, Class A common stock and warrants, are covered securities.
Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate
companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or
bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit
or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators
view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered
securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our
initial Business Combination.
Our stockholders are not entitled
to protections normally afforded to investors of many other blank check companies.
We are a “blank check” company
under the U.S. securities laws. However, because we have net tangible assets in excess of $5,000,000, we are exempt from rules promulgated
by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors are not afforded the benefits
or protections of those rules. Among other things, this means we will have a longer period of time to complete our initial Business
Combination than companies subject to Rule 419. Moreover, if the Public Offering had been subject to Rule 419, that rule would
prohibit the release of any interest earned on funds held in the Trust Account to us unless and until the funds in the Trust Account
were released to us in connection with our completion of an initial Business Combination.
If we seek stockholder approval of
our initial Business Combination and we do not conduct redemptions pursuant to the tender offer rules, and if a stockholder or
a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, they 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 second 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), is restricted from seeking redemption rights with respect to more than
an aggregate of 15% of the shares sold in the Public Offering without our prior consent, which we refer to as the “Excess
Shares.” However, we will not restrict our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our initial Business Combination. Our stockholders’ inability to redeem their Excess Shares will reduce their
influence over our ability to complete our initial Business Combination and stockholders could suffer a material loss on their
investment in us if they sell Excess Shares in open market transactions. Additionally, our stockholders will not receive redemption
distributions with respect to the Excess Shares if we complete our initial Business Combination. And as a result, stockholders
will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell their
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
$10.00 per share on our redemption of our Public Shares, or less than such amount in certain circumstances, and our warrants will
expire worthless.
We expect to encounter competition from
other entities having a business objective similar to ours, including private investors (which may be individuals or investment
partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses
we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying
and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many
of these competitors possess similar or greater technical, human and other resources to ours, and our financial resources will
be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses
we could potentially acquire with the net proceeds of the 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. Any of these obligations may place us at a competitive disadvantage in successfully
negotiating an initial Business Combination. If we are unable to complete our initial Business Combination, our public stockholders
may receive only approximately $10.00 per share on the liquidation of our Trust Account and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation. See “—If
third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and other risk factors below.
If the net proceeds of the 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 October 14, 2022, we may be unable to complete our initial Business Combination, in which case our public stockholders
may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
The funds available to us outside of the
Trust Account may not be sufficient to allow us to operate until October 14, 2022, assuming that our initial Business Combination
is not completed during that time. We believe the funds available to us outside of the Trust Account will be sufficient to allow
us to operate until October 14, 2022; however, there can be no assurance that our estimate is accurate. Of the funds available
to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target
business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions
with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed initial
Business Combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement
where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds
(whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due
diligence with respect to, a target business. If we are required to seek additional capital, we would need to borrow funds from
our Sponsors, management team or other third parties to operate or may be forced to liquidate. None of our Sponsors, members of
our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such
advances would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our initial
Business Combination. Up to $1,500,000 of such loans may be convertible into private placement-equivalent warrants at a price of
$1.50 per warrant at the option of the lender. Prior to the completion of our initial Business Combination, we do not expect to
seek advances or loans from parties other than our Sponsors or an affiliate of one of our Sponsors 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, our public stockholders may receive only approximately $10.00 per share on the liquidation of
our Trust Account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than
$10.00 per share upon our liquidation. See “—If third parties bring claims against us, the proceeds held in the Trust
Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share”
and other risk factors below.
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, and which
could cause stockholders to lose some or all of their investment.
Even if we conduct extensive due diligence
on a target business with which we combine, there can be no assurance that this diligence will identify all material issues that
may be present within a particular target business, that it would be possible to uncover all material issues through a customary
amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result
of these factors, we may be forced to later write-down or write-off assets, restructure our operations or incur impairment or other
charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even
though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of
this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may
cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a
target business or by virtue of our obtaining debt financing to partially finance the initial Business Combination or thereafter.
Accordingly, any stockholders who choose to remain stockholders following the initial Business Combination could suffer a reduction
in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
If third parties bring claims against
us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share.
Our placing of funds in the Trust Account
may not protect those funds from third-party claims against us. Although we seek to have all vendors, service providers, prospective
target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or
claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders, such parties may not
execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the Trust
Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well
as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against
our assets, including the funds held in the Trust Account. If any third party refuses to enter into an agreement waiving such claims
to the monies held in the Trust Account, the Company’s management will consider whether competitive alternatives are reasonably
available to the Company, and will only enter into an agreement with such third party if the Company’s management believes
that such third party’s engagement would be in the best interests of the Company under the circumstances. Marcum LLP, our
independent registered public accounting firm, and the underwriters of the offering, have not executed agreements with us waiving
such claims to the monies held in the Trust Account.
Examples of possible instances where we
may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise
or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee
that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our Public
Shares, if we are unable to complete our initial Business Combination by October 14, 2022, or upon the exercise of a redemption
right in connection with our initial Business Combination, we will be required to provide for payment of claims of creditors that
were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption
amount received by public stockholders could be less than the $10.00 per share initially held in the Trust Account, due to claims
of such creditors. Pursuant to the letter agreement, which is filed as an exhibit to this report, our Sponsors have agreed that
they will be jointly and severally liable to us if and to the extent any claims by a third party for services rendered or products
sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar
agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00
per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of
the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable; provided
that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and
all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims
under our indemnity of the underwriters of the Public Offering against certain liabilities, including liabilities under the Securities
Act. However, we have not asked our Sponsors to reserve for such indemnification obligations, nor have we independently verified
whether our Sponsors have sufficient funds to satisfy their indemnity 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 public stockholders
would receive such lesser amount per share in connection with any redemption of their Public Shares. Therefore, there can be no
assurance that our Sponsors would be able to satisfy those obligations. None of our officers or directors will indemnify us for
claims by third parties, including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce
the indemnification obligations of our Sponsors, resulting in a reduction in the amount of funds in the Trust Account available
for distribution to our public stockholders.
