Item 1. Business.
Introduction
We are a blank check company
formed under the laws of the State of Delaware on December 15, 2020 for the purpose of entering into a merger, capital stock exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses
or entities, which we refer to in this report as our initial business combination. While our efforts in identifying a prospective target
business for our initial business combination are not limited to a particular industry or geographic region, we have initially focused
our search on companies that may be experiencing liquidity constraints, are financially stressed or have experienced and emerged from
a financial restructuring.
On January 15, 2021, we issued
an aggregate of 5,750,000 founder shares to our sponsor for an aggregate price of $25,000, or approximately $0.004 per share. Our sponsor
subsequently transferred 25,000 founder shares to each of our independent directors, 276,000 founder shares to Stifel Venture and an aggregate
of 50,000 founder shares to certain strategic advisors identified in connection with our initial public offering (our “Strategic
Advisors”), in each case at the same price originally paid for such shares. On each of July 27, 2021 and September 20, 2021, our
sponsor forfeited 718,750 founder shares, resulting in there being 4,312,500 founder shares issued and outstanding. On October 22, 2021,
in connection with the underwriters’ election to partially exercise their over-allotment option and the forfeiture of the remaining
portion of such over-allotment option, as described below, 175,500 and 12,000 founder shares were forfeited by our sponsor and Stifel
Venture, respectively, to us at no cost, and 4,125,000 founder shares remain outstanding.
On October 7, 2021, the registration
statement on Form S-1 (File No. 333-254018) relating to our initial public offering was declared effective by the U.S. Securities and
Exchange Commission (the “SEC”). On October 13, 2021, we consummated our initial public offering of 15,000,000 units at $10.00
per unit, generating total gross proceeds of $150,000,000. Each unit consisted of one share of Class A common stock and one-half of one
redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of Class A common stock at an exercise price
of $11.50 per share, subject to adjustment. The warrants will become exercisable 30 days after the consummation of our initial business
combination and will expire five years after the consummation of our initial business combination, or earlier upon redemption or liquidation.
On October 19, 2021, the underwriters
of our initial public offering notified us of their exercise of the over-allotment option in part and concurrent forfeiture of the remaining
portion of such option. As such, on October 22, 2021, the underwriters purchased 1,500,000 additional units at $10.00 per additional unit
upon the closing of the partial exercise of the over-allotment option, generating total gross proceeds of $15,000,000.
Simultaneously with the consummation
of our initial public offering, we consummated the private placement of an aggregate of 6,200,000 private placement warrants to our sponsor
and Stifel Venture at a price of $1.00 per private placement warrant, generating total gross proceeds of $6,200,000. Simultaneously with
the closing of the partial exercise of the over-allotment option, we consummated the private placement of an aggregate of 375,000 additional
private placement warrants to such purchasers at $1.00 per additional private placement warrant, generating total gross proceeds of $375,000
(collectively, the “private placements”).
Of the aggregate 16,500,000
units sold in our initial public offering, 14,857,500 units were purchased by our anchor investors. In connection with the closing of
our initial public offering, each anchor investor acquired from our sponsor an indirect economic interest in certain founder shares (937,500
founder shares in the aggregate) at a purchase price of $0.10 per share. Our sponsor has agreed to distribute such founder shares to the
anchor investors pro rata based on their indirect ownership interest in such founder shares after the completion of our initial business
combination.
A total of $166,650,000 (or
$10.10 per unit sold in our initial public offering) of the net proceeds from our initial public offering, including the partial exercise
of the underwriters’ over-allotment option, and the private placements was placed in a trust account established for the benefit
of our public stockholders (the “trust account”), with Continental Stock Transfer & Trust Company acting as trustee, and
has been invested only in U.S. “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.
Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our franchise and income
tax obligations (and less up to $150,000 of interest for any dissolution or liquidation related expenses, as applicable), none of the
funds held in the trust account will be released from the trust account until the earliest 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 approve an amendment
to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemptions
in connection with our initial business combination or to redeem 100% of the public shares if we do not complete our initial business
combination by April 13, 2023 or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business
combination activity and (iii) our redemption of 100% of the outstanding public shares if we do not complete our initial business combination
within the required time period.
We incurred $15,892,398 of
transaction costs, consisting of $2,475,000 in underwriting fees, $6,600,000 in deferred underwriting fees, $541,773 of other offering
costs and expenses related to our initial public offering, and $6,275,625 for the fair value of the founder shares attributable to our
anchor investors. As of December 31, 2022, we had $366,794 in our operating bank accounts, $168,830,546 of cash and marketable securities
held in the trust account to be used for our initial business combination or to repurchase or redeem stock in connection therewith and
working capital deficit of $1,638,300, which excludes franchise taxes payable of $40,050 and income taxes payable of $25,184, of which
such amount will be paid from interest earned on the trust account as well as $3,203 of franchise taxes paid out of operating funds not
yet reimbursed from the trust account.
Our units began trading on
October 8, 2021 on the Nasdaq Global Market under the symbol “SAMAU.” Commencing on November 29, 2021, the Class A common
stock and warrants comprising the units began separate trading on Nasdaq under the symbols “SAMA” and “SAMAW,”
respectively. Those units not separated continue to trade on Nasdaq under the symbol “SAMAU.”
Business Strategy
Our sponsor is an affiliate
of Schultze Asset Management, LP (“Schultze Asset Management”), an alternative investment management firm founded in 1998
that primarily focuses on distressed, special situation and event-driven securities. Schultze Asset Management’s investment objective
is to achieve exceptional risk-adjusted capital appreciation through investments in various securities of companies in financial and/or
legal distress or which have recently emerged from financial reorganizations or lawsuits. Since inception, the firm has executed over
$7.4 billion in investment transactions across numerous market cycles. At the core of the firm’s strategy is deep-rooted, credit-
and equity-based fundamental analysis, leveraging the team’s distressed, legal, bankruptcy and financial expertise. Schultze Asset
Management believes that distressed securities can often be purchased at discounts to intrinsic value given the complexities surrounding
their restructuring. The firm complements its liquid investment strategy with illiquid investments where it has taken an active approach
to managing such investments often through participation on credit committees, liquidating trusts and board positions. The firm has successfully
deployed its active investment strategy in 12 companies involving approximately $475.0 million of invested capital, with 11 of such investments
monetized to date. Said investments have generated $716 million of realized and unrealized gains, including $715 million realized as of
December 31, 2022, representing an internal rate of return (IRR) of 26.3%.(1)
Schultze Asset Management and
members of our management team have significant experience in identifying, investing in and operating businesses that are experiencing
some level of financial distress or have successfully emerged from a financial re-organization. As a result of the success with Schultze
Special Purpose Acquisition Corp. (“Schultze I”), a special purpose acquisition company (“SPAC”) that completed
its initial public offering in December 2018 and consummated a business combination with Clever Leaves Holdings Inc. (NASDAQ: CLVR) (“Clever
Leaves”) in December 2020, our management team has significantly expanded its capability to focus on investment opportunities in
select industries where it has significant background and expertise. Such industries include but are not exclusive to aerospace &
defense, communications infrastructure, consumer/food & beverage, healthcare, industrial growth, media & entertainment and technology.
We believe our affiliation with Schultze Asset Management and the significant financial and operational expertise of our team, which includes
our Strategic Advisors, provide us with important competitive advantages for sourcing, pursuing and evaluating an initial business combination
within our target universe and creating value following such combination. We also believe Stifel, through its wholly-owned subsidiary,
Miller Buckfire, a leading investment bank focused on providing strategic and financial advisory services in financial restructurings,
recapitalizations and other complex situations, will be of tremendous assistance in helping us identify and evaluate potential business
combination candidates.
We have initially focused on
pursuing business combinations with target companies that may be experiencing liquidity constraints, are financially stressed or have
completed and emerged from a financial restructuring. Owners of post-restructuring companies typically benefit from a significant reduction
in liabilities including lower financial indebtedness, employee benefit obligations, litigation liabilities, contractual commitments and
a generally lower operating cost structure. Such target companies often have underexploited opportunities for continued growth as a result
of prior under-investment. Further, management teams often exit restructurings with increased financial and operating discipline and with
meaningful equity ownership. Given the inefficiencies that may exist in the post-reorganization market, we believe a business combination
within our target universe can be completed at a discount to its intrinsic value and publicly-traded peers. Whether or not we transact
with a company that is experiencing liquidity constraints, is financially stressed or has previously gone through a restructuring, we
expect to transact in an industry which overlaps within our core competencies and in-depth experience while also satisfying our investment
criteria.
(1) | Includes only those investments where Schultze Asset Management was or is “Actively
Involved”, invested long, and invested over $10 million. Does not include short sold companies, exchange traded funds (ETFs), companies
in the retail sector, leverage or margin borrowings, management and incentive fees, professional fees, and other trading expenses. Such
Actively Involved investments reflect a period of performance from 2003 through December 31, 2022. |
We believe a business combination
through a blank check company provides meaningful benefits to owners of liquidity constrained, financially stressed or post-reorganization
companies, with whom we seek to transact with, and our investors. In the case of post-reorganization companies, owners are often former
creditors, including banks, who are not natural owners of equity securities. We believe a business combination with us may provide a significant
monetization event for owners desiring liquidity as well as continued equity participation for those desiring continued ownership. Further,
target companies can benefit from access to a public vehicle to support organic and inorganic growth initiatives by combining with us.
Our investors can benefit from ownership in a business with significantly reduced liabilities, an enhanced operating structure and a highly
motivated management team.
Following our initial business
combination, we, including our Strategic Advisors, intend to assist the target company in creating shareholder value which may include
through board and/or senior management representation. In the case of Clever Leaves, George J. Schultze, our Chairman, President and CEO,
and Gary M. Julien, our Executive Vice President, Chief Financial Officer and director, are two of five directors of the company. As a
result of our team’s experience, we believe we can add value post-transaction to ensure proper corporate governance and alignment
of management incentives, develop an operational and financial strategy to pursue continued organic and inorganic growth initiatives and
to assist with capital raising and capital structure optimization.
The past performance of Schultze
Asset Management, our management team or our Strategic Advisors, or any of their affiliates, is not a guarantee that we will be able to
identify a suitable candidate for our initial business combination or of success with respect to any business combination we may consummate.
You should not rely on the historical record of the performance of Schultze Asset Management, our management team or our Strategic Advisors,
or any of their affiliates, as indicative of our future performance.
Acquisition Criteria
Consistent with our business
strategy of focusing on those targets which are liquidity constrained, are financially stressed or have completed a financial restructuring
and can be valued at a discount to their intrinsic value and publicly-traded peers, we have identified the following additional general
criteria and guidelines that we believe are important in evaluating prospective target businesses. We intend to use these criteria and
guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target business
that does not meet any of these criteria and guidelines.
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Enterprise Value: While we initially intended to focus our efforts on seeking and completing an initial business combination with an enterprise that has a value of between $750.0 million to $1.25 billion, we have been evaluating companies with an enterprise value below this range as a result of current market conditions; |
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Financial Well-Being: We expect to primarily target an initial business combination with solid financial fundamentals, despite prior mis-steps which can often occur through previously excessive leverage, challenging industry conditions, material litigation, regulatory shifts, macroeconomic events, performance disruptions, lack of management execution or any combination thereof; |
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Leading Industry Market Position: We intend to pursue companies whose products or services have leading positions within their respective markets with sustainable competitive advantages and natural barriers to market entry; |
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Solid Free Cash Flow Generation: We seek to acquire an established company with attractive operating margins, strong free cash flow generation and solid recurring revenue streams; |
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Strong Management Team: We seek to acquire a target business with an experienced management team and a proven track record of execution; |
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Favorable Industry Outlook: We seek to acquire a target business where the end user markets of such target business’ products or services have a favorable growth outlook, which may include the aerospace & defense, communications infrastructure, consumer/food & beverage, healthcare, industrial growth, media & entertainment and technology industries; |
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Performance Catalysts: We intend to solicit target companies that have clearly identifiable opportunities to execute on growth initiatives following the initial business combination; |
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Market Fragmentation: We intend to seek business combinations that have significant opportunities for selective strategic acquisitions and partnerships that can complement an organic growth strategy; and |
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Benefit from Being a Public Company: We intend to acquire a business that can benefit from being publicly-traded and can effectively utilize broader access to capital. |
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant,
on these general guidelines as well as other considerations, factors and criteria that we may deem relevant. In the event that we decide
to enter into our initial business combination with a target business that does not meet some or any of the above criteria and guidelines,
we will disclose that in our stockholder communications related to our initial business combination, which, as discussed elsewhere in
this report and our final prospectus, would be in the form of proxy solicitation materials or tender offer documents that we would file
with the SEC.
Effecting a Business Combination
General
We are not presently engaged
in, and we will not engage in, any substantive commercial business for an indefinite period of time. We intend to utilize cash derived
from the proceeds of our initial public offering and the private placements of the private placement warrants, our capital stock, debt
or a combination of these in effecting a business combination. A business combination may involve the acquisition of, or merger with,
a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while
avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense,
loss of voting control and compliance with various federal and state securities laws. In the alternative, we may seek to consummate a
business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek
to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our
limited resources, to effect only a single business combination.
We have until April 13, 2023
(or such later date as may be approved by our stockholders) to consummate an initial business combination. If we are unable to consummate
our initial business combination within the applicable time period, we will, as promptly as reasonably possible but not more than ten
business days thereafter, redeem the public shares for a pro rata portion of the funds held in the trust account and 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.
Our Acquisition Process
In evaluating a prospective
target business, we expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent
management, employees and their advisors, document reviews, on-site inspection of facilities, as well as a review of historical and
projected financial and other information that will be made available to us. We also expect to utilize the financial and operational restructuring
expertise of Schultze Asset Management and our management team to evaluate the risk-profile and growth opportunities for such target
business.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with Schultze Asset Management, investment funds or separate
accounts advised by Schultze Asset Management or our officers or directors. In the event we seek to complete our initial business combination
with a company that is affiliated with Schultze Asset Management, investment funds or separate accounts advised by Schultze Asset Management
or our officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm, or another independent entity that commonly renders valuation opinions, that our initial business combination is fair to our company
from a financial point of view.
We may, at our option, pursue
a business combination opportunity jointly with one or more entities affiliated with Schultze Asset Management and/or one or more investors
in funds or separate accounts managed by Schultze Asset Management, which we refer to as an “Affiliated Joint Acquisition.”
Any such parties would co-invest only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and
Schultze Asset Management considered a transaction to be mutually beneficial to us as well as the affiliated entity; and (iii) other
business reasons exist to do so, such as the strategic merits of including such co-investors, the need for additional capital beyond the
amount held in our trust account to fund the initial business combination and/or the desire to obtain committed capital for closing the
initial business combination. An Affiliated Joint Acquisition may be effected through a co-investment with us in the target business
at the time of our initial business combination, or we could raise additional proceeds to complete the initial business combination by
issuing to such parties a class of equity or equity-linked securities. We refer to this potential future issuance, or a similar issuance
to other specified purchasers, as a “specified future issuance”. The amount and other terms and conditions of any such specified
future issuance would be determined at the time thereof. We are not obligated to make any specified future issuance and may determine
not to do so.