In the event that the proceeds in the Trust
Account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share held in the
Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per share due to reductions in the value
of the trust assets, in each case net of the interest, which may be withdrawn to pay taxes, and our Sponsors assert that they are
unable to satisfy their obligations or that they have no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our Sponsors to enforce their indemnification obligations.
While we currently expect that our independent
directors would take legal action on our behalf against our Sponsors to enforce their indemnification obligations to us, it is
possible that our independent directors, in exercising their business judgment and subject to their fiduciary duties, may choose
not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent directors to
be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely.
If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account
available for distribution to our public stockholders may be reduced below $10.00 per share.
We may not have sufficient funds
to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers
and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive (and any other persons
who may become an officer or director prior to the initial Business Combination will also be required to waive) any right, title,
interest or claim of any kind in or to any monies in the Trust Account and not to seek recourse against the Trust Account for any
reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we
have sufficient funds outside of the Trust Account or (ii) we consummate an initial Business Combination. Our obligation to
indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for
breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against
our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore,
a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against
our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds
in the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of
punitive damages.
If, after we distribute the proceeds in
the Trust Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court
could seek to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having
breached its fiduciary duty to our creditors and/or having acted in bad faith, 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 initial Business Combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete
our initial Business Combination.
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In addition, we may have imposed upon us
burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily
in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S.
government securities and cash items) on an unconsolidated basis. Our business is to identify and complete an initial Business
Combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses
or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive
investor.
We do not believe that our anticipated
principal activities are subject to the Investment Company Act. To this end, the proceeds held in the Trust Account may only be
invested in U.S. “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. Our securities are not intended for persons who are seeking a return on investments
in government securities or investment securities. The Trust Account is intended as a holding place for funds pending the earliest
to occur of: (i) the completion of our initial Business Combination; (ii) the redemption of any Public Shares properly
submitted in connection with a stockholder vote to amend our second 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 October 14, 2022, or to provide for redemption in connection with a Business Combination; or (iii) absent an initial
Business Combination by October 14, 2022, our return of the funds held in the Trust Account to our public stockholders as
part of our redemption of the Public Shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject
to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional
regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete
an initial Business Combination or may result in our liquidation. If we are unable to complete our initial Business Combination,
our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances described herein, on
the liquidation of our Trust Account and our warrants will expire worthless.
Changes in laws or regulations, or
a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete
our initial Business Combination and results of operations.
We are subject to laws and regulations
enacted by national, regional and local governments. In particular, we are be required to comply with certain SEC and other legal
requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
Those laws and regulations and their interpretation
and application may also change from time to time and those changes could have a material adverse effect on our business, investments
and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could
have a material adverse effect on our business, including our ability to negotiate and complete our initial Business Combination
and results of operations.
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 Delaware General Corporations
Law (“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 October 14, 2022,
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 May 2021, the 24th month from the closing of the Public Offering in the event we do not complete our
initial Business Combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not be complying with Section 280,
Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for
our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following
our dissolution. However, because we are a blank check company, rather than an operating company, and our operations are limited
to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers,
investment bankers, etc.) or prospective target businesses. 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 assurance 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 October 14, 2022, is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings
that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL,
the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead
of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting
of stockholders until after the consummation of our initial Business Combination, which could delay the opportunity for our stockholders
to elect directors.
In accordance with Nasdaq corporate governance
requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following
our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders
for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of
such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial
Business Combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual
meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial Business Combination,
they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of
the DGCL.
Our sponsors, as the holders of our Class B common
stock, will have the right to elect all of our directors prior to our initial business combination, which could delay the opportunity
for our stockholders to elect directors.
The holders of the Class B common stock have the right
to elect all of our directors prior to our initial business combination. Accordingly, we do not expect to hold an annual meeting
of stockholders to elect new directors prior to the consummation of our initial business combination.
We have not registered the shares
of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this
time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from
being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not
registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise
such warrant and such warrant may have no value and expire worthless.
We have not registered the shares of Class A
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However,
under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than 15 business days
after the closing of our initial Business Combination, we will use our best efforts to file with the SEC a registration statement
for the registration under the Securities Act of the shares of Class A common stock issuable upon exercise of the warrants
and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial Business
Combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants,
until the expiration of the warrants in accordance with the provisions of the warrant agreement. There can be no assurance that
we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set
forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are
not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered
under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant
will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise
their warrants, unless the issuance of the shares upon such exercise are registered or qualified under the securities laws of the
state of the exercising holder, or an exemption from registration is available. Notwithstanding the foregoing, if a registration
statement covering the Class A common stock issuable upon exercise of the warrants is not effective within a specified period
following the consummation of our initial Business Combination, warrantholders may, until such time as there is an effective registration
statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on
a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act; provided
that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise
their warrants on a cashless basis. In no event will we be required to net cash settle any warrant, or issue securities or other
compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants
under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the
warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be
entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired
their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of Class A
common stock included in the units. If and when the warrants become redeemable by us, we may not exercise our redemption right
if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under
applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register
or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants
were initially offered by us in the Public Offering. However, there may be instances in which holders of our public warrants may
be unable to exercise such public warrants but holders of our private warrants may be able to exercise such private warrants.