Sources of Target Businesses
We believe based on Schultze
Asset Management’s as well as our management’s business knowledge and past experience that there are numerous acquisition
candidates. We expect that our principal means of identifying potential target businesses will be through the extensive contacts and relationships
of Schultze Asset Management as well as our officers and directors. While our officers and directors are not required to commit any specific
amount of time in identifying or performing due diligence on potential target businesses, our officers and directors believe that the
relationships they have developed over their careers and their access to their contacts and resources will generate a number of potential
business combination opportunities that will warrant further investigation. We also anticipate that target business candidates will be
brought to our attention from various unaffiliated sources, including current and former creditors such as banks and distressed debt investment
firms, investment bankers, venture capital funds, private equity funds, alternative investment management firms and other members of the
financial and legal community including those involved in the restructuring industry. Target businesses may be brought to our attention
by such unaffiliated sources as a result of being solicited by us through calls, emails or mailings. These sources may also introduce
us to target businesses they think we may be interested in on an unsolicited basis, since many of these sources will have read our public
filings and know what types of businesses we are targeting. Our officers and directors, as well as members of Schultze Asset Management,
may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal
or informal inquiries or discussions they may have, as well as attending various industry conferences. Our officers and directors must
present to us all target business opportunities that have a fair market value of at least 80% of the assets held in the trust account
(excluding the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the agreement
to enter into the initial business combination, subject to any pre-existing fiduciary or contractual obligations. Schultze Asset
Management is under no obligation to present us with potential acquisition targets. We may also engage the services of professional firms
or other individuals that specialize in business acquisitions, in which event we may pay a finder’s fee, consulting fee or other
compensation to be determined in an arm’s length negotiation based on the terms of the transaction. In no event, however, will our
sponsor, officers, directors or their respective affiliates be paid any finder’s fee, consulting fee or other compensation prior
to, or for any services they render in order to effectuate, the consummation of an initial business combination (regardless of the type
of transaction that it is) other than the monthly administrative fee of an aggregate of up to $25,000 to our sponsor, the repayment of
any loans from our sponsor, officers and directors for working capital purposes and reimbursement of any out-of-pocket expenses.
Our audit committee reviews all reimbursements and payments made to our sponsor, officers, directors or our or their respective affiliates,
on a quarterly basis, with any interested director abstaining from such review and approval. We are not restricted from entering into
a business combination with a target business that is affiliated with Schultze Asset Management, investment funds or separate accounts
advised by Schultze Asset Management, or any of our officers, directors or sponsor, and may do so if (i) such transaction is approved
by a majority of our disinterested independent directors and (ii) we obtain an opinion from an independent investment banking firm,
or another independent entity that commonly renders valuation opinions, that the business combination is fair to our unaffiliated stockholders
from a financial point of view.
Selection of a Target Business and Structuring
of a Business Combination
As required by Nasdaq listing
rules, approval of our initial business combination will require the affirmative vote of a majority of our board of directors, which must
include a majority of our independent directors. Subject to our officers’ and directors’ pre-existing fiduciary duties and
the limitation that a target business has a fair market value of at least 80% of the balance in the trust account (excluding the deferred
underwriting commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement
for our initial business combination, as described below in more detail, and that we must acquire a controlling interest in the target
business, we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate. Except for
the general criteria and guidelines set forth above, we have not established any other specific attributes or criteria (financial or otherwise)
for prospective target businesses. To the extent we effect a business combination with a financially unstable company or an entity in
its early stage of development or growth, including entities without established records of sales or earnings, we may be affected by numerous
risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. Although
our management will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly
ascertain or assess all significant risk factors.
In evaluating a prospective
target business, our management may consider a variety of factors, including one or more of the following:
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quality and depth of target company management; |
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public market readiness; |
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financial condition and results of operation; |
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sustainability of cash flow generation; |
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brand recognition and potential; |
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experience and skill of management and availability of additional personnel; |
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stage of development of the products, processes or services; |
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existing distribution and potential for expansion; |
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degree of current or potential market acceptance of the products, processes or services; |
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proprietary aspects of products and the extent of intellectual property or other protection for products or formulas; |
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impact of regulation on the business; |
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regulatory environment of the industry; |
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costs associated with effecting the business combination; |
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market fragmentation and potential for industry consolidation; |
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industry leadership, sustainability of market share and attractiveness of market industries in which a target business participates; and |
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macro competitive dynamics in the industry within which the company competes. |
These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on
the above factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with
our business objective. In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass,
among other things, meetings with incumbent management and inspection of facilities, as well as review of projected and historical financial
and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated
third parties we may engage.
The time and costs required
to select and evaluate a target business and to structure and complete the business combination cannot presently be ascertained. Any costs
incurred with respect to the identification and evaluation of a prospective target business with which a business combination is not ultimately
completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination.
Fair Market Value of Target Business
The target business or businesses
that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (excluding
the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive
agreement for our initial business combination, although we may acquire a target business whose fair market value significantly exceeds
80% of the trust account balance.
We currently anticipate structuring
a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination where we merge directly with the target business or where we acquire less than 100% of such interests
or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons,
but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the
voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we
could acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial number of new shares, our
stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be
valued for purposes of the 80% of fair market value test. In order to consummate such an acquisition, we may issue a significant amount
of our debt or equity securities to the sellers of such businesses and/or seek to raise additional funds through a private offering of
debt or equity securities. The fair market value of the target will be determined by our board of directors based upon one or more standards
generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The proxy solicitation
materials or tender offer documents used by us in connection with any proposed transaction will provide public stockholders with our analysis
of the fair market value of the target business, as well as the basis for our determinations. If our board is not able to independently
determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated, independent investment
banking firm, or another independent entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria.
We will not be required to
obtain an opinion from an investment banking firm as to the fair market value if our board of directors independently determines that
the target business complies with the 80% threshold.
Lack of Business Diversification
We may seek to effect a business
combination with more than one target business, and there is no required minimum valuation standard for any target at the time of such
acquisition. We expect to complete only a single business combination, although this process may entail the simultaneous acquisitions
of several operating businesses. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future
performance of a single business operation. Unlike other entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination
with only a single entity, our lack of diversification may:
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subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination, and |
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result in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services. |
If we determine to simultaneously
acquire several businesses, and such businesses 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 acquisitions, which may make it more difficult for us,
and delay our ability, to complete the business combination. With multiple acquisitions, 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.
Limited Ability to Evaluate the Target Business’s
Management
Although we intend to scrutinize
the management of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure
you that our assessment of the target business’s management will prove to be correct. In addition, we cannot assure you that the
future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role
of our officers and directors, if any, in the target business following a business combination cannot presently be stated with any certainty.
While it is possible that some of our key personnel will remain in senior management or advisory positions with us following a business
combination, it is unlikely that they will devote their full time efforts to our affairs subsequent to a business combination. Moreover,
they would only be able to remain with the company after the consummation of a business combination if they are able to negotiate employment
or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation
of the business combination and could provide for them to receive compensation in the form of cash payments and/or our securities for
services they would render to the company after the consummation of the business combination. While the personal and financial interests
of our key personnel may influence their motivation in identifying and selecting a target business, their ability to remain with the company
after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed
with any potential business combination. Additionally, we cannot assure you that our officers and directors will have significant experience
or knowledge relating to the operations of the particular target business.
Following a business combination,
we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we
will have the ability to recruit additional managers, or that any such additional managers we do recruit will have the requisite skills,
knowledge or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to
Approve an Initial Business Combination
In connection with any proposed
business combination, we will either (1) seek stockholder approval of our initial business combination at a meeting called for such
purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination,
into their pro rata share of the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), or
(2) provide our public stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid
the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account,
including interest (net of taxes payable), in each case subject to the limitations described herein. If we determine to engage in a tender
offer, such tender offer will be structured so that each stockholder may tender any or all of his, her or its shares rather than some
pro rata portion of his, her or its shares. The decision as to whether we will seek stockholder approval of a proposed business combination
or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek
stockholder approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction
with their initial business combinations and related redemptions of public shares for cash upon consummation of such initial business
combination even when a vote is not required by law, we will have the flexibility to avoid such stockholder vote and allow our stockholders
to sell their shares pursuant to Rule 13e-4 and Regulation 14E of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) which regulate issuer tender offers. In that case, we will file tender offer documents with the SEC which will contain substantially
the same financial and other information about the initial business combination as is required under the SEC’s proxy rules. We will
consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if
we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination.
We chose our net tangible asset
threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act of 1933, as
amended (the “Securities Act”). However, if we seek to consummate an initial business combination with a target business that
imposes any type of working capital closing condition or requires us to have a minimum amount of funds available from the trust account
upon consummation of such initial business combination, we may need to have more than $5,000,001 in net tangible assets upon consummation
and this may force us to seek third party financing which may not be available on terms acceptable to us or at all. As a result, we may
not be able to consummate such initial business combination and we may not be able to locate another suitable target within the applicable
time period, if at all. Public stockholders may therefore have to wait until at least April 13, 2023 (or such later date as may be approved
by our stockholders) in order to be able to receive a pro rata share of the trust account.
Our sponsor and our officers
and directors have agreed (i) to vote any shares of common stock owned by them in favor of any proposed business combination, including
the founder shares, (ii) not to redeem any shares of common stock in connection with a stockholder vote to approve a proposed initial
business combination and (iii) not sell any shares of common stock in any tender in connection with a proposed initial business combination.
As a result, we would need only 6,187,501, or 37.5% (assuming all outstanding shares are voted), or 1,031,251, or 6.25% (assuming only
the minimum number of shares representing a quorum are voted), of the 16,500,000 public shares sold in our initial public offering to
be voted in favor of a transaction in order to have our initial business combination approved. Furthermore, if our anchor investors vote
all of the public shares underlying the 14,857,500 units they acquired in our initial public offering in favor of an initial business
combination, we would not need any of the other public shares sold in our initial public offering to be voted in favor of an initial business
combination in order to have our initial business combination approved. Although our anchor investors are not contractually obligated
to vote in favor of an initial business combination, their interest in certain of our founder shares may provide an incentive for them
to do so.
If we hold a meeting to approve
a proposed business combination and a significant number of stockholders vote, or indicate an intention to vote, against such proposed
business combination, our officers, directors, sponsor or their affiliates could purchase units or shares of Class A common stock from
persons in the open market or in private transactions in order to influence the vote. Notwithstanding the foregoing, our officers, directors,
sponsor and their affiliates will not make purchases of shares of common stock if the purchases would violate Section 9(a)(2) or
Rule 10b-5 of the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock.
Redemption Rights
At any meeting called to approve
an initial business combination, public stockholders may seek to redeem their shares, regardless of whether they vote for or against the
proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account as of two business
days prior to the consummation of the initial business combination, less any taxes then due but not yet paid (which taxes may be paid
only from the interest earned on the funds in the trust account). Alternatively, we may provide our public stockholders with the opportunity
to sell their shares of Class A common stock to us through a tender offer (and thereby avoid the need for a stockholder vote) for an amount
equal to their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due but not yet paid.
Our sponsor, officers, directors
and our initial stockholders will not have redemption rights with respect to any shares of common stock owned by them, directly or indirectly,
whether acquired prior to our initial public offering or purchased by them in the aftermarket.
We may require public stockholders
seeking redemption, whether they are a record holder or hold their shares in “street name,” to either (i) tender their
certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using Depository Trust Company’s
(“DTC”) DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option, in each case prior to a date set forth
in the proxy materials sent in connection with the proposal to approve the business combination.
There is a nominal cost associated
with the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker the fee and it would be up to the broker whether to pass this cost on to the
holder. However, this fee would be incurred regardless of whether we require holders seeking to exercise redemption rights to tender their
shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must
be effectuated. However, in the event we require stockholders seeking to exercise redemption rights to deliver their shares prior to the
consummation of the proposed business combination and the proposed business combination is not consummated, this may result in an increased
cost to stockholders.
Any proxy solicitation materials
we furnish to stockholders in connection with a vote for any proposed business combination will indicate whether we are requiring stockholders
to satisfy such certification and delivery requirements. Accordingly, a stockholder would have from the time the stockholder received
our proxy statement up until the vote on the proposal to approve the business combination to deliver his, her or its shares if such stockholder
wishes to seek to exercise his, her or its redemption rights. This time period varies depending on the specific facts of each transaction.
However, as the delivery process can be accomplished by the stockholder, whether or not he, she or it is a record holder or his, her or
its shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his, her or its broker
and requesting delivery of his, her or its shares through the DWAC System, we believe this time period is sufficient for an average investor.
However, we cannot assure you of this fact. Please see the risk factor titled “In connection with any stockholder meeting called
to approve a proposed initial business combination, we may require stockholders who wish to redeem their shares in connection with a proposed
business combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption
rights prior to the deadline for exercising their rights” for further information on the risks of failing to comply with these
requirements.
The foregoing is different
from the procedures historically used by some blank check companies. Traditionally, in order to perfect redemption rights in connection
with a blank check company’s business combination, the company would distribute proxy materials for the stockholders’ vote
on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on the proxy
card indicating such holder was seeking to exercise his, her or its redemption rights. After the business combination was approved, the
company would contact such stockholder to arrange for him, her or it to deliver his, her or its certificate to verify ownership. As a
result, the stockholder then had an “option window” after the consummation of the business combination during which he, she
or it could monitor the price of the company’s stock in the market. If the price rose above the redemption price, such stockholder
could sell his, her or its shares in the open market before actually delivering his, her or its shares to the company for cancellation.
As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become
a “continuing” right surviving past the consummation of the business combination until the holder delivered its certificate.
The requirement for physical or electronic delivery prior to the meeting ensures that a holder’s election to redeem shares is irrevocable
once the business combination is approved.
Any request to redeem such
shares once made, may be withdrawn at any time up to the vote on the proposed business combination. Furthermore, if a holder of a public
share of Class A common stock delivered his, her or its certificate in connection with an election of their redemption and subsequently
decides prior to the vote on the proposed business combination not to elect to exercise such rights, such holder may simply request that
the transfer agent return the certificate (physically or electronically).
If the initial business combination
is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account as of two business days prior to the consummation
of the initial business combination. In such case, we will promptly return any shares delivered by public holders.