If our stockholders exercise their
public warrants on a “cashless basis,” they will receive fewer shares of Class A common stock from such exercise
than if they were to exercise such warrants for cash.
Under the following circumstances, the
exercise of the public warrants may be required or permitted to be made on a cashless basis: (i) if a registration statement
covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day
after the closing of our initial Business Combination, warrantholders may, until such time as there is an effective registration
statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on
a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption; (ii) if
our common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies
the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option,
require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of
the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement;
and (iii) if we call the public warrants for redemption, our management will have the option to require all holders that wish
to exercise warrants to do so on a cashless basis. In the event of an exercise on a cashless basis, a holder would pay the warrant
exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained
by dividing (x) the product of the number of shares of Class A common stock underlying the warrants multiplied by the
excess of the “fair market value” (as defined in the next sentence) over the exercise price of the warrants by (y) the
fair market value. The “fair market value” is the average reported closing price of the Class A common stock for
the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant
agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, stockholders would receive
fewer shares of Class A common stock from such exercise than if they were to exercise such warrants for cash.
The grant of registration rights
to our Sponsors 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 a registration rights agreement
entered into concurrently with our initial public offering, our Sponsors and their permitted transferees can demand that we register
the resale of private placement warrants, the shares of Class A common stock issuable upon exercise of the Founder Shares
and the private placement warrants held, or to be held, by them and holders of warrants that may be issued upon conversion of working
capital loans may demand that we register the resale of such warrants or the Class A common stock issuable upon exercise of
such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number
of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock.
In addition, the existence of the registration rights may make our initial Business Combination more costly or difficult to conclude.
This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for
more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when
the securities owned by our Sponsors or holders of working capital loans or their respective permitted transferees are registered
for resale.
Because we are not limited to evaluating
a target business in a particular industry sector or any specific target businesses with which to pursue our initial Business Combination,
stockholders will be unable to ascertain the merits or risks of any particular target business’s operations.
We will seek to complete an initial Business
Combination with companies in the dining, hospitality, entertainment and gaming industries but may also pursue other Business Combination
opportunities, except that we are not, under our second amended and restated certificate of incorporation, permitted to effectuate
our initial Business Combination with another blank check company or similar company with nominal operations. To the extent we
complete our initial Business Combination, we may be affected by numerous risks inherent in the business operations with which
we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development
stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business,
there can be no assurance that we will properly ascertain or assess all of the significant risk factors or that we will have adequate
time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to
control or reduce the chances that those risks will adversely impact a target business. There can be no assurance that an investment
in our securities will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available,
in a Business Combination target. Accordingly, any stockholders who choose to remain stockholders following our initial Business
Combination could suffer a reduction in the value of their securities. Such stockholders are unlikely to have a remedy for such
reduction in value.
Past performance by our management
team and their affiliates may not be indicative of future performance of an investment in the Company.
Information regarding performance by, or
businesses associated with, our management team or businesses associated with them is presented for informational purposes only.
Past performance by our management team is not a guarantee either (i) of success with respect to any Business Combination
we may consummate or (ii) that we will be able to locate a suitable candidate for our initial Business Combination. Stockholders
should not rely on the historical record of the performance of our management team or businesses associated with them as indicative
of our future performance of an investment in the Company or the returns the Company will, or is likely to, generate going forward.
We may seek Business Combination
opportunities in industries or sectors that may or may not be outside of our management’s area of expertise.
Although we intend to focus on identifying
companies in the dining, hospitality, entertainment and gaming industries, we will consider an initial Business Combination outside
of our management’s area of expertise if an initial Business Combination candidate is presented to us and we determine that
such candidate offers an attractive Business Combination opportunity for our company or we are unable to identify a suitable candidate
in this sector after having expanded a reasonable amount of time and effort in an attempt to do so. Although our management will
endeavor to evaluate the risks inherent in any particular Business Combination candidate, there can be no assurance that we will
adequately ascertain or assess all of the significant risk factors. There can be no assurance that an investment in our securities
will not ultimately prove to be less favorable to investors than a direct investment, if such an opportunity were available, in
an initial Business Combination candidate. In the event we elect to pursue a Business Combination outside of the areas of our management’s
expertise, our management’s expertise may not be directly applicable to its evaluation or operation, and the information
contained 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 ascertain or assess adequately all of the relevant
risk factors. Accordingly, any stockholders who choose to remain stockholders following our initial Business Combination could
suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial
Business Combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which
we enter into our initial Business Combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria
and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our
initial Business Combination will not have all of these positive attributes. If we complete our initial Business Combination with
a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a
business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective Business Combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval of
our initial Business Combination if the target business does not meet our general criteria and guidelines. If we are unable to
complete our initial Business Combination, our public stockholders may receive only approximately $10.00 per share, or less in
certain circumstances as described herein, on the liquidation of our Trust Account and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares. See “—If
third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and other risk factors herein.
We may seek Business Combination
opportunities with a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings,
which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete our initial Business
Combination with 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 or with limited historic financial data, volatile revenues or earnings,
intense competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor
to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the relevant
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, stockholders may
have no assurance from an independent source that the price we are paying for the target(s) of our initial Business Combination
is fair to our company from a financial point of view.
Unless we complete our initial Business
Combination with an affiliated entity or our board of directors cannot independently determine the fair market value of the target
business or businesses (including with the assistance of financial advisors), 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 materials or tender offer documents, 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 Founder Shares at a ratio greater than one-to-one at the time of our initial Business Combination as
a result of the anti-dilution provisions contained in our second amended and restated certificate of incorporation. Any such issuances
would dilute the interest of our stockholders and likely present other risks.
Our second amended and restated certificate
of incorporation authorizes the issuance of up to 380,000,000 shares of Class A common stock, par value $0.0001 per share,
20,000,000 shares of Founder Shares, 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 305,333,333 and 7,500,000 authorized but unissued shares of Class A common
stock and Founder Shares, respectively, available for issuance, which amount takes into account the shares of Class A common
stock reserved for issuance upon exercise of outstanding warrants but not the shares of Class A common stock issuable upon
conversion of Founder Shares. As of December 31, 2020, there were no shares of preferred stock issued and outstanding. Shares
of Founder Shares are convertible into shares of our Class A common stock initially at a one-for-one ratio but subject to
adjustment as set forth herein, including in certain circumstances in which we issue Class A common stock or equity-linked
securities related to our initial Business Combination.
We may issue a substantial number of additional
shares of common or preferred stock to complete our initial Business Combination or under an employee incentive plan after completion
of our initial Business Combination (although our second amended and restated certificate of incorporation provides that we may
not issue additional shares of capital stock that would entitle the holders thereof to receive funds from the Trust Account or
vote on any initial Business Combination or on matters related to our pre-initial Business Combination activity. We may also issue
shares of Class A common stock upon conversion of the Founder Shares at a ratio greater than one-to-one at the time of our
initial Business Combination as a result of the anti-dilution provisions contained in our second amended and restated certificate
of incorporation. However, our second 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, (ii) vote on any initial Business Combination or (iii) vote on matters
related to our pre-initial Business Combination activity. These provisions of our second amended and restated certificate of incorporation,
like all provisions of our second amended and restated certificate of incorporation, may be amended with the approval of our stockholders.
However, our executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose
any amendment to our second 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 October 14, 2022, or to provide
for redemption in connection with a Business Combination, unless we provide our public stockholders with the opportunity to redeem
their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the
number of then outstanding Public Shares.
The issuance of additional shares of common
or preferred stock:
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may significantly dilute the equity interest of investors in the 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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Unlike some other similarly structured special purpose
acquisition companies, our Sponsors will receive additional shares of Class A common stock if we issue certain shares to consummate
an initial business combination.
The founder shares will automatically convert into shares of
Class A common stock concurrently with or immediately following the consummation of our initial business combination on a
one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and
subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equitylinked
securities are issued or deemed issued in connection with our initial business combination, the number of shares of Class A
common stock issuable upon conversion of all founder shares will equal, in the aggregate, on an as-converted basis, 20% of the
total number of shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of
shares of Class A common stock by public stockholders), including the total number of shares of Class A common stock
issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued,
by the Company in connection with or in relation to the consummation of the initial business combination, excluding any shares
of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common
stock issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our
sponsor, officers or directors upon conversion of working capital loans, provided that such conversion of founder shares will never
occur on a less than one-for-one basis. This is different than some other similarly structured special purpose acquisition companies
in which the initial stockholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior
to our initial business combination.
Resources could be wasted in researching
Business Combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we are unable to complete our initial Business Combination, our public stockholders may receive
only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our Trust Account
and our warrants will expire worthless.
We anticipate that the investigation of
each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other
instruments will require substantial management time and attention and substantial costs for accountants, attorneys, consultants
and others. If we decide not to complete a specific initial Business Combination, the costs incurred up to that point for the proposed
transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may
fail to complete our initial Business Combination for any number of reasons, including those beyond our control. Any such event
will result in a loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we are unable to complete our initial Business Combination, our public stockholders
may receive only approximately $10.00 per share on the liquidation of our Trust Account and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares. See
“—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share
redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
Our ability to successfully effect
our initial Business Combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel,
some of whom may join us following our initial Business Combination. The loss of key personnel could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully effect our
initial Business Combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business,
however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management
or advisory positions following our initial Business Combination, it is likely that some or all of the management of the target
business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial Business Combination,
there can be no assurance that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar
with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping
them become familiar with such requirements. In addition, the officers and directors of an initial Business Combination candidate
may resign upon completion of our initial Business Combination. The departure of an initial Business Combination target’s
key personnel could negatively impact the operations and profitability of our post-combination business. The role of an initial
Business Combination candidate’s key personnel upon the completion of our initial Business Combination cannot be ascertained
at this time. Although we contemplate that certain members of an initial Business Combination candidate’s management team
will remain associated with the initial Business Combination candidate following our initial Business Combination, it is possible
that members of the management of an initial Business Combination candidate will not wish to remain in place. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
We are dependent upon our officers
and directors and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals and, in particular, our officers and directors. We believe that our success depends on the continued
service of our executive officers and directors, at least until we have completed our initial Business Combination. In addition,
our officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts
of interest in allocating management time among various their business activities, including identifying potential Business Combinations
and monitoring the related due diligence, negotiations and other activities. We do not have an employment agreement with, or key-man
insurance on the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors
or officers could have a detrimental effect on us.