Limitation on Redemption upon Completion
of our Initial Business Combination if We Seek Stockholder Approval
Notwithstanding the foregoing,
if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an
aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” We believe this
restriction 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 business combination as a means to force us or our management to purchase
their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public
stockholder holding more than an aggregate of 15% of the shares sold in our initial public offering could threaten to exercise its redemption
rights if such holder’s shares are not purchased by us or our management at a premium to the then-current market price or on
other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our initial public
offering 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 a business combination with a target that requires
as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Liquidation if No Business Combination
Our amended and restated certificate
of incorporation provides that we will continue in existence only until April 13, 2023. If we have not completed an initial business combination,
or effected an extension, by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest earned on the funds held in
the trust account not previously released to us (net of taxes payable and $150,000 for any dissolution or liquidation related expenses,
as applicable), 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 liquidation distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law.
Our sponsor, officers, directors
and our initial stockholders have agreed that they will not propose any amendment to our amended and restated certificate of incorporation
(A) to modify the substance or timing of our obligation to allow redemptions in connection with our initial business combination or to
redeem 100% of our public shares if we do not complete our initial business combination by April 13, 2023 or (B) with respect to any other
provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders
with the opportunity to redeem their public shares upon such approval at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest not previously released to us but net of franchise and income taxes payable,
divided by the number of then outstanding public shares. This redemption right shall apply in the event of the approval of any such amendment,
whether proposed by our sponsor, any executive officer or director or any other person.
Under the Delaware General
Corporation Law (the “DGCL”), stockholders may be held liable for claims by third parties against a corporation to the extent
of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon
the redemption of 100% of our outstanding public shares in the event we do not complete our initial business combination within the required
time period may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth
in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice
period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders,
any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata
share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third
anniversary of the dissolution.
Furthermore, if the pro rata
portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do
not complete our initial business combination within the required time period is not considered a liquidation distribution under Delaware
law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of
a liquidation distribution. If we are unable to complete a business combination within the prescribed time frame, we will (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account, including any interest earned on the funds held in the trust account not previously released to us (net
of taxes payable and $150,000 for any dissolution or liquidation related expenses, as applicable), 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 liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the
case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following April 13,
2023 (or such later date as may be approved by our stockholders), and, therefore, we do not intend to comply with those procedures. As
such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any
liability of our stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying
with Section 280 of the DGCL, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent
ten years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers,
etc.) or prospective target businesses.
We are required to use our
reasonable best efforts to have all third parties (including any vendors or other entities we may engage) and any prospective target businesses
enter into agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust
account. As a result, the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would
result in any liability extending to the trust. We therefore believe that any necessary provision for creditors will be reduced and should
not have a significant impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless, we
cannot assure you of this fact as there is no guarantee that vendors, service providers and prospective target businesses will execute
such agreements. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed
a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. The
underwriters of our initial public offering and our auditor are the only third parties we are currently aware of that will not execute
a waiver. Nor is there any guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust
account. Our sponsor has agreed that it will be liable to ensure that the proceeds in the trust account are not reduced below $10.10 per
share by the claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted
for or products sold to us, but we cannot assure you that it will be able to satisfy its indemnification obligations if it is required
to do so. Additionally, the agreement our sponsor entered into specifically provides for two exceptions to the indemnity it has given:
it will have no liability (i) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement
with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (ii) as
to any claims for indemnification by the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations
and believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such indemnification
obligations. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if we liquidate,
the per-share distribution from the trust account could be less than $10.10 due to claims or potential claims of creditors. We will
distribute to all of our public stockholders, in proportion to their respective equity interests, an aggregate amount then on deposit
in the trust account, including any interest earned on the funds held in the trust account net of taxes payable.
We anticipate notifying the
trustee of the trust account to begin liquidating such assets promptly after such date and anticipate it will take no more than ten business
days to effect such a distribution. The holders of the founder shares have waived their rights to participate in any liquidation distribution
with respect to such founder shares. There will be no distribution from the trust account with respect to our warrants, including the
private placement warrants, which will expire worthless. We will pay the costs of any subsequent liquidation from our remaining assets
outside of the trust account and the interest earned on the funds held in the trust account that we are permitted to withdraw to pay such
expenses.
If we are unable to complete
an initial business combination and expend all of the net proceeds of our initial public offering and the private placements of the private
placement warrants, other than the proceeds deposited in the trust account, and without taking into account interest earned on the trust
account, the initial per-share redemption price would be $10.10. 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 of our initial public
offering. The underwriters have agreed to waive their rights to the deferred underwriting commissions held in the trust account in the
event we do not complete our initial business combination and subsequently liquidate and, in such event, such amounts will be included
with the funds held in the trust account that will be available to fund the redemption of our public shares. The proceeds deposited in
the trust account could, however, become subject to claims of our creditors that are in preference to the claims of public stockholders.
Our public stockholders shall
be entitled to receive funds from the trust account only in the event of our failure to complete a business combination within the required
time period or if the stockholders seek to have us redeem or purchase their respective shares upon a business combination which is actually
completed by us or upon certain amendments to our amended and restated certificate of incorporation as described elsewhere herein. In
no other circumstances shall a stockholder have any right or interest of any kind to or in the trust account.
The holders of the founder
shares will not participate in any redemption distribution from our trust account with respect to such shares. Additionally, any loans
made by our officers, directors, sponsors or their affiliates for working capital needs will be forgiven and not repaid if we are unable
to complete an initial business combination.
If we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could
be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with
priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will
be able to return to our public stockholders at least $10.10 per share.
If we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders
could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent
conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because
we intend to distribute the proceeds held in the trust account to our public stockholders promptly after April 13, 2023 (or such later
date as may be approved by our stockholders), this may be viewed or interpreted as giving preference to our public stockholders over any
potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached
their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive
damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims
will not be brought against us for these reasons.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate
of incorporation contains certain requirements and restrictions relating to our initial public offering that will apply to us until the
consummation of our initial business combination. These provisions cannot be amended without the approval of a majority of our stockholders.
If we seek to amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing
of our obligation to allow redemptions in connection with our initial business combination or to redeem 100% of our public shares if we
do not complete our initial business combination by April 13, 2023 or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, we will provide dissenting public stockholders with the opportunity to redeem
their public shares in connection with any such vote. This redemption right shall apply in the event of the approval of any such amendment,
whether proposed by our sponsor, any executive officer or director or any other person. Our sponsor, officers, directors and initial stockholders
have agreed to waive any redemption rights with respect to any founder shares and any public shares they may hold in connection with any
vote to amend our amended and restated certificate of incorporation. Specifically, our amended and restated certificate of incorporation
provides, among other things, that:
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we shall either (i) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), or (ii) provide our stockholders with the opportunity to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), in each case subject to the limitations described herein; |
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we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination; |
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if our initial business combination is not consummated by April 13, 2023, then we will redeem all of the outstanding public shares and thereafter liquidate and dissolve our company; |
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we may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar transaction prior to our initial business combination; and |
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prior to our initial business combination, we may not issue additional stock that participates in any manner in the proceeds of the trust account, or that votes as a class with the public shares on any matter. |
Competition
In identifying, evaluating
and selecting a target business, we may encounter intense competition from other entities having a business objective similar to ours.
Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or
through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial resources
will be relatively limited when contrasted with those of many of these competitors. While we believe there may be numerous potential target
businesses that we could merge with or acquire using the net proceeds of our initial public offering and the private placements of the
private placement warrants, our ability to compete in merging with or acquiring certain sizable target businesses may be limited by our
available financial resources.
The following also may not
be viewed favorably by certain target businesses:
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our obligation to seek stockholder approval of a business combination or engage in a tender offer may delay the completion of a transaction; |
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our obligation to redeem or repurchase public shares held by our public stockholders may reduce the resources available to us for a business combination; and |
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our outstanding warrants, and the potential future dilution they represent. |
Any of these factors may place
us at a competitive disadvantage in successfully negotiating a business combination. Our management believes, however, that our status
as a public entity and potential access to the United States public equity markets may give us a competitive advantage over privately-held entities
having a similar business objective as ours in acquiring a target business with significant growth potential on favorable terms.
If we succeed in effecting
a business combination, there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure
you that, subsequent to a business combination, we will have the resources or ability to compete effectively.
Employees
We have three executive officers.
These individuals are not obligated to devote any specific number of hours to our matters and intend to devote only as much time as they
deem necessary to our affairs. The amount of time they will devote in any time period will vary based on whether a target business has
been selected for the business combination and the stage of the business combination process the company is in. Accordingly, once a suitable
target business to acquire has been located, management will spend more time investigating such target business and negotiating and processing
the business combination (and consequently spend more time on our affairs) than had been spent prior to locating a suitable target business.
We expect our executive officers to devote such amount of time as they reasonably believe is necessary to our business. We do not intend
to have any employees prior to the consummation of a business combination.
Our Website
Our corporate website address
is www.samaspac.com. The information contained on or accessible through our corporate website or any other website that we may maintain
is not incorporated by reference into this report.
Periodic Reporting and Audited Financial Statements
We have registered our units,
Class A common stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. Such reports and other information filed by the company with the SEC are available free of
charge on our website and on the SEC’s website at www.sec.gov. The contents of these websites are not incorporated into this report.
In accordance with the requirements of the Exchange Act, our annual reports contain financial statements audited and reported on by our
independent registered public accountants.
We will provide stockholders
with audited financial statements of the prospective target business as part of any proxy solicitation materials or tender offer documents
sent to stockholders to assist them in assessing the target business. These financial statements will need to be prepared in accordance
with or reconciled to United States generally accepted accounting principles (“U.S. GAAP”) or international financial
reporting standards (“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) (the “PCAOB”). We
cannot assure you that any particular target business identified by us as a potential acquisition candidate will have the necessary financial
statements. To the extent that this requirement cannot be met, we may not be able to acquire the proposed target business.
We were required to evaluate
and report on our internal control procedures for the fiscal year ended December 31, 2022 as required by the Sarbanes-Oxley Act
of 2002 (the “Sarbanes-Oxley Act”). Only in the event we are deemed to be a large accelerated filer or an accelerated
filer, and no longer qualify as an emerging growth company, will we be required to have our internal control procedures audited. A target
company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The
development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and
costs necessary to complete any such acquisition.
We are an “emerging growth
company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be
a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company for up to five
years. However, if our annual gross revenue is $1.07 billion or more, if our nonconvertible debt issued within a three year period
exceeds $1 billion or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million
on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following
fiscal year.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain
reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain
a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equaled
or exceeded $250 million as of the end of that year’s second fiscal quarter, and (2) our annual revenues equaled or exceeded
$100 million during such completed fiscal year or the market value of our common stock held by non-affiliates equaled or exceeded
$700 million as of the end of that year’s second fiscal quarter.
Item 1A. Risk Factors.
Ownership of our securities
involves a high degree of risk. 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 a holder of our securities could lose all or
part of its investment. This report also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the risks
described below.
Risk Factor Summary
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We may not be able to complete our initial business combination by April 13, 2023 (or such later date as may be approved by our stockholders), in which case we would cease all operations except for the purpose of winding up, and we would redeem our public shares for a pro rata portion of the funds in the trust account, and we would liquidate. In such event, our warrants would expire worthless. |
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Your only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares for cash. |
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Our initial stockholders control a substantial interest in us and thus may influence certain actions requiring a stockholder vote. |
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We may not obtain a fairness opinion with respect to the target business that we seek to acquire and therefore you may be relying solely on the judgment of our board of directors in approving a proposed business combination. |
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Our outstanding warrants 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. |
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We may issue additional shares of capital stock or debt securities to complete a business combination, or issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination, which would dilute the equity interest of our stockholders and likely present other risks. |
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The ability of our public stockholders to exercise their redemption rights, or sell their shares to us in a tender offer, with respect to a large number of our shares may not allow us to effectuate the most desirable business combination or optimize our capital structure. |
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We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure or abandon a particular business combination. |
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Resources could be spent researching acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. |
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Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (COVID-19) pandemic, the invasion of Ukraine by Russia and resulting sanctions, recent increases in inflation and the status of debt and equity markets. |
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We may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company. |
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There may be tax consequences to our business combinations that may adversely affect us. |
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A new 1% U.S. federal excise tax could be imposed on us in connection with redemptions by us of our shares. |
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Certain of our officers and directors have, and any of our officers and directors or their affiliates may in the future have, outside fiduciary and contractual obligations and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
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Our officers and directors may have interests in a potential business combination that are different than yours, which may create conflicts of interest. |
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A market for our securities may not fully develop or be sustained, which would adversely affect the liquidity and price of our securities. |
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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. |
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We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by at least 50% of the then outstanding public warrants. |
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We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. |
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If third parties bring claims against us, and if our directors decide not to enforce the indemnification obligations of our sponsor, or if our sponsor does not have the funds to indemnify us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.10 per share. |
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Provisions in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock and could entrench management. |
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Our amended and restated certificate of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders. |
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Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them. |
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We may not hold an annual meeting of stockholders until after the consummation of our initial business combination. Our public stockholders will not have the right to elect or remove directors prior to the consummation of our initial business combination. |
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We are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. |
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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 a business combination. |
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We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies. |
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Cyber incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss. |
Risks Related to Searching for and Consummating
a Business Combination
Our independent registered public accounting
firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going
concern.”
As of December 31, 2022, we
had $366,794 in our operating bank accounts, $168,830,546 of cash and marketable securities held in the trust account to be used for our
initial business combination or to repurchase or redeem stock in connection therewith and working capital deficit of $1,638,300, which
excludes franchise taxes payable of $40,050 and income taxes payable of $25,184, of which such amount will be paid from interest earned
on the trust account as well as $3,203 of franchise taxes paid out of operating funds not yet reimbursed from the trust account. Further,
we have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Our management’s plans to
address this need for capital are discussed under “Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations.” We cannot assure you that our plans to consummate an initial business combination will be successful. We
have determined that the liquidity condition due to insufficient working capital and mandatory liquidation, should our initial business
combination not occur, and potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern.
The financial statements contained elsewhere in this report do not include any adjustments that might result from our inability to continue
as a going concern.
Past performance by our management team
may not be indicative of future performance of an investment in our company or the future performance of any business we may acquire.
Information regarding performance
by, or businesses associated with, our management team and their affiliates is presented for informational purposes only. Past performance
by our management team is not a guarantee either (i) that we will be able to identify a suitable candidate for our initial business combination
or (ii) of success with respect to any business combination we may consummate. You should not rely on the historical record of our management
team’s or their affiliates’ performance 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.
Our public stockholders may not be afforded
an opportunity to vote on our proposed business combination.
We will either (i) seek stockholder
approval of our initial business combination at a meeting called for such purpose at which public stockholders may seek to redeem their
shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount
then on deposit in the trust account, including interest (net of taxes payable), or (ii) provide our public stockholders with the opportunity
to sell their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their
pro rata share of the aggregate amount then on deposit in the trust account, including interest (net of taxes payable), in each case subject
to the limitations described elsewhere in this report and in our final prospectus. Accordingly, it is possible that we will consummate
our initial business combination even if holders of a majority of our public shares do not approve of the business combination we consummate.