Our key personnel may negotiate employment
or consulting agreements as well as reimbursement of out-of-pocket expenses, if any, with a target business in connection with
a particular Business Combination. These agreements may provide for them to receive compensation or reimbursement for out-of-pocket
expenses, if any, following our initial Business Combination and as a result, may cause them to have conflicts of interest in determining
whether a particular Business Combination is the most advantageous.
Our key personnel may be able to remain
with the Company after the completion of our initial Business Combination only if they are able to negotiate employment or consulting
agreements in connection with the initial Business Combination. Additionally, they may negotiate reimbursement of any out-of-pocket
expenses incurred on our behalf prior to the consummation of our initial Business Combination, should they choose to do so. Such
negotiations would take place simultaneously with the negotiation of the initial Business Combination and could provide for such
individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after
the completion of the initial Business Combination, or as reimbursement for such out-of-pocket expenses. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe
the ability of such individuals to remain with us after the completion of our initial Business Combination will not be the determining
factor in our decision as to whether or not we will proceed with any potential Business Combination. There is no certainty, however,
that any of our key personnel will remain with us after the completion of our initial Business Combination. There can be no assurance
that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any
of our key personnel will remain with us will be made at the time of our initial Business Combination.
We may have a limited ability to
assess the management of a prospective target business and, as a result, may affect our initial Business Combination with a target
business whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn,
negatively impact the value of our stockholders’ investment in us.
When evaluating the desirability of 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 initial Business Combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
Our officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our
affairs. This conflict of interest could have a negative impact on our ability to complete our initial Business Combination.
Our officers and directors are not required
to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between
our operations and our search for an initial Business Combination and their other businesses. We do not intend to have any full-time
employees prior to the completion of our initial Business Combination. Each of our officers is engaged in other business endeavors
for which they may be entitled to substantial compensation and our officers are not obligated to contribute any specific number
of hours per week to our affairs. Our independent directors may also serve as officers or board members for other entities. If
our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs
in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative
impact on our ability to complete our initial Business Combination.
Certain of our officers and directors
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended
to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity
a particular business opportunity should be presented.
Until we complete our initial Business
Combination, we intend to engage in the business of identifying and combining with one or more businesses. Our Sponsors, 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 that may be appropriate for presentation to us and the other entities to which they owe certain
fiduciary or contractual duties.
Accordingly, they may have conflicts of
interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved
in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our second amended
and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director
or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of
our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable
for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another
legal obligation.
Our officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly
prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest
in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact,
we may enter into an initial Business Combination with a target business that is affiliated with our Sponsors, our directors or
officers. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities
of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
The personal and financial interests of
our directors and officers may influence their motivation in timely identifying and selecting a target business and completing
a Business Combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable
target business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular
Business Combination are appropriate and in our stockholders’ best interest. If this were the case, it would be a breach
of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such individuals
for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may make against
them for such reason.
We may engage in an initial Business
Combination with one or more target businesses that have relationships with entities that may be affiliated with our Sponsors,
officers, directors or existing holders that may raise potential conflicts of interest.
In light of the involvement of our Sponsors,
officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our Sponsors, officers
or directors. Our directors also serve as officers and board members for other entities which may compete with us for Business
Combination opportunities. Our Sponsors, officers and directors are not currently aware of any specific opportunities for us to
complete our initial Business Combination with any entities with which they are affiliated, and there have been no discussions
concerning an initial Business Combination with any such entity or entities. Although we will not be specifically focusing on,
or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated
entity met our criteria for an initial 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 the Company and our stockholders from a financial point of view
of an initial 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 initial Business Combination
may not be as advantageous to our public stockholders as they would be absent any conflicts of interest. These risks may become
more acute as the 24-month deadline for the completion of our initial Business Combination approaches.
Since our Sponsors, officers and
directors will lose their entire investment in us if our initial Business Combination is not completed, a conflict of interest
may arise in determining whether a particular Business Combination target is appropriate for our initial Business Combination.
As of December 31, 2020, our Sponsors,
JFG and TJF, owned 48.3% and 51.7%, respectively, of the 12,500,000 issued and outstanding Founder Shares. The number of Founder
Shares issued was determined based on the expectation that such Founder Shares would represent 20% of the outstanding shares after
the Public Offering. The Founder Shares will be worthless if we do not complete an initial Business Combination. In addition, our
Sponsors purchased an aggregate of 8,000,000 Sponsor Warrants at $1.50 per warrants for a total purchase price of $12,000,000.
Each Sponsor Warrant is exercisable for one share of our Class A common stock at $11.50 per share, and will be deemed worthless
if we do not complete an initial Business Combination. Holders of Founder Shares have agreed (i) to vote any shares owned
by them in favor of any proposed initial Business Combination and (ii) 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 Sponsors, affiliates
of our Sponsors or an officer or director. The personal and financial interests of our officers and directors may influence their
motivation in identifying and selecting a target Business Combination, completing an initial Business Combination and influencing
the operation of the business following the initial Business Combination.
We may issue notes or other debt
securities, or otherwise incur substantial debt, to complete an initial Business Combination, which may adversely affect our leverage
and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of December 31,
2020 to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt
to complete our initial Business Combination. We have agreed that we will not incur any indebtedness unless we have obtained from
the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the Trust Account. As such,
no issuance of debt will affect the per-share amount available for redemption from the Trust Account. Nevertheless, the incurrence
of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial Business Combination
are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest
payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable
on demand;
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our inability to obtain necessary additional financing if the debt security contains covenants
restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will
reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures
and acquisitions, and fund other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation;
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, and execution of our strategy; and
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other disadvantages compared to our competitors who have less debt.
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We may be able to complete only one
Business Combination with the proceeds of the Public Offering and Sponsor Warrants, which will cause us to be solely dependent
on a single business, which may have a limited number of products or services and limited operating activities. This lack of diversification
may negatively impact our operating results and profitability.
Of the net proceeds from the Public Offering
and Sponsor Warrants, $500,000,000 may be used to complete our initial Business Combination and pay related fees and expenses (which
includes $17,500,000 for the payment of deferred underwriting commissions being held in the Trust Account).
We may effectuate our initial Business
Combination with a single target business or multiple target businesses simultaneously or within a short period of time. However,
we may not be able to effectuate our initial Business Combination with more than one target business because of various factors,
including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements
with the SEC that present operating results and the financial condition of several target businesses as if they had been operated
on a combined basis. By completing our initial Business Combination with only a single entity, our lack of diversification may
subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to
complete several Business Combinations in different industries or different areas of a single industry. In addition, we intend
to focus our search for an initial Business Combination in a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset, or
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dependent upon the development or market acceptance of a single or limited number of products,
processes or services.
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This lack of diversification may subject
us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our initial Business Combination.
We may attempt to simultaneously
complete Business Combinations with multiple prospective targets, which may hinder our ability to complete our initial Business
Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire
several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other Business Combinations, which may make it more difficult for us,
and delay our ability to complete our initial Business Combination. We do not, however, intend to purchase multiple businesses
in unrelated industries in conjunction with our initial Business Combination. With multiple Business Combinations, we could also
face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these
risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial
Business Combination with a private company about which little information is available, which may result in an initial Business
Combination with a company that is not as profitable as we suspected, if at all.
In pursuing our initial Business Combination,
we may seek to effectuate our initial Business Combination with a privately-held company. Very little public information generally
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial Business
Combination on the basis of limited information, which may result in an initial Business Combination with a company that is not
as profitable as we suspected, if at all.
Our management may not be able to
maintain control of a target business after our initial Business Combination.
We may structure an initial Business Combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests
or assets of a target business, but we will only complete such Business Combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction
that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target,
our stockholders prior to the initial Business Combination may collectively own a minority interest in the post Business Combination
company, depending on valuations ascribed to the target and us in the initial Business Combination. For example, we could pursue
a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of
a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than
a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may
subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s stock
than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control
of the target business. We cannot provide assurance that, upon loss of control of a target business, new management will possess
the skills, qualifications or abilities necessary to profitably operate such business.
We do not have a specified maximum
redemption threshold. The absence of such a redemption threshold may make it possible for us to complete an initial Business Combination
with which a substantial majority of our stockholders do not agree.
Our second amended and restated certificate
of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our Public Shares
in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial Business Combination
and after payment of deferred underwriters’ commissions (such that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial Business
Combination. As a result, we may be able to complete our initial Business Combination even though a substantial majority of our
public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our
initial Business Combination and do not conduct redemptions in connection with our initial Business Combination pursuant to the
tender offer rules, have entered into privately-negotiated agreements to sell their shares to our Sponsors, 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 initial Business Combination exceed the aggregate amount of cash available to us, we will not complete the initial
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 effectuate an initial
Business Combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing
instruments, including their warrant agreements. There can be no assurance that we will not seek to amend our second amended and
restated certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial
Business Combination that our stockholders may not support.
In order to effectuate an initial Business
Combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing
instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination,
increased redemption thresholds, changed industry focus and extended the time to consummate an initial Business Combination and,
with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other
securities. Amending our second amended and restated certificate of incorporation requires the approval of holders of 65% of our
common stock, and amending our warrant agreement requires a vote of holders of at least 50% of the public warrants and, solely
with respect to any amendment to the terms of the private placement warrants or any provision of our warrant agreement with respect
to the private placement warrants, 50% of the number of the then outstanding private placement warrants. In addition, our second
amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem
their Public Shares for cash if we propose an amendment to our second 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 October 14, 2022, or to provide for redemption in connection with a Business Combination. To the extent any such amendments
would be deemed to fundamentally change the nature of any securities offered through this registration statement, we would register,
or seek an exemption from registration for, the affected securities. There can be no assurance that we will not seek to amend our
charter or governing instruments or extend the time to consummate an initial Business Combination in order to effectuate our initial
Business Combination.
The provisions of our second amended
and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of
the agreement governing the release of funds from our Trust Account), including an amendment to permit us to withdraw funds from
the Trust Account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced
or eliminated, may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than
that of some other blank check companies. It may be easier for us, therefore, to amend our second amended and restated certificate
of incorporation and the trust agreement to facilitate the completion of an initial Business Combination that some of our stockholders
may not support.