The decision as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their
shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing
of the transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. For instance, Nasdaq
rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder
approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination.
Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek
stockholder approval of such business combination instead of conducting a tender offer.
If we seek stockholder approval of our initial
business combination, our initial stockholders, executive officers and directors have agreed to vote in favor of such initial business
combination, regardless of how our public stockholders vote.
Unlike many other blank check
companies in which the founders, executive officers, directors and director nominees agree to vote their founder shares in accordance
with the majority of the votes cast by the public stockholders in connection with an initial business combination, our initial stockholders,
executive officers and directors have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement
entered into with us, to vote any common stock held by them in favor of our initial business combination. As a result, in addition to
the founder shares held by our initial stockholders, executive officers and directors, we would need only 6,187,501, or 37.5% (assuming
all outstanding shares are voted), or 1,031,251, or 6.25% (assuming only the minimum number of shares representing a quorum are voted),
of the 16,500,000 public shares sold in our initial public offering to be voted in favor of a transaction in order to have our initial
business combination approved. Furthermore, if our anchor investors vote all of the public shares underlying the 14,857,500 units they
acquired in our initial public offering in favor of an initial business combination, we would not need any of the other public shares
sold in our initial public offering to be voted in favor of an initial business combination in order to have our initial business combination
approved. Although our anchor investors are not contractually obligated to vote in favor of an initial business combination, their interest
in certain of our founder shares may provide an incentive for them to do so. We expect that our initial stockholders and their permitted
transferees will own at least approximately 20% of the issued and outstanding shares of our common stock at the time of any such stockholder
vote. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder
approval will be received than would be the case if such persons agreed to vote their founder shares in accordance with the majority of
the votes cast by our public stockholders.
Since our anchor investors acquired an interest
in certain of our founder shares from our sponsor in connection with the closing of our initial public offering, a conflict of interest
may arise in determining whether a particular target business is appropriate for our initial business combination.
In connection with the closing
of our initial public offering, our anchor investors acquired an interest in an aggregate of 937,500 founder shares for a price of $0.10
per share, which our sponsor will distribute to our anchor investors after the completion of an initial business combination. Accordingly,
the anchor investors will share in any appreciation in the value of the founder shares above that nominal amount, provided that we successfully
complete a business combination. Moreover, as the anchor investors acquired all of the aggregate 14,857,500 units they purchased in our
initial public offering for a purchase price of $10.00 per unit and paid $0.10 per share for their interests in the founder shares, and
assuming each warrant has no value and without taking into account any liquidity discount on the founder shares, the anchor investors
paid an effective price of approximately $9.41 per share acquired, as compared to the $10.00 per share paid by the other public stockholders
in our initial public offering. As a result, the anchor investors may have an incentive to vote any public shares they own in favor of
a business combination, and, if a business combination is approved, they may make a substantial profit on such interest, even if the market
price of our securities declines in value below the price to the public in our initial public offering and the business combination is
not profitable for other public stockholders. In addition, as discussed above, if the anchor investors retain a substantial portion of
their interests in our public shares and if the anchor investors vote those public shares in favor of a business combination, we will
receive sufficient votes to approve the business combination, regardless of how any other public stockholder votes their shares. You should
consider the anchor investors’ financial incentive to complete an initial business combination when evaluating whether to invest
in our securities and/or redeem your shares prior to or in connection with an initial business combination.
Your only opportunity to affect the investment
decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares for cash.
At the time of your investment
in us, you may not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Because
our board of directors may consummate our initial business combination without seeking stockholder approval, public stockholders may not
have the right or opportunity to vote on the business combination. Accordingly, your only opportunity to affect the investment decision
regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be
at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial
business combination.
If the net proceeds of our initial public
offering and the private placements of the private placement warrants not being held in the trust account are insufficient to allow us
to operate until April 13, 2023 (or such later date as may be approved by our stockholders), we may be unable to complete a business combination.
We believe that the funds available
to us outside of the trust account will be sufficient to allow us to operate until April 13, 2023, assuming that a business combination
is not consummated during that time. However, we cannot assure you that our estimates will be accurate. Accordingly, if we use all of
the funds held outside of the trust account, or if our stockholders approve an extension to the time period in which we must consummate
our initial business combination, we may not have sufficient funds available with which to structure, negotiate or close an initial business
combination. In such event, we would need to borrow funds from our sponsor, officers or directors or their affiliates to operate or may
be forced to liquidate. Our sponsor, officers, directors or their affiliates may, but are not obligated to, loan us funds, from time to
time or at any time, in whatever amount that they deem reasonable in their sole discretion for our working capital needs. Each loan would
be evidenced by a promissory note. The notes would either be paid upon consummation of our initial business combination, without interest,
or, at the holder’s discretion, up to $1,500,000 of the notes may be converted into warrants at a price of $1.00 per warrant. The
warrants would be identical to the private placement warrants. If we do not complete a business combination, the loans will be forgiven.
The requirement that the target business
or businesses that we acquire must collectively have a fair market value of at least 80% of the balance in the trust account (excluding
the deferred underwriting commissions and taxes payable on the income earned on the trust account) at the time of the execution of a definitive
agreement for our initial business combination may limit the type and number of companies with which we may complete such a business combination.
Nasdaq rules and our amended
and restated certificate of incorporation require that the target business or businesses that we acquire must collectively have a fair
market value of at least 80% of the balance in the trust account (excluding the deferred underwriting commissions and taxes payable on
the income earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination. This
restriction may limit the type and number of companies with which we may complete such a business combination. If we are unable to locate
a target business or businesses that satisfy this fair market value test, we may be forced to liquidate and our public stockholders will
only be entitled to receive their pro rata portion of the funds in the trust account, which may be less than $10.10 per share.
The ability of our public stockholders to
exercise their redemption rights, or sell their shares to us in a tender offer, with respect to a large number of our shares may not allow
us to effectuate 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, or sell their
shares to us in a tender offer, and therefore we will need to structure the transaction based on our expectations as to the number of
shares that will be submitted for redemption, or sold to us in a tender offer. If our business combination agreement requires us to use
a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing, because
we will not know how many stockholders may exercise redemption rights or seek to sell their shares to us in a tender offer, we may either
need to reserve a portion of the cash in the trust account to meet such requirements, or we may need to arrange third party financing
to help fund our business combination. In addition, if a larger number of shares are submitted for redemption, or if more stockholders
seek to sell their shares to us in a tender offer, 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. This risk may be increasingly prevalent given recent
high levels of redemptions among other SPACs completing their initial business combinations. In the event that a proposed initial business
combination involves the issuance of our stock as consideration, we may be required to issue a higher percentage of our stock to make
up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness
at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class
B common stock results in the issuance of shares of Class A common stock on a greater than one-to-one basis upon conversion of the Class
B common stock at the time of our business combination.
The above considerations may
limit our ability to effectuate the most desirable business combination available to us or optimize our capital structure. The amount
of the deferred underwriting commissions payable to the underwriters of our initial public offering will not be adjusted for any shares
that are redeemed in connection with a business combination. The per-share amount we will distribute to stockholders who properly
exercise their redemption rights will not be reduced by the deferred underwriting 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.
In connection with any vote to approve a
business combination, we will offer each public stockholder the option to vote in favor of a proposed business combination and still seek
redemption of his, her or its shares.
In connection with any vote
to approve a business combination, we will offer each public stockholder (but not our sponsor, officers or directors) the right to have
his, her or its shares of common stock redeemed for cash (subject to the limitations described elsewhere in this report and in our final
prospectus) regardless of whether such stockholder votes for or against such proposed business combination. This risk may be increasingly
prevalent given recent high levels of redemptions among other SPACs completing their initial business combinations. This ability to seek
redemption while voting in favor of our proposed business combination may make it more likely that we will consummate a business combination.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our business combination, or fails to comply with the procedures for tendering
its shares, such shares may not be redeemed.
We will comply with the tender
offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business combination. Despite our compliance
with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become
aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer materials, as applicable, that we will
furnish to holders of our public shares in connection with our initial business combination will indicate the applicable delivery requirements,
which may include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. For example, we
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer
documents or proxy materials mailed to such holders, or up to two business days prior to the initially scheduled vote on the proposal
to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically.
In the event that a stockholder fails to comply with these or any other procedures, its shares may not be redeemed.
In connection with any stockholder meeting
called to approve a proposed initial business combination, we may require stockholders who wish to redeem their shares in connection with
a proposed business combination to comply with specific requirements for redemption that may make it more difficult for them to exercise
their redemption rights prior to the deadline for exercising their rights.
In connection with any stockholder
meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether
he, she or it is voting for or against such proposed business combination, to demand that we redeem his, her or its shares into a pro
rata share of the trust account as of two business days prior to the consummation of the initial business combination. We may require
public stockholders who wish to redeem their shares in connection with a proposed business combination to either (i) tender their certificates
to our transfer agent or (ii) deliver their shares to the transfer agent electronically using the DTC’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holders’ option, in each case prior to a date set forth in the proxy materials sent in connection with
the proposal to approve the business combination. In order to obtain a physical stock certificate, a stockholder’s broker and/or
clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should
generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control
over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate.
While we have been advised that it takes a short time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly,
if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet
the deadline for exercising their redemption rights and thus may be unable to redeem their shares.
If, in connection with any stockholder meeting
called to approve a proposed business combination, we require public stockholders who wish to redeem their shares to comply with specific
requirements for redemption, such redeeming stockholders may be unable to sell their securities when they wish to in the event that the
proposed business combination is not approved.
If we require public stockholders
who wish to redeem their shares to either (i) tender their certificates to our transfer agent or (ii) deliver their shares to the transfer
agent electronically using the DTC’s DWAC (Deposit/Withdrawal At Custodian) System as described above and such proposed business
combination is not consummated, we will promptly return such certificates to the tendering public stockholders. Accordingly, investors
who attempted to redeem their shares in such a circumstance will be unable to sell their securities after the failed acquisition until
we have returned their securities to them. The market price for our shares of common stock may decline during this time and you may not
be able to sell your securities when you wish to, even while other stockholders that did not seek redemption may be able to sell their
securities.
Because of our structure, other companies
may have a competitive advantage and we may not be able to consummate an attractive business combination.
We expect to encounter intense
competition from entities other than blank check companies having a business objective similar to ours, including venture capital funds,
leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established and have extensive
experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors possess greater
technical, human and other resources than we do and our financial resources will be relatively limited when contrasted with those of many
of these competitors. While we believe that there are numerous potential target businesses that we could acquire with the net proceeds
of our initial public offering and the private placements of the private placement warrants, our ability to compete in acquiring certain
sizable target businesses 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, seeking stockholder approval or engaging in a tender offer in connection
with any proposed business combination may delay the consummation of such a transaction. Additionally, our outstanding warrants, and the
future dilution they potentially represent, may not be viewed favorably by certain target businesses. Any of the foregoing may place us
at a competitive disadvantage in successfully negotiating a business combination.
As the number of special purpose acquisition
companies increases, there may be more competition to find an attractive target for an initial business combination. This could increase
the costs associated with completing our initial business combination and may result in our inability to find a suitable target for our
initial business combination.
In recent years, the number
of special purpose acquisition companies that have been formed has increased substantially. Many companies have entered into business
combinations with special purpose acquisition companies, and there are still many special purpose acquisition companies seeking targets
for their initial business combination, as well as many additional special purpose acquisition companies currently in registration. As
a result, at times, fewer attractive targets may be available, and it may require more time, effort and resources to identify a suitable
target for an initial business combination.
In addition, because there
are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition
for available targets with attractive fundamentals or business models may increase, which could cause target companies to demand improved
financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical
tensions, including the invasion of Ukraine by Russia and the resulting sanctions, or increases in the cost of additional capital needed
to close business combinations or operate targets post-business combination, including as a result of measures imposed to limit recent
increases in inflation in the United States and elsewhere. This could increase the cost of, delay or otherwise complicate or frustrate
our ability to find a suitable target for and/or complete our initial business combination.
Changes in the market for directors and
officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
The market for directors and
officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and our management team. Fewer
insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have generally
increased and the terms of such policies have generally become less favorable. These trends may continue into the future.
The increased cost and decreased
availability of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete
an initial business combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming
a public company, the post-business combination entity might need to incur greater expense and/or accept less favorable terms. Furthermore,
any failure to obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s
ability to attract and retain qualified officers and directors.
In addition, after completion
of any initial business combination, our directors and officers could be subject to potential liability from claims arising from conduct
alleged to have occurred prior to such initial business combination. As a result, in order to protect our directors and officers, the
post-business combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”).
The need for run-off insurance would be an added expense for the post-business combination entity and could interfere with or frustrate
our ability to consummate an initial business combination on terms favorable to our investors.
We may not have sufficient funds to satisfy
indemnification claims of our directors and 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 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.
Certain agreements related to our initial
public offering may be amended without stockholder approval.
Certain agreements, including
the letter agreement among us and our sponsor, officers, directors and initial stockholders, and the registration rights agreement entered
into in connection with our initial public offering, may be amended without stockholder approval. These agreements contain various provisions,
including transfer restrictions on our founder shares, that our public stockholders might deem to be material. It may be possible that
our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments
to any such agreement in connection with the consummation of our initial business combination. Any such amendments would not require approval
from our stockholders, may result in the completion of our initial business combination that may not otherwise have been possible, and
may have an adverse effect on the value of an investment in our securities.
We may be unable to obtain additional financing,
if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to
restructure or abandon a particular business combination.
Although we believe that the
net proceeds of our initial public offering and the private placements of the private placement warrants will be sufficient to allow us
to consummate a business combination, because we have not yet identified any prospective target business, we cannot ascertain the capital
requirements for any particular transaction. If the net proceeds of our initial public offering and the private placements of the private
placement warrants prove to be insufficient, because of either the size of the business combination, the depletion of the available net
proceeds in search of a target business or the obligation to redeem for cash a significant number of shares from dissenting stockholders,
we will be required to seek additional financing. Such financing may not be available on acceptable terms, if at all. To the extent that
additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to either
restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. In addition,
if we consummate a business combination, we may require additional 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 sponsor, officers, directors or stockholders is required to provide any financing to us in connection with or after a business
combination.
Our initial stockholders control a substantial
interest in us and thus may influence certain actions requiring a stockholder vote.
Our initial stockholders own
approximately 20% of our issued and outstanding shares of common stock. In addition, our sponsor, officers, directors or their affiliates
could determine in the future to make such purchases in the open market or in private transactions, to the extent permitted by law, in
order to influence the vote or magnitude of the number of stockholders seeking to tender their shares to us. In connection with any vote
for a proposed business combination, our sponsor and initial stockholders, as well as all of our officers and directors, have agreed to
vote the shares of common stock owned by them in favor of such proposed business combination.
Our board of directors is divided
into two classes, each of which generally serves for a term of two years with only one class of directors being elected in each year.