Our second amended and restated certificate
of incorporation provides that any of its provisions related to pre-initial Business Combination activity (including the requirement
to deposit proceeds of the Public Offering and the private placement of warrants into the Trust Account and not release such amounts
except in specified circumstances, and to provide redemption rights to public stockholders as described herein and including to
permit us to withdraw funds from the Trust Account such that the per share amount investors will receive upon any redemption or
liquidation is substantially reduced or eliminated) may be amended if approved by holders of 65% of our common stock entitled to
vote thereon, and corresponding provisions of the trust agreement governing the release of funds from our Trust Account may be
amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our second 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 second amended and restated certificate of incorporation. Our Sponsors will participate in any
vote to amend our second 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 second amended and restated certificate
of incorporation, which governs our pre-initial Business Combination behavior more easily than some other blank check companies,
and this may increase our ability to complete an initial Business Combination with which our stockholders do not agree. Our stockholders
may pursue remedies against us for any breach of our second amended and restated certificate of incorporation.
Our Sponsors, officers and directors have
agreed, pursuant to a written agreement with us, that they will not propose any amendment to our second 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 October 14, 2022, or to provide for redemption in connection with a Business Combination,
unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval
of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
divided by the number of then outstanding Public Shares. These agreements are contained in a letter agreement that we have entered
into with our Sponsors, 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 Sponsors, officers or directors for any breach of these
agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject
to applicable law.
We may be unable to obtain additional
financing to complete our initial Business Combination or to fund the operations and growth of a target business, which could compel
us to restructure or abandon a particular Business Combination.
We intend to target businesses with enterprise
values that are greater than we could acquire with the net proceeds of the Public Offering and Sponsor Warrants. As a result, if
the cash portion of the purchase price exceeds the amount available from the Trust Account, net of amounts needed to satisfy any
redemption by public stockholders, we may be required to seek additional financing to complete such proposed initial Business Combination.
There can be no assurance that such financing will be available on acceptable terms, if at all. To the extent that additional financing
proves to be unavailable when needed to complete our initial Business Combination, we would be compelled to either restructure
the transaction or abandon that particular Business Combination and seek an alternative target business candidate. Further, we
may be required to obtain additional financing in connection with the closing of our initial Business Combination for general corporate
purposes, including for maintenance or expansion of operations of the post-transaction businesses, the payment of principal or
interest due on indebtedness incurred in completing our initial Business Combination, or to fund the purchase of other companies.
If we are unable to complete our initial Business Combination, our public stockholders may receive only approximately $10.00 per
share plus any pro rata interest earned on the funds held in the Trust Account and not previously released to us to pay
our taxes on the liquidation of our Trust Account and our warrants will expire worthless. In addition, even if we do not need additional
financing to complete our initial Business Combination, we may require such financing to fund the operations or growth of the target
business. The failure to secure additional financing could have a material adverse effect on the continued development or growth
of the target business. None of our Sponsors, officers, directors or stockholders is required to provide any financing to us in
connection with or after our initial Business Combination. If we are unable to complete our initial Business Combination, our public
stockholders may only receive approximately $10.00 per share on the liquidation of our Trust Account, and our warrants will expire
worthless. Furthermore, as described in the risk factor entitled “—If third parties bring claims against us, the proceeds
held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00
per share,” under certain circumstances our public stockholders may receive less than $10.00 per share upon the liquidation
of the Trust Account.
Our Sponsors may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that our public stockholders do not support.
Our Sponsors own shares representing 22.4%
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 our public stockholders do not support, including amendments to our second amended
and restated certificate of incorporation and approval of major corporate transactions. If our Sponsors purchase any additional
shares of common stock in the aftermarket, as they have done in the past, or in privately-negotiated transactions, this would increase
their control. Factors that would be considered in making such additional purchases would include consideration of the current
trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our Sponsors,
is divided into three classes, each of which 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 initial Business
Combination, in which case all of the current directors will continue in office until at least the completion of the initial Business
Combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority
of the board of directors will be considered for election and our Sponsors, because of their ownership position, will have considerable
influence regarding the outcome. Accordingly, our Sponsors will continue to exert control at least until the completion of our
initial Business Combination.
Stockholders may experience dilution
of our Class A common stock at the time of our initial Business Combination.
Dilution may occur as a result of the anti-dilution
provisions of the Founder Shares resulting in the issuance of Class A shares on a greater than one to-one basis upon conversion
of the Founder Shares at the time of our initial Business Combination. In addition, because of the anti-dilution protection in
the Founder Shares, any equity or equity-linked securities issued or deemed issued in connection with our initial Business Combination
would be disproportionately dilutive to our Class A common stock and would be exacerbated to the extent the public stockholders
seek redemptions from the Trust Account.
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 public stockholders’ 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 public stockholders’ approval.
Our warrants were issued in registered
form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant
agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct
any defective provision, but requires the approval by the holders of at least 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 of public warrants if holders of at least 50% of the then outstanding public
warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least
50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things,
increase the exercise price of the warrants, convert the warrants into cash or stock, 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 stockholders, thereby making their 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 reported closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period
ending on the third trading day prior to the date on which we give proper notice of such redemption to the warrant holders and
provided certain other conditions are met. If and when the warrants become redeemable by us, we may not exercise our redemption
right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification
under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts
to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the
warrants were initially offered by us in the Public Offering. Redemption of the outstanding warrants could force stockholders (i) to
exercise their warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) to sell
their warrants at the then-current market price when they might otherwise wish to hold their 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 their warrants. None of the private placement warrants will be redeemable by us so long as they are held
by the Sponsors or their permitted transferees.
Our
warrants and Founder Shares may have an adverse effect on the market price of our Class A common stock
and make it more difficult to effectuate our initial Business Combination.
We issued warrants to purchase 16,666,667
shares of our Class A common stock as part of the units offered in the Public Offering, and we issued 8,000,000 in Sponsor
Warrants in a private placement. Each warrant is exercisable to purchase one share of Class A common stock at $11.50 per share.