There may not be an annual meeting of stockholders to elect new directors prior to the consummation of a business combination, in which
case all of the current directors will continue in office until at least the consummation of the business combination. If there is an
annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be
considered for election and our initial stockholders, because of their ownership position, will have considerable influence regarding
the outcome. Accordingly, our initial stockholders will continue to exert control at least until the consummation of a business combination.
We may not hold an annual meeting of stockholders
until after the consummation of our initial business combination. Our public stockholders will not have the right to elect or remove directors
prior to the consummation of our initial business combination.
We may not hold an annual meeting
of stockholders until after we consummate our initial business combination (unless required by Nasdaq) and thus may not be in compliance
with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance
with a company’s bylaws unless such election is made by written consent in lieu of such a meeting. Therefore, if our stockholders
want us to hold an annual meeting prior to our consummation of our initial business combination, they may attempt to force us to hold
one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. Until we hold an annual
meeting of stockholders, public stockholders may not be afforded the opportunity to discuss company affairs with management. In addition,
as holders of shares of our Class A common stock, our public stockholders will not have the right to vote on the election, removal or
replacement of directors prior to consummation of our initial business combination.
If our security holders exercise their registration
rights, it may have an adverse effect on the market price of our shares of Class A common stock and the existence of these rights may
make it more difficult to effect a business combination.
Our initial stockholders and
their permitted transferees are entitled to demand that we register the resale of the founder shares and the holders of the private placement
warrants and any warrants our sponsor, officers, directors, or their affiliates may be issued in payment of working capital loans made
to us are entitled to demand that we register the resale of the private placement warrants and any other warrants we issue to them (and
the underlying shares of Class A common stock) commencing at any time after we consummate an initial business combination. The presence
of these additional shares of Class A common stock trading in the public market may have an adverse effect on the market price of our
securities. In addition, the existence of these rights may make it more difficult to effectuate a business combination or increase the
cost of acquiring the target business, as the stockholders of the target business may be discouraged from entering into a business combination
with us or will request a higher price for their securities because of the potential effect the exercise of such rights may have on the
trading market for our shares of Class A common stock.
The requirement that we complete an initial
business combination by April 13, 2023 (or such later date as may be approved by our stockholders) may give potential target businesses
leverage over us in negotiating a business combination.
We have until April 13, 2023
(or such later date as may be approved by our stockholders) to complete an initial business combination. Any potential target business
with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently, such target business
may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that
particular target business, we may be unable to complete a business combination with any other target business. This risk will increase
as we get closer to the time limit referenced above.
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.
The coronavirus (COVID-19)
pandemic has resulted, and other infectious diseases could result, in a widespread health crisis that could adversely affect the economies
and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could
be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating
to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors
and services providers are unavailable to negotiate and consummate a transaction in a timely manner, or if COVID-19 causes a prolonged
economic downturn. 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. Moreover, the Federal Reserve has shifted its focus to limiting inflationary and
other potentially adverse effects of the extensive pandemic-related government stimulus, which signals the potential for a continued period
of economic uncertainty even if the pandemic subsides. 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 business combination 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 and third-party financing being unavailable
on terms acceptable to us or at all.
The COVID-19 pandemic may also
have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related to
the market for our securities and cross-border transactions.
Our search for a business combination, and
any target business with which we ultimately consummate a business combination, may be materially adversely affected by negative impacts
on the global economy, capital markets or other geopolitical conditions resulting from the invasion of Ukraine by Russia and subsequent
sanctions against Russia, Belarus and related individuals and entities.
United States and global markets
are experiencing volatility and disruption following the escalation of geopolitical tensions and the invasion of Ukraine by Russia in
February 2022. In response to such invasion, the North Atlantic Treaty Organization (“NATO”) deployed additional military
forces to eastern Europe, and the United States, the United Kingdom, the European Union and other countries have announced various sanctions
and restrictive actions against Russia, Belarus and related individuals and entities, including the removal of certain financial institutions
from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system. Certain countries, including the United States,
have also provided and may continue to provide military aid or other assistance to Ukraine during the ongoing military conflict, increasing
geopolitical tensions with Russia. The invasion of Ukraine by Russia and the resulting measures that have been taken, and could be taken
in the future, by NATO, the United States, the United Kingdom, the European Union and other countries have created global security concerns
that could have a lasting impact on regional and global economies. Although the length and impact of the ongoing military conflict in
Ukraine is highly unpredictable, the conflict could lead to market disruptions, including significant volatility in commodity prices,
credit and capital markets, as well as supply chain interruptions. Additionally, Russian military actions and the resulting sanctions
could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets.
Any of the abovementioned factors,
or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting from the Russian invasion
of Ukraine and subsequent sanctions, could adversely affect our search for a business combination and any target business with which we
ultimately consummate a business combination. The extent and duration of the Russian invasion of Ukraine, resulting sanctions and any
related market disruptions are impossible to predict, but could be substantial, particularly if current or new sanctions continue for
an extended period of time or if geopolitical tensions result in expanded military operations on a global scale. Any such disruptions
may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related
to the market for our securities, cross-border transactions or our ability to raise equity or debt financing in connection with any particular
business combination. If these disruptions 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.
Recent increases in inflation in the United
States and elsewhere could make it more difficult for us to complete our initial business combination.
Recent increases in inflation
in the United States and elsewhere may lead to increased price volatility for publicly traded securities, including ours, or other national,
regional or international economic disruptions, any of which could make it more difficult for us to complete our initial business combination.
Management’s flexibility in identifying
and selecting a prospective target business or businesses, along with our management’s financial interest in consummating our initial
business combination, may lead management to enter into an acquisition agreement that is not in the best interest of our stockholders.
Subject to the requirements
in Nasdaq rules and our amended and restated certificate of incorporation that we must complete one or more business combinations having
an aggregate fair market value of at least 80% of the balance in the trust account (excluding the deferred underwriting commissions and
taxes payable on the income earned on the trust account) at the time of the execution of a definitive agreement for such initial business
combination, we have virtually unrestricted flexibility in identifying and selecting a prospective target business or businesses. Investors
will be relying on management’s ability to identify business combinations, evaluate their merits, conduct or monitor diligence and
conduct negotiations. Management’s flexibility in identifying and selecting a prospective target business or businesses, along with
management’s financial interest in consummating our initial business combination, may lead management to enter into an acquisition
agreement that is not in the best interest of our stockholders, which would be the case if the trading price of our shares of Class A
common stock after giving effect to such business combination was less than the per-share trust liquidation value that our stockholders
would have received if we had dissolved without consummating our initial business combination.
We may not obtain a fairness opinion with
respect to the target business that we seek to acquire and therefore you may be relying solely on the judgment of our board of directors
in approving a proposed business combination.
We will only be required to
obtain a fairness opinion with respect to the target business that we seek to acquire if it is an entity that is affiliated with any of
our officers, directors or sponsor. In all other instances, we will have no obligation to obtain an opinion. Accordingly, investors will
be relying solely on the judgment of our board of directors in approving a proposed business combination.
Resources could be spent researching acquisitions
that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
It is anticipated that the
investigation of each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents,
and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others.
If a decision is made not to complete a specific business combination, the costs incurred up to that point for the proposed transaction
likely would not be recoverable. Furthermore, even if an agreement is reached relating to a specific target business, we may fail to consummate
the 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.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability
of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’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 stockholder or warrant holder who chooses to remain a stockholder
or warrant holder, respectively, following our initial business combination could suffer a reduction in the value of their securities.
Such stockholders and warrant holders are unlikely to have a remedy for such reduction in value.
The directors and officers
of an acquisition candidate may resign upon completion of our initial business combination. The departure of a business combination target’s
key personnel could negatively impact the operations and profitability of our post-combination business. The role of an acquisition candidate’s
key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that
certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our
initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Because we must furnish our stockholders
with target business financial statements prepared in accordance with U.S. generally accepted accounting principles or international financial
reporting standards, we will not be able to complete a business combination with prospective target businesses unless their financial
statements are prepared in accordance with such standards.
The federal proxy rules require
that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include historical
and/or pro forma financial statement disclosure in periodic reports. These financial statements may be required to be prepared in accordance
with, or be reconciled to, accounting principles generally accepted in the United States of America, or U.S. GAAP, or international financial
reporting standards, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited in
accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. We will include the same financial
statement disclosure in connection with any tender offer documents we use, whether or not they are required under the tender offer rules.
Additionally, to the extent we furnish our stockholders with financial statements prepared in accordance with IFRS, such financial statements
will need to be audited in accordance with U.S. GAAP at the time of the consummation of the business combination. These financial statement
requirements may limit the pool of potential target businesses we may acquire.
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
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we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors, and in the case of any such issuance to our initial stockholders or their affiliates, without taking into account any founder shares held by them prior to such issuance) (the “Newly Issued Price”), |
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(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 |
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(iii) |
the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day prior to the day on which we consummate our initial business combination (such price, 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
price of our warrants will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued
Price. This may make it more difficult for us to consummate an initial business combination with a target business.
We may be subject to an increased rate of
tax on our income if we are treated as a personal holding company.
Depending on the date and size
of our initial business combination, it is possible that we could be treated as a “personal holding company” for U.S. federal
income tax purposes. A U.S. corporation generally will be classified as a personal holding company for U.S. federal income tax purposes
in a given taxable year if more than 50% of its ownership (by value) is concentrated, within a certain period of time, in five or fewer
individuals (without regard to their citizenship or residency and including as individuals for this purpose certain entities such as certain
tax-exempt organizations, pension funds, and charitable trusts), and at least 60% of its income is comprised of certain passive items.
There may be tax consequences to our business
combinations that may adversely affect us.
While we expect to undertake
any merger or acquisition so as to minimize taxes both to the acquired business and/or asset and us, such business combination might not
meet the statutory requirements of a tax-free reorganization, or the parties might not obtain the intended tax-free treatment upon a transfer
of shares or assets. A non-qualifying reorganization could result in the imposition of substantial taxes.
A new 1% U.S. federal excise tax could be
imposed on us in connection with redemptions by us of our shares.
On August 16, 2022, the Inflation
Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S.
federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded U.S. domestic corporations and certain
U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on
the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally
1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax,
repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock
repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury
(the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or
avoidance of the excise tax.
On December 27, 2022, the Treasury released Notice 2023-2, which provides
taxpayers with interim guidance on the excise tax that may be relied upon until the IRS issues proposed Treasury regulations on such matter.
Notice 2023-2 includes as one of its exceptions to the excise tax a distribution in complete liquidation of a “covered corporation”,
such as ours, to which Sec. 331 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), applies (so long as Sec.
332(a) of the Code also does not also apply). Although it remains uncertain whether, and/or to what extent, the excise tax could apply
to any redemptions of our public shares after December 31, 2022, including any redemptions in connection with our initial business combination
or in the event we do not consummate our initial business combination by April 13, 2023 (or such later date as may be approved by our
stockholders), we would not expect the excise tax to apply to redemptions of our public shares that occur during a taxable year in which
we completely liquidate under Sec. 331 of the Code.
Any redemption or other repurchase
that occurs after December 31, 2022 may be subject to the excise tax, including in connection with our initial business combination, certain
amendments to our amended and restated certificate of incorporation or otherwise. Whether and to what extent we would be subject to the
excise tax would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with
the initial business combination, certain amendments to our amended and restated certificate of incorporation or otherwise, (ii) the structure
of the initial business combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with
the initial business combination (or otherwise issued not in connection with the initial business combination but issued within the same
taxable year of the initial business combination) and (iv) the content of regulations and other guidance from the Treasury. In addition,
because the excise tax would be payable by us and not by the redeeming holder, the mechanics of any required payment of the excise tax
have not been determined. The foregoing could cause a reduction in the cash available on hand to complete our initial business combination
and in our ability to complete our initial business combination.
Risks Related to the Post-Business Combination
Company
If we do not conduct an adequate due diligence
investigation of a target business, we may subsequently be required to take write-downs or write-offs, restructuring, and impairment or
other charges that could have a significant negative effect on our financial condition, results of operations and our stock price, which
could cause you to lose some or all of your investment.
We must conduct a due diligence
investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and expensive due to the operations,
accounting, finance and legal professionals who must be involved in the due diligence process. Even if we conduct extensive due diligence
on a target business, this diligence may not reveal all material issues that may affect a particular target business, and factors outside
the control of the target business and outside of our control may later arise. If our diligence fails to identify issues specific to a
target business, industry or the environment in which the target business operates, we may later be forced to write-down or write-off
assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. 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 common stock. 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 during or subsequent to the business combination.
Investments in post-restructured equities
are subject to various risks.
Business combinations with
post-restructured entities entail special considerations and risks. If we are successful in completing a business combination with such
a target business, we may be subject to, and possibly adversely affected by, the following risks:
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investments in such companies are speculative, prices are volatile, and market movements are difficult to predict; |
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supply and demand for distressed securities change rapidly and are affected by a variety of market factors over which we have no control and which may reduce the pool of profitable investment opportunities; |
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our ability to identify undervalued investment opportunities that fit our business strategy involves a high degree of uncertainty, and no assurance can be given that we will be able to identify such opportunities; |
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such investments may take a substantial period of time before realizing their anticipated value and returns generated from such investments may not adequately compensate for the business and financial risks assumed; and |
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there is no guarantee that we will be able to achieve our investment objectives or provide any return on invested capital. |
Any of the foregoing could
have an adverse impact on our operations following a business combination. However, our efforts in identifying prospective target businesses
will not be limited to post-restructured entities. Accordingly, if we acquire a target business that is not a post-restructured entity,
it is possible that these specific risks would not affect us in the same manner, but we would be subject to other risks attendant with
the specific industry in which we operate or target business which we acquire, none of which can be presently ascertained.
Since we have not yet selected a particular
industry or target business with which to complete a business combination, we are unable to currently ascertain the merits or risks of
the industry or business in which we may ultimately operate.
Although we have initially
focused our search on identifying a prospective target business that may be experiencing liquidity constraints, is financially stressed
or has experienced and emerged from a financial restructuring, we are not limited to completing a business combination with a target business
in any industry or geographic location and may consummate a business combination with a company in any industry or geographic location
we choose. Accordingly, there is no current basis for you to evaluate the possible merits or risks of the particular industry in which
we may ultimately operate or the target business which we may ultimately acquire. To the extent we complete a business combination with
a financially unstable company or an entity in its development stage, we may be affected by numerous risks inherent in the business operations
of those entities. If we complete a business combination with an entity in an industry characterized by a high level of risk, we may be
affected by the currently unascertainable risks of that industry. Although our management will endeavor to evaluate the risks inherent
in a particular industry or target business, we cannot assure you that we will properly ascertain or assess all of the significant risk
factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to our security holders
than a direct investment, if an opportunity were available, in a target business.