Further, our Sponsors own an aggregate of 12,500,000 in 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 Sponsors make 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 effectuate an initial Business Combination, the potential for the issuance of a substantial number of additional
shares of Class A common stock upon exercise of these warrants and conversion rights could make us a less attractive Business
Combination vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our Class A
common stock and reduce the value of the shares of Class A common stock issued to complete the initial Business Combination.
Therefore, our warrants and Founder Shares may make it more difficult to effectuate an initial Business Combination or increase
the cost of acquiring the target business.
The Sponsor Warrants are identical to the
warrants sold as part of the units in the Public Offering except that, so long as they are held by our Sponsors or their permitted
transferees, (i) they will not be redeemable by us, (ii) they (including the Class A common stock issuable upon
exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our Sponsors 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 us to consummate an initial business combination.
Unlike most blank check companies, if (i) we issue additional
shares of Class A common stock or equitylinked 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, (ii) the aggregate gross proceeds from such issuances
represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination
on the date of the consummation of our initial business combination (net of redemptions), and (iii) the Market Value is below $9.20
per share, then the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the
Newly Issued Price, and the $18.00 per share redemption trigger prices described below under “Description of Securities —
Redeemable Warrants — Public Stockholders’ Warrants — Redemption of warrants when the price per share of Class
A common stock equals or exceeds $18.00” and “Redemption of warrants when the price per share of Class A common stock
equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and
the Newly Issued Price, and the $10.00 per share redemption trigger price described below under “Description of Securities
— Redeemable Warrants — Public Stockholders’ Warrants — Redemption of warrants when the price per share
of Class A common stock equals or exceeds $10.00” will be adjusted (to the nearest cent) to be equal to the higher of the
Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with
a target business.
Our warrants are accounted
for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the Acting Director
of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and
reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and
Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Staff
Statement”). Specifically, the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender
offers following a business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As
a result of the SEC Staff Statement, we reevaluated the accounting treatment of our 16,666,667 public warrants and 8,000,000 private placement
warrants, and determined to classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period
reported in earnings.
As a result, included on our consolidated
balance sheet as of December 31, 2020 contained elsewhere in this Annual Report are derivative liabilities related to embedded features
contained within our warrants. Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the
remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the
change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement,
our consolidated financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control.
Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting
period and that the amount of such gains or losses could be material.
We have identified a material
weakness in our internal control over financial reporting as of December 31, 2020. If we are unable to develop and maintain an effective
system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner,
which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following this issuance of the SEC
Staff Statement, after consultation with our independent registered public accounting firm, our management and our audit committee concluded
that, in light of the SEC Staff Statement, it was appropriate to restate our previously issued audited financial statements as of and
for the period ended December 31, 2020 (the “Restatement”). See “—Our warrants are accounted for as liabilities
and the changes in value of our warrants could have a material effect on our financial results.” As part of such process, we
identified a material weakness in our internal controls over financial reporting.
A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective
internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate
the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will
ultimately have the intended effects. If we identify any new material weaknesses in the future, any such newly identified material weakness
could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement
of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements
regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence
in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date,
or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
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 and for the year ended December 31, 2020.
See “—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect
on our financial results.” 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 Annual 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 an initial business combination.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial Business Combination
with some prospective target businesses.
The federal proxy rules require that
the proxy statement with respect to the vote on an initial Business Combination include historical and pro forma financial statement
disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not
they are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or
be reconciled to, accounting principles generally accepted in the United States of America (“GAAP”) or international
financial reporting standards as issued by the International Accounting Standards Board (“IFRS”) depending on the circumstances
and the historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the pool of potential target
businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such
statements in accordance with federal proxy rules and complete our initial Business Combination within the prescribed time
frame.
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 internal controls attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information
they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to
lose that status earlier, including if the market value of our Class A common stock held by non-affiliates 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 that is neither an emerging growth company nor an emerging growth company which has opted
out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
Compliance obligations under the
Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial Business Combination, require substantial financial
and management resources, and increase the time and costs of completing an initial Business Combination.
Section 404 of the Sarbanes-Oxley
Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K
for the year ending December 31, 2020. Only in the event we are deemed to be a large accelerated filer or an accelerated filer,
and no longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting
firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth
company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our
internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which
we seek to complete our initial Business Combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such Business Combination.
Provisions in our second 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 second 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.
Provisions in our second amended
and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and
officers.
Our second amended and restated certificate
of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against
directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery
in the State of Delaware and, if brought outside of Delaware, the stockholder bringing such suit will be deemed to have consented
to service of process on such stockholder’s counsel. This provision may have the effect of discouraging lawsuits against
our directors and officers.
Cyber incidents or attacks directed
at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including
information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal.
Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure
of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive
or confidential data. As an early stage company without significant investments in data security protection, we may not be sufficiently
protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate
any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse
consequences on our business and lead to financial loss.
If we effect our initial Business
Combination with a company with locations, operations or opportunities outside of the United States, we would be subject to a variety
of additional risks that may negatively impact our operations.
If we effect our initial Business Combination
with a company with locations, 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, including, but not limited to, tax law changes and variations in tax laws as compared
to the United States;
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currency fluctuations and exchange controls;
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cultural and language differences;
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employment regulations;
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changes in industry, regulatory or environmental standards within the jurisdictions where we operate;
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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.