Our ability to successfully effect a 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 a business combination. While we intend to closely scrutinize any individuals we engage after a business combination, we cannot
assure you that our assessment of these individuals will prove to be correct.
Our ability to successfully
effect a business combination is dependent upon the efforts of our key personnel. We believe that our success depends on the continued
service of our key personnel, at least until we have consummated our initial business combination. We cannot assure you that any of our
key personnel will remain with us for the immediate or foreseeable future. In addition, none of our officers are required to commit any
specified amount of time to our affairs and, accordingly, our officers may have conflicts of interest in allocating management time among
various business activities, including identifying potential business combinations and monitoring the related due diligence. We do not
have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the services of our
key personnel could have a detrimental effect on us.
Additionally, the role of our
key personnel after a business combination cannot presently be ascertained. Although some of our key personnel may continue to serve in
senior management or advisory positions following a business combination, it is likely that most, if not all, of the management of the
target business will remain in place. While we intend to closely scrutinize any individuals we engage after a business combination, we
cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements.
This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
Our officers and directors may not have
significant experience or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.
Although we intend to initially
focus our search on identifying a prospective target business that may be experiencing liquidity constraints, is financially stressed
or has experienced and emerged from a financial restructuring such as a bankruptcy court protection, which is where our management team
has its most experience, we are not limited to such industry and may consummate a business combination with a target business in any geographic
location or industry we choose. We cannot assure you that our officers and directors will have enough experience or have sufficient knowledge
relating to the jurisdiction of the target or its industry to make an informed decision regarding a business combination.
If we effect a business combination with
a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.
We may effect a business combination
with a company located outside of the United States. If we did, we would be subject to any special considerations or risks associated
with companies operating in the target business’s home jurisdiction, including any of the following:
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rules and regulations or currency conversion or corporate withholding taxes on individuals; |
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tariffs and trade barriers; |
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regulations related to customs and import/export matters; |
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tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
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currency fluctuations and exchange controls; |
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challenges in collecting accounts receivable; |
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cultural and language differences; |
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employment regulations; |
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crime, strikes, riots, civil disturbances, terrorist attacks and wars, such as the invasion of Ukraine by Russia; and |
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deterioration of political relations with the United States. |
We cannot assure you that we
would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.
If we effect a business combination with
a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements
and we may not be able to enforce our legal rights.
If we effect a business combination
with a company located outside of the United States, the laws of the country in which such company operates will govern almost all of
the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of its material
agreements or that remedies will be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such
jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a
remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally,
if we acquire a company located outside of the United States, it is likely that substantially all of our assets would be located outside
of the United States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible
for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce
judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under federal
securities laws.
Risks Relating to Conflicts of Interest of
our Officers, Directors and Others
Our officers and directors may 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 consummate a business combination.
Our officers and directors
are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between
our operations and their other commitments. We presently expect each of our employees to devote such amount of time as they reasonably
believe is necessary to our business. We do not intend to have any full time employees prior to the consummation of our initial business
combination. All of our officers and directors are engaged in other business endeavors and are not obligated to devote any specific number
of hours to our affairs. In particular, certain of our officers and directors are employed by Schultze Asset Management, which is an investment
manager to various investment funds, which make investments in securities or other interests of or relating to companies in industries
we may target for our initial business combination. 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 more substantial amounts of time to such affairs,
it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate our initial business
combination. We cannot assure you that these conflicts will be resolved in our favor.
Our officers and directors may have a conflict
of interest in determining whether a particular target business is appropriate for a business combination.
Our sponsor and our officers
and directors have agreed to waive their right to redeem their founder shares and any other shares they purchase, or to receive distributions
from the trust account with respect to their founder shares upon our liquidation if we are unable to consummate a business combination.
Accordingly, the founder shares will be worthless if we do not consummate a business combination. Additionally, the warrants, including
the private placement warrants held by our sponsor, will expire worthless if we do not consummate a business combination. The personal
and financial interests of our directors and officers, including through their interests in our sponsor, 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.
Certain of our officers and directors have,
and any of our officers and directors or their affiliates may in the future have, outside fiduciary and contractual obligations and, accordingly,
may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Certain of our officers and
directors have, and any of our officers and directors or their affiliates may in the future have, fiduciary and contractual obligations
to other companies. Accordingly, they may participate in transactions and have obligations that may be in conflict or competition with
the consummation of our initial business combination. As a result, a potential target business may be presented by our management team
to another entity prior to its presentation to us and we may not be afforded the opportunity to engage in a transaction with such target
business.
We may acquire a target business through
an Affiliated Joint Acquisition with one or more affiliates of Schultze Asset Management. This may result in conflicts of interest as
well as dilutive issuances of our securities.
We may, at our option, pursue
an Affiliated Joint Acquisition opportunity with an entity affiliated with Schultze Asset Management. Any such parties would co-invest
only if (i) permitted by applicable regulatory and other legal limitations; (ii) we and Schultze Asset Management considered a transaction
to be mutually beneficial to us as well as the affiliated entity; and (iii) other business reasons exist to do so, such as the strategic
merits of including such co-investors, the need for additional capital beyond the amount held in our trust account to fund the initial
business combination and/or the desire to obtain committed capital for closing the initial business combination. An Affiliated Joint Acquisition
may be effected through a co-investment with us in the target business at the time of our initial business combination, or we could raise
additional proceeds to complete the initial business combination by issuing to such parties a class of equity or equity-linked securities.
Accordingly, such persons or entities may have a conflict between their interests and ours.
Since our sponsor, 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.
On January 15, 2021, our sponsor
purchased an aggregate of 5,750,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. Our
sponsor subsequently transferred 25,000 founder shares to each of our independent directors, 276,000 founder shares to Stifel Venture
and an aggregate of 50,000 founder shares to our Strategic Advisors, in each case at the same price originally paid for such shares. Subsequently,
our sponsor forfeited an aggregate of 1,437,500 founder shares, resulting in there being 4,312,500 founder shares outstanding. On October
22, 2021, in connection with the underwriters’ election to partially exercise their over-allotment option and the forfeiture of
the remaining portion of such over-allotment option, 175,500 and 12,000 founder shares were forfeited by our sponsor and Stifel Venture,
respectively, to us at no cost, and 4,125,000 founder shares remain outstanding. The number of founder shares issued was determined based
on the expectation that such founder shares would represent 20% of the outstanding shares after our initial public offering. The founder
shares will be worthless if we do not complete an initial business combination. In addition, our sponsor and Stifel Venture purchased
an aggregate of 6,575,000 private placement warrants at a price of $1.00 per warrant for an aggregate purchase price of $6,575,000, that
will also be worthless if we do not complete an initial business combination. Holders of founder shares have agreed (A) to vote any shares
owned by them in favor of any proposed initial business combination and (B) not to redeem any founder shares in connection with a stockholder
vote to approve a proposed initial business combination. In addition, we may obtain loans from our sponsor, affiliates of our sponsor
or an officer or director. The personal and financial interests of our officers and directors may influence their motivation in identifying
and selecting a target business combination, completing an initial business combination and influencing the operation of the business
following the initial business combination.
Since our anchor investors will acquire
founder shares from our sponsor upon consummation of the initial business combination, a conflict of interest may arise in determining
whether a particular target business is appropriate for our initial business combination.
Our anchor investors have an
indirect interest in founder shares controlled by our sponsor, which are expected to be distributed to our anchor investors after the
completion of an initial business combination. Provided that we successfully complete a business combination, these anchor investors will
share in any appreciation of the founder shares and, accordingly, our anchor investors’ interests in the founder shares may provide
them with an incentive to vote any public shares they own in favor of a business combination, and make a substantial profit on such interests,
even if the business combination is with a target that ultimately declines in value and is not profitable for other public stockholders.
We may engage the underwriters of our initial
public offering or one of their respective affiliates to provide additional services to us, which may include acting as financial advisor
in connection with an initial business combination or as placement agent in connection with a related financing transaction. Such underwriters
are entitled to receive deferred commissions that will be released from the trust account only on the completion of an initial business
combination. These financial incentives may cause them to have potential conflicts of interest in rendering any such additional services
to us, including, for example, in connection with the sourcing and consummation of an initial business combination.
We may engage the underwriters
of our initial public offering or one of their respective affiliates to provide additional services to us, including, for example, identifying
potential targets, providing financial advisory services, acting as a placement agent in a private offering or arranging debt financing.
We may pay such underwriters or their respective affiliates fair and reasonable fees or other compensation that would be determined at
that time in an arm’s length negotiation. Such underwriters are also entitled to receive deferred commissions that are conditioned
on the completion of an initial business combination. In addition, Stifel Venture owns a portion of the private placement warrants, which
would have no value if we do not consummate an initial business combination. The fact that the underwriters of our initial public offering
or their respective affiliates’ financial interests are tied to the consummation of a business combination transaction may give
rise to potential conflicts of interest in providing any such additional services to us, including potential conflicts of interest in
connection with the sourcing and consummation of an initial business combination.
Since our sponsor initially paid only approximately
$0.004 per share for the founder shares, our initial stockholders and our Chairman could potentially make a substantial profit even if
we acquire a target business that subsequently declines in value.
On January 15, 2021, our sponsor
purchased an aggregate of 5,750,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. Our
sponsor subsequently transferred 25,000 founder shares to each of our independent director nominees, 276,000 founder shares to Stifel
Venture and an aggregate of 50,000 founder shares to our Strategic Advisors, in each case at the same price originally paid for such shares.
Subsequently, our sponsor forfeited an aggregate of 1,437,500 founder shares, resulting in there being 4,312,500 founder shares outstanding.
On October 22, 2021, in connection with the underwriters’ election to partially exercise their over-allotment option and the forfeiture
of the remaining portion of such over-allotment option, 175,500 and 12,000 founder shares were forfeited by our sponsor and Stifel Venture,
respectively, to us at no cost, and 4,125,000 founder shares remain outstanding. Our Chairman has a significant indirect economic interest
in our sponsor. As a result of the low acquisition cost of our founder shares, our initial stockholders and our Chairman could make a
substantial profit even if we select and consummate an initial business combination with an acquisition target that subsequently declines
in value or is unprofitable for our public stockholders. Thus, such parties may have more of an economic incentive for us to enter into
an initial business combination with a riskier, weaker-performing or financially unstable business, or an entity lacking an established
record of revenues or earnings, than would be the case if our sponsor had initially paid the full offering price for the founder shares.
The nominal purchase price paid by our initial
stockholders for the founder shares may significantly dilute the implied value of the public shares in the event we consummate an initial
business combination, and our initial stockholders are likely to make a substantial profit on their investment in us in the event we consummate
an initial business combination, even if the business combination causes the trading price of our Class A common stock to materially decline.
Our initial stockholders invested
an aggregate of $6,600,000 in our company in connection with our initial public offering, comprised of the $25,000 purchase price for
the founder shares and the $6,575,000 purchase price for the private placement warrants. The amount held in the trust account was $168,830,546
as of December 31, 2022, implying a value of approximately $10.23 per public share. The value of the public shares may be significantly
diluted as a result of the automatic conversion of the founder shares into shares of Class A common stock upon our completion of an initial
business combination.
The following table shows the
public stockholders’ and our initial stockholders’ investment per share and how these compare to the implied value of one
share of Class A common stock upon the completion of our initial business combination. The following table (i) assumes that (a) our valuation
is $168,830,546 (which is the amount held in the trust account as of December 31, 2022), (b) no additional interest is earned on the funds
held in the trust account, (c) no public shares are redeemed in connection with our initial business combination and (d) all founder shares
are held by our initial stockholders upon completion of our initial business combination, and (ii) does not take into account other potential
impacts on our valuation at the time of our initial business combination such as (a) the value of the public warrants and private placement
warrants, (b) the trading price of our shares of Class A common stock, (c) business combination transaction costs (including payment of
$6,600,000 of deferred underwriting commissions), (d) any equity issued or cash paid to the target’s sellers, (e) any equity issued
to other third party investors or (f) the target’s business itself, including its assets, liabilities, management and prospects.
Public shares | |
| 16,500,000 shares | |
Founder shares | |
| 4,125,000 shares | |
Total shares | |
| 20,625,000 shares | |
Total funds in trust(1) | |
$ | 168,830,546 | |
Public stockholders’ investment per public share(2) | |
$ | 10.00 | |
Initial stockholders’ investment per founder share(3)(4) | |
$ | 0.006 | |
Implied value per share of Class A common stock upon completion of the initial business combination | |
$ | 8.19 | |
(1) |
Amount held in the trust account as of December 31, 2022. |
(2) |
While the public stockholders’ investment is in both the public shares and the public warrants, for purposes of this table the full investment amount is ascribed to the public shares only. |
(3) |
Investment per founder share reflects the forfeiture by our initial stockholders of 1,625,000 founder shares in the aggregate prior to our initial public offering and in connection with the partial forfeiture of the underwriters’ over-allotment option. |
(4) |
Our initial stockholders’ total investment in the equity of our company, inclusive of the founder shares and the $6,575,000 investment in the private placement warrants, is $6,600,000. |
Note that redemptions of public
shares in connection with our initial business combination would further reduce the implied value of our Class A common stock. For instance,
in the example above, if 50% of the public shares were redeemed in connection with our initial business combination, the implied value
per share would be approximately $6.98.
While the implied value of
our public shares may be diluted, the implied value of $8.19 per share in the example above would represent a significant implied profit
for our initial stockholders relative to the initial purchase price of the founder shares. At $8.19 per share, the 4,125,000 founder shares
would have an aggregate implied value of $33,783,750. As a result, even if the trading price of our Class A common stock significantly
declines (whether because of a substantial amount of redemptions of our public shares or for any other reason), our initial stockholders
will stand to make significant profit on their investment in us. In addition, our initial stockholders could potentially recoup their
entire investment in us even if the trading price of our Class A common stock were as low as $1.60 per share and even if the private placement
warrants are worthless. As a result, our initial stockholders are likely to make a substantial profit on their investment in us even if
we select and consummate an initial business combination that causes the trading price of our Class A common stock to decline, while our
public stockholders who purchased their units in our initial public offering could lose significant value in their public shares. Our
initial stockholders may therefore be economically incentivized to consummate an initial business combination with a riskier, weaker-performing
or less-established target business than would be the case if our initial stockholders had paid the same per share price for the founder
shares as our public stockholders paid for their public shares.
This dilution would increase
to the extent that the anti-dilution provisions of the founder shares result in the issuance of shares of Class A common stock on a greater
than one-to-one basis upon conversion of the founder shares at the time of our initial business combination and would become exacerbated
to the extent that public stockholders seek redemptions from the trust account. In addition, because of the anti-dilution protection in
the founder shares, any equity or equity-linked securities issued in connection with our initial business combination would be disproportionately
dilutive to our Class A common stock.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for
them to receive compensation following a 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 will be able
to remain with the company after the consummation of a business combination only if they are able to negotiate employment or consulting
agreements or other appropriate arrangements in connection with the business combination. Such negotiations would take place simultaneously
with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to the company after the consummation of the business combination. The personal and
financial interests of such individuals may influence their motivation in identifying and selecting a target business.
Risks Related to Our Securities
Concentration of ownership among our sponsor
and the anchor investors may prevent other investors from influencing significant corporate decisions or adversely affect the trading
price of our securities.
Our anchor investors purchased
an aggregate of 14,857,500 units in our initial public offering, or approximately 90% of the aggregate 16,500,000 units sold. There can
be no assurance as to the amount of units the anchor investors will retain, if any, prior to or upon the consummation of our initial business
combination. So long as the anchor investors hold a substantial portion of the public shares included in the units purchased, our sponsor
and the anchor investors would collectively have substantial control over us and be able to exercise significant influence over all matters
requiring stockholder approval (although we have no knowledge of any affiliation or other agreement or arrangement, as to voting of our
securities or otherwise, among any such persons). For example, in the event that the anchor investors continue to hold such public shares
included in the units and vote such shares in favor of our initial business combination (although they are not contractually obligated
to, their interest in our founder shares may provide an incentive for them to do so), we would not need any additional public shares sold
in our initial public offering to be voted in favor of our initial business combination to have our initial business combination approved.
This potential concentration of influence could be disadvantageous to other stockholders with interests different from those of our sponsor
and the anchor investors. In addition, this potential significant concentration of share ownership may adversely affect the trading price
of our securities because investors often perceive disadvantages in owning shares in companies with principal stockholders and might make
it more difficult to complete a business combination with targets that would prefer to enter into a transaction with a SPAC with less
concentrated ownership.
If the anchor investors continue to hold
a substantial portion of the units sold in our initial public offering, the available public float for our securities may be limited,
which could affect the trading volume, liquidity and volatility of our securities, and could result in our inability to satisfy Nasdaq
continued listing requirements.
Our anchor investors purchased
an aggregate of 14,857,500 units in our initial public offering, or approximately 90% of the aggregate 16,500,000 units sold. There can
be no assurance as to the amount of units the anchor investors will retain, if any, prior to or upon the consummation of our initial business
combination. So long as the anchor investors continue to hold a substantial portion of the units sold in our initial public offering,
the available public float for our securities may be limited. Any such limitation in our available public float may consequently reduce
the trading volume and liquidity, and increase the volatility, of our securities relative to what they would have been had such units
been purchased by other public investors. Further, the anchor investors are not required to hold any units, public shares or warrants,
whether purchased in our initial public offering or thereafter, for any amount of time. Accordingly, the anchor investors may sell any,
or up to all, of the units, public shares or public warrants they purchased in our initial public offering or thereafter at any time.
The sale of material amounts of our units, public shares or warrants, or the perception that such sales may occur, could reduce the market
prices of those securities and may encourage short sales. In addition, in order to continue to satisfy Nasdaq’s continued listing
requirements, among other requirements, we must have a minimum of 400 round lot holders of our securities. To the extent our public float
is limited due to the anchor investors’ holdings, we may be more likely than other companies to fall below the required public holder
threshold in the future, which could ultimately result in Nasdaq delisting our securities from trading on its exchange.
If we are unable to consummate a business
combination, our public stockholders may be forced to wait beyond April 13, 2023 (or such later date as may be approved by our stockholders)
before receiving distributions from the trust account.
We have until April 13, 2023
(or such later date as may be approved by our stockholders) to complete a business combination. We have no obligation to return funds
to investors prior to such date unless (i) we consummate a business combination prior thereto or (ii) we seek to amend our amended and
restated certificate of incorporation prior to consummation of a business combination, and only then in cases where investors have properly
sought to redeem or sell their shares to us. Only after the expiration of this full time period will public security holders be entitled
to distributions from the trust account if we are unable to complete a business combination. Accordingly, investors’ funds may be
unavailable to them until after such date and to liquidate their investment, public security holders may be forced to sell their public
shares or warrants, potentially at a loss.
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 not be consummated and that you would have to wait for liquidation in order to redeem your stock.
If our business combination
agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, the probability that our initial business combination would not be consummated is increased. This risk may be increasingly
prevalent given recent high levels of redemptions among other SPACs seeking stockholder approval of certain charter amendments or completing
their initial business combinations. If our initial business combination is unsuccessful, you would not receive your pro rata portion
of the trust account until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock
in the open market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In
either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or you are able to sell your stock in the open market.
We may not be able to complete our initial
business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up
and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.10 per share, or less
than such amount in certain circumstances, and our warrants will expire worthless.
Our amended and restated certificate
of incorporation provides that we will continue in existence only until April 13, 2023. We may not be able to find a suitable target business
and complete our initial business combination, or effect an extension, within such time period. Our ability to complete our initial business
combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other risks described
herein. For example, the coronavirus (COVID-19) pandemic persists both in the U.S. and globally and, while the extent of the impact of
the COVID-19 pandemic on us will depend on future developments, it could limit our ability to complete our initial business combination,
including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms
acceptable to us or at all. The invasion of Ukraine by Russia and resulting sanctions may also have similar effects, and the impact of
such effects on us will depend on future developments that cannot be predicted with any degree of certainty. Additionally, the COVID-19
pandemic, the invasion of Ukraine by Russia and resulting sanctions, recent increases in inflation and other events (such as terrorist
attacks, geopolitical unrest, natural disasters or a significant outbreak of other infectious diseases) may negatively impact businesses
we may seek to acquire.
If we have not completed our
initial business combination, or effected an extension, within such time period, we will: (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the
funds held in the trust account not previously released to us (net of taxes payable and $150,000 for any dissolution or liquidation related
expenses, as applicable), divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and
our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. In such case, our public stockholders may only receive $10.10 per share, and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.10 per share on the redemption of their
shares. See “— If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share redemption
price received by stockholders may be less than $10.10” and other risk factors.
Our outstanding warrants 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
8,250,000 shares of Class A common stock as part of the units sold in our initial public offering and private placement warrants to purchase
6,575,000 shares of Class A common stock. We may also issue other warrants to our sponsor, officers or directors in payment of working
capital loans made to us as described elsewhere in this report and in our final prospectus. To the extent we issue shares of Class A common
stock to effect a business combination, the potential for the issuance of a substantial number of additional shares of Class A common
stock upon exercise of these warrants could make us a less attractive acquisition vehicle in the eyes of a target business. Such securities,
when exercised, will increase the number of issued and outstanding shares of Class A common stock and reduce the value of the shares issued
to complete the business combination. Accordingly, our warrants may make it more difficult to effectuate a business combination or increase
the cost of acquiring the target business. Additionally, the sale, or even the possibility of sale, of the shares underlying the warrants
could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent
these warrants are exercised, you may experience dilution to your holdings.
We may redeem your unexpired warrants prior
to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem
outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided
that the last reported sales price of the Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like and certain issuances of Class A common stock and equity-linked securities)
for any 20 trading days within a 30 trading-day period ending on the third business day prior to proper notice of such redemption provided
that on the date we give notice of redemption and during the entire period thereafter until the time we redeem the warrants, we have an
effective registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the warrants
and a current prospectus relating to them is available. If and when the warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption
of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be
disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your
warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely
to be substantially less than the market value of your warrants.
Our management’s ability to require
holders of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of Class A common stock
upon their exercise of the warrants than they would have received had they been able to exercise their warrants for cash.
If we call our warrants for
redemption after the redemption criteria have been satisfied, our management will have the option to require any holder that wishes to
exercise his, her or its warrant (including any warrants held by our sponsor, officers or directors or their permitted transferees) to
do so on a “cashless basis.” If our management chooses to require holders to exercise their warrants on a cashless basis,
the number of shares of Class A common stock received by a holder upon exercise will be fewer than it would have been had such holder
exercised his, her or its warrant for cash. This will have the effect of reducing the potential “upside” of the holder’s
investment in our company.
A market for our securities may not fully
develop or be sustained, which would adversely affect the liquidity and price of our securities.
The price of our securities
may vary significantly due to one or more potential business combinations and general market or economic conditions, including as a result
of the COVID-19 pandemic, the invasion of Ukraine by Russia and resulting sanctions, recent increases in inflation and other events (such
as terrorist attacks, geopolitical unrest, natural disasters or a significant outbreak of other infectious diseases). An active trading
market for our securities may not fully develop or be sustained. Additionally, if our securities become delisted from Nasdaq for any reason,
and are quoted on the OTC Pink Sheets, an inter-dealer automated quotation system for equity securities not listed on a national exchange,
or other over-the-counter market, the liquidity and price of our securities may be more limited than if we were listed on Nasdaq or another
national exchange. You may be unable to sell your securities unless a market can be fully developed and sustained.
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 currently
listed on Nasdaq, a national securities exchange. We cannot assure you that our securities will continue to be listed on Nasdaq in the
future prior to an initial business combination, including following any stockholder redemptions in connection with certain amendments
to our amended and restated certificate of incorporation. If our securities do not meet Nasdaq’s continued listing requirements,
Nasdaq may delist our securities from trading on its exchange. Additionally, in connection with our initial business combination, it is
likely that Nasdaq will require us to file a new initial listing application and meet its initial listing requirements as opposed to its
more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements at that
time.
If Nasdaq delists any of our
securities from trading on its exchange and we are not able to list such securities on another national securities exchange, we expect
such securities could be quoted on an over-the-counter market. However, if this were to occur, we could face significant material adverse
consequences, including:
|
● |
a limited availability of market quotations for our securities; |
|
● |
reduced liquidity with respect to our securities; |
|
● |
a determination that our shares of Class A common stock are “penny stock” which will require brokers trading in our shares of Class A common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of Class A common stock; |
|
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a limited amount of news and analyst coverage for our company; and |
|
● |
a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets
Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as “covered securities.” Because our units, Class A common stock and warrants are currently listed on Nasdaq,
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, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities
and we would be subject to regulation in each state in which we offer our securities.
If third parties bring claims against us,
the proceeds held in trust could be reduced and the per-share redemption price received by stockholders may be less than $10.10.
Our placing of funds in trust
may not protect those funds from third party claims against us. Although we seek to have all vendors and service providers we engage and
prospective target businesses we negotiate with 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, they may not execute such agreements. Furthermore,
even if such entities execute such agreements with us, they may seek recourse against the trust account. A court may not uphold the validity
of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of our public
stockholders. If we are unable to complete a business combination and distribute the proceeds held in trust to our public stockholders,
our sponsor has agreed (subject to certain exceptions described elsewhere in this report and in our final prospectus) that it will be
liable to ensure that the proceeds in the trust account are not reduced below $10.10 per share by the claims of target businesses or claims
of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. However, it may
not be able to meet such obligation. Therefore, the per-share distribution from the trust account may be less than $10.10, plus interest,
due to such claims.
Additionally, if we are forced
to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust
account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third
parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be
able to return to our public stockholders at least $10.10 per share. We have not independently verified whether our sponsor has sufficient
funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. We have not
asked our sponsor to reserve for such indemnification obligations. Therefore, we cannot assure you that our sponsor would be able to satisfy
those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial
business combination and redemptions could be reduced to less than $10.10 per public share.
The securities in which we invest the funds
held in the trust account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the
per-share redemption amount received by public stockholders may be less than $10.10 per share.
The proceeds held in the trust
account are invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations.
While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative
interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market
Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States.
In the event that we are unable to complete our initial business combination or make certain amendments to our amended and restated certificate
of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus
any interest income, net of taxes payable (less, in the case we do not complete our initial business combination, up to $150,000 of interest
for any dissolution or liquidation related expenses, as applicable). Negative interest rates could reduce the value of the assets held
in trust such that the per-share redemption amount received by public stockholders may be less than $10.10 per share.
Our stockholders may be held liable for
claims by third parties against us to the extent of distributions received by them.
Our amended and restated certificate
of incorporation provides that we will continue in existence only until April 13, 2023. If we have not completed a business combination,
or effected an extension, by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account, including any interest earned on the funds held in the trust
account not previously released to us (net of taxes payable and $150,000 for any dissolution or liquidation related expenses, as applicable),
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 liquidation distributions, if any), subject to applicable law, and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve
and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. We cannot assure you that we will properly assess all claims that may be potentially brought
against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but
no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly,
we cannot assure you that third parties will not seek to recover from our stockholders amounts owed to them by us.
If we are forced to file a
bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders
could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent
conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because
we intend to distribute the proceeds held in the trust account to our public stockholders promptly after expiration of the time we have
to complete an initial business combination, this may be viewed or interpreted as giving preference to our public stockholders over any
potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached
their fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive
damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims
will not be brought against us for these reasons.
Our directors may decide not to enforce
our sponsor’s indemnification obligations, 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 $10.10 per public share and our sponsor asserts that it is unable to satisfy its obligations or
that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal
action against our sponsor to enforce such indemnification obligations. While we currently expect that our independent directors would
take legal action on our behalf against our sponsor to enforce such indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. 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 $10.10 per share.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders
are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15%
of our Class A common stock.
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Exchange Act), will be restricted from seeking redemptions rights with respect to more than an aggregate of 15% of the
shares sold in our initial public offering without our prior consent, which we refer to as the “Excess Shares.” However, we
would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial
business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business
combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally,
you will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. As a
result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell
your shares in open market transactions, potentially at a loss.
If we do not file and maintain a current
and effective prospectus relating to the shares of Class A common stock issuable upon exercise of the warrants, holders will only be able
to exercise such warrants on a “cashless basis.”
If we do not file and maintain
a current and effective prospectus relating to the shares of Class A common stock issuable upon exercise of the warrants at the time that
holders wish to exercise such warrants, they will only be able to exercise them on a “cashless basis” provided that an exemption
from registration is available. As a result, the number of shares of Class A common stock that holders will receive upon exercise of the
warrants will be fewer than it would have been had such holder exercised his, her or its warrant for cash. Further, if an exemption from
registration is not available, holders would not be able to exercise on a cashless basis and would only be able to exercise their warrants
for cash if a current and effective prospectus relating to the Class A common stock issuable upon exercise of the warrants is available.
Under the terms of the warrant agreement, we have agreed to use our commercially reasonable efforts to meet these conditions and to file
and maintain a current and effective prospectus relating to the Class A common stock issuable upon exercise of the warrants until the
expiration of the warrants. However, we cannot assure you that we will be able to do so. If we are unable to do so, the potential “upside”
of the holder’s investment in our company may be reduced or the warrants may expire worthless.
A warrant holder will only be able to exercise
a warrant if the shares of Class A common stock issuable upon such exercise have been registered or qualified or are deemed exempt under
the securities laws of the state of residence of the holder of the warrants.
No warrants will be exercisable
and we will not be obligated to issue shares of Class A common stock unless the shares of Class A common stock issuable upon such exercise
have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants.
If the shares of Class A common stock issuable upon exercise of the warrants are not qualified or exempt from qualification in the jurisdictions
in which the holders of the warrants reside, the warrants may be deprived of any value, the market for the warrants may be limited and
they may expire worthless if they cannot be sold and may be subject to redemption.
We may amend the terms of the warrants in
a manner that may be adverse to holders with the approval by the holders of at least 50% of the then outstanding public warrants. As a
result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares of our
Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants 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 (i) to cure any ambiguity or correct
any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants and the warrant
agreement set forth in our final prospectus, or to cure, correct or supplement any defective provision or (ii) to add or change any other
provisions with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary
or desirable and that the parties deem to not adversely affect the interests of the registered holders of the warrants. The warrant agreement
requires the approval by the holders of at least 50% of the then outstanding public warrants in order to make any change that adversely
affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner
adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although our ability
to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples
of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into
cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock purchasable upon exercise of a
warrant.
Our warrant agreement designates the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders
to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides
that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement,
including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District
Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the
exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum.
Notwithstanding the foregoing,
these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act
or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person
or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented
to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions
of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the
Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed
to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with
any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of
process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign
action as agent for such warrant holder.
This choice-of-forum provision
may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company,
which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations
and result in a diversion of the time and resources of our management and board of directors.
We may issue additional shares of Class
A common stock or preferred stock or debt securities to complete our initial business combination or under an employee incentive plan
after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the Class
B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
contained in our amended and restated certificate of incorporation. Any such issuances would dilute the equity interest of our stockholders
and likely present other risks.
Our amended and restated certificate of incorporation authorizes the
issuance of up to 200,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares of Class B common stock,
par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. As of February 27, 2023, there were
168,675,000 and 15,875,000 authorized but unissued shares of Class A common stock and Class B common stock, 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 Class B common stock. As of February 27, 2023, there were no shares
of preferred stock issued and outstanding. Shares of Class B common stock are convertible into shares of our Class A common stock initially
at a one-for-one ratio but subject to adjustment as set forth herein and in our final prospectus, including in certain circumstances in
which we issue Class A common stock or equity-linked securities related to our initial business combination. Shares of Class B common
stock are also convertible at the option of the holder at any time.
We may issue a substantial
number of additional shares of Class A common stock or shares of preferred stock to complete our initial business combination or under
an employee incentive plan after completion of our initial business combination (although our amended and restated certificate of incorporation
provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial business combination
activity). We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one
at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate
of incorporation. However, our amended and restated certificate of incorporation provides, among other things, that prior to or in connection
with our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (i)
receive funds from the trust account or (ii) vote on any initial business combination. These provisions of our amended and restated certificate
of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with the approval of our
stockholders. However, our sponsor, initial stockholders, officers and directors have agreed, pursuant to a written agreement with us,
that they will not propose any amendment to our amended and restated certificate of incorporation (A) to modify the substance or timing
of our obligation to allow redemptions in connection with our initial business combination or to redeem 100% of our public shares if we
do not complete our initial business combination by April 13, 2023 or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their public
shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
The issuance of additional
shares of Class A common stock or shares of preferred stock:
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may significantly dilute the equity interest of our current security holders; |
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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. |
Similarly, if we issue debt
securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
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default and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations; |
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; and |
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding. |
If we incur indebtedness, our
lenders will not have a claim on the cash in the trust account and such indebtedness will not decrease the per-share redemption amount
in the trust account.
Provisions in our amended and restated certificate
of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future
for our common stock and could entrench management.
Our amended and restated certificate
of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their
best interests. Our board of directors is divided into two classes, each of which generally serves for a term of two years with only one
class of directors being elected in each year. As a result, at a given annual meeting only a minority of the board of directors may be
considered for election. Since our “staggered board” may prevent our stockholders from replacing a majority of our board of
directors at any given annual meeting, it may entrench management and discourage unsolicited stockholder proposals that may be in the
best interests of stockholders. Moreover, our board of directors has the ability to designate the terms of and issue new series of preferred
stock.
Section 203 of the DGCL affects
the ability of an “interested stockholder” to engage in certain business combinations, for a period of three years following
the time that the stockholder becomes an “interested stockholder.” We elected in our amended and restated certificate of incorporation
not to be subject to Section 203 of the DGCL. Nevertheless, our amended and restated certificate of incorporation contains provisions
that have the same effect as Section 203 of the DGCL, except that it provides that affiliates of our sponsor and their transferees will
not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and will therefore
not be subject to such restrictions. These charter provisions may limit the ability of third parties to acquire control of our company.
Our amended and restated certificate of
incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive
forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum
for disputes with us or our directors, officers, employees or stockholders.
Our amended and restated certificate
of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors,
officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State
of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process
on such stockholder’s counsel; provided that the exclusive forum provision will not apply to any action (A) as to which the Court
of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery
(and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination),
(B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery
does not have subject matter jurisdiction, or (D) arising under the Securities Act. Any person or entity purchasing or otherwise acquiring
any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and
restated certificate of incorporation.
This choice of forum provision
may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our
directors, officers, employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will
not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively, if a
court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable
or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could
harm our business, operating results and financial condition.
Our amended and restated certificate
of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law but
will not apply to suits brought to enforce any duty or liability created by the Exchange Act, the Securities Act or any other claim for
which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits
brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities
Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the
Securities Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to
enforce any duty or liability created by the Exchange Act, the Securities Act or any other claim for which the federal courts have exclusive
jurisdiction.
General Risks
We are a newly formed company with no operating
history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a newly formed company
with no operating results to date. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve
our business objective of completing our initial business combination with one or more target businesses. We 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.
We are an emerging growth company and a
smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.
We are an “emerging growth
company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but
not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes- Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth
company for up to five years, although circumstances could cause us to lose that status earlier, including if the aggregate worldwide
market value of our Class A common stock held by non-affiliates equals or exceeds $700.0 million as of any June 30 before that time, in
which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will
find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as
a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may
be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an
emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may
make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the aggregate worldwide market value of our Class A common stock
held by non-affiliates equaled or exceeded $250 million as of the prior June 30th, and (2) our annual revenues equaled or exceeded $100
million during such completed fiscal year or the aggregate worldwide market value of our Class A common stock held by non-affiliates equaled
or exceeded $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also
make comparison of our financial statements and other disclosures with other public companies difficult or impossible.
Our security holders are not entitled to
protections normally afforded to investors of many other blank check companies.
Since the net proceeds of our
initial public offering and the private placements of the private placement warrants are intended to be used to complete an initial business
combination with a target business that has not been identified, we may be deemed to be a “blank check” company under the
United States securities laws. However, because we had net tangible assets in excess of $5,000,000 upon the completion of our initial
public offering and the private placements and filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this
fact, we are exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, our
security holders are not be afforded the benefits or protections of those rules which would, for example, completely restrict the transferability
of our securities, require us to complete a business combination within 18 months of the effective date of the initial registration statement
and restrict the use of interest earned on the funds held in the trust account. Because we are not subject to Rule 419, our units were
immediately tradable upon completion of our initial public offering and we will be entitled to withdraw amounts from the funds held in
the trust account prior to the completion of an initial business combination.
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 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.
On March 30, 2022, the SEC
issued proposed rules (the “SPAC Rule Proposals”) relating to, among other items, enhancing disclosures in business combination
transactions involving special purpose acquisition companies, or SPACs, and private operating companies; amending the financial statement
requirements applicable to transactions involving shell companies; the potential liability of certain participants in proposed business
combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act. These rules,
if adopted, whether in the form proposed or in revised form, may materially adversely affect our ability to negotiate and complete our
initial business combination and may increase the costs and time related thereto.
If we are deemed to be an investment company
for purposes of the Investment Company Act, we would be required to institute burdensome compliance requirements and our activities
would be severely restricted and, as a result, we may abandon our efforts to consummate an initial business combination and liquidate.
On March 30, 2022, the SEC
issued the SPAC Rule Proposals relating to, among other things, circumstances in which SPACs could potentially be subject to the Investment
Company Act and the regulations thereunder. The SPAC Rule Proposals would provide a safe harbor for such companies from the definition
of “investment company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a SPAC satisfies certain criteria,
including a limited time period to announce and complete a de-SPAC transaction. Specifically, to comply with the safe harbor, the SPAC
Rule Proposals would require a company to file a Current Report on Form 8-K announcing that it has entered into an agreement with a target
company for an initial business combination no later than 18 months after the effective date of its registration statement for its initial
public offering (the “IPO Registration Statement”). The company would then be required to complete its initial business combination
no later than 24 months after the effective date of the IPO Registration Statement.
There is currently uncertainty
concerning the applicability of the Investment Company Act to a SPAC that has not entered into a definitive agreement within 18 months
after the effective date of the IPO Registration Statement or that may not complete its initial business combination within 24 months
after such date. If we do not enter into a definitive initial business combination agreement within 18 months after the effective date
of our IPO Registration Statement and do not complete our initial business combination within 24 months of such date (subject to the approval
of an extension by our stockholders), it is possible that a claim could be made that we have been operating as an unregistered investment
company.
If we are deemed to be an investment
company under the Investment Company Act, our activities would be severely restricted. In addition, we would be subject to burdensome
compliance requirements. We do not believe that our principal activities will subject us to regulation as an investment company under
the Investment Company Act. However, if we are deemed to be an investment company and subject to compliance with and regulation under
the Investment Company Act, we would be subject to additional regulatory burdens and expenses for which we have not allotted funds. As
a result, unless we are able to modify our activities so that we would not be deemed an investment company, we would expect to abandon
our efforts to complete an initial business combination and instead to liquidate. If we are required to liquidate, our stockholders would
not be able to realize the benefits of owning stock in a successor operating business, including the potential appreciation in the value
of our stock and warrants following such a transaction, and our warrants would expire worthless.
If we instruct the trustee to liquidate
the securities held in the trust account and instead to hold the funds in the trust account in cash until the earlier of the consummation
of an initial business combination or our liquidation, we may be able to mitigate the risk that we could be deemed to be an investment
company for purposes of the Investment Company Act. Following the liquidation of securities in the trust account, we would likely receive
minimal interest, if any, on the funds held in the trust account, which would reduce the dollar amount our public stockholders would receive
upon any redemption or liquidation of our company.
The funds in the trust account
have, since our initial public offering, been held only in U.S. government treasury obligations with a maturity of 185 days or less or
in money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the
Investment Company Act. However, to mitigate the risk of us being deemed to be an unregistered investment company (including under the
subjective test of Section 3(a)(1)(A) of the Investment Company Act) and thus subject to regulation under the Investment Company Act,
we may, at any time, on or prior to the 24-month anniversary of the effective date of the IPO Registration Statement (subject to the approval
of an extension by our stockholders), instruct the trustee with respect to the trust account to liquidate the U.S. government treasury
obligations or money market funds held in the trust account and thereafter to hold all funds in the trust account in cash until the earlier
of consummation of an initial business combination or liquidation of our company. Following such liquidation of the securities held in
the trust account, we would likely receive minimal interest, if any, on the funds held in the trust account. However, interest previously
earned on the funds held in the trust account still may be released to us to pay our taxes, if any, and certain other expenses as permitted.
As a result, any decision to liquidate the securities held in the trust account and thereafter to hold all funds in the trust account
in cash would reduce the dollar amount our public stockholders would receive upon any redemption or liquidation of our company.
In addition, even prior to
the 24-month anniversary of the effective date of the IPO Registration Statement (subject to the approval of an extension by our stockholders),
we may be deemed to be an investment company. The longer that the funds in the trust account are held in short-term U.S. government treasury
obligations or in money market funds invested exclusively in such securities, even prior to the 24-month anniversary (subject to the approval
of an extension by our stockholders), the greater the risk that we may be considered an unregistered investment company, in which case
we may be required to liquidate our company. Accordingly, we may determine, in our discretion, to liquidate the securities held in the
trust account at any time, even prior to the 24-month anniversary (subject to the approval of an extension by our stockholders), and instead
hold all funds in the trust account in cash, which would further reduce the dollar amount our public stockholders would receive upon any
redemption or liquidation of our company. As of the date of this report, we have not yet made any such determination to liquidate the
securities held in the trust account.
Were we considered to be a “foreign
person,” we might not be able to complete an initial business combination with a U.S. target company if such initial business combination
is subject to U.S. foreign investment regulations and review by a U.S. government entity such as the Committee on Foreign Investment in
the United States (“CFIUS”), or ultimately prohibited.
Certain federally licensed
businesses in the United States, such as broadcasters and airlines, may be subject to rules or regulations that limit foreign ownership.
In addition, CFIUS is an interagency committee authorized to review certain transactions involving foreign investment in the United States
by foreign persons in order to determine the effect of such transactions on the national security of the United States. Were we considered
to be a “foreign person” under such rules and regulations, any proposed business combination between us and a U.S. business
engaged in a regulated industry or which may affect national security could be subject to such foreign ownership restrictions and/or CFIUS
review. The scope of CFIUS was expanded by the Foreign Investment Risk Review Modernization Act of 2018 (“FIRRMA”) to include
certain non-controlling investments in sensitive U.S. businesses and certain acquisitions of real estate even with no underlying U.S.
business. FIRRMA, and subsequent implementing regulations that are now in force, also subject certain categories of investments to mandatory
filings. If a potential initial business combination with a U.S. business falls within the scope of foreign ownership restrictions, we
may be unable to consummate an initial business combination with such business. In addition, if a potential initial business combination
falls within CFIUS’s jurisdiction, we may be required to make a mandatory filing or determine to submit a voluntary notice to CFIUS,
or to proceed with the initial business combination without notifying CFIUS and risk CFIUS intervention, before or after closing the initial
business combination. Our sponsor is a U.S. entity, the manager of our sponsor is a U.S. entity, such manager’s general partner
is a U.S. entity and the managing member of such general partner is a U.S. person. However, if CFIUS has jurisdiction over our initial
business combination, CFIUS may decide to block or delay our initial business combination, impose conditions to mitigate national security
concerns with respect to such initial business combination or order us to divest all or a portion of a U.S. business of the combined company
if we had proceeded without first obtaining CFIUS clearance. If we were considered to be a “foreign person,” the foreign ownership
limitations, and the potential impact of CFIUS, may limit the attractiveness of a transaction with us or prevent us from pursuing certain
initial business combination opportunities that we believe would otherwise be beneficial to us and our stockholders. As a result, in such
circumstances, the pool of potential targets with which we could complete an initial business combination could be limited and we may
be adversely affected in terms of competing with other SPACs that do not have similar foreign ownership issues.
Moreover, the process of government
review, whether by CFIUS or otherwise, could be lengthy. Because we have only a limited time to complete our initial business combination,
our failure to obtain any required approvals within the requisite time period may require us to liquidate. If we liquidate, our public
stockholders may only receive $10.10 per share, and our warrants will expire worthless. This will also cause you to lose any potential
investment opportunity in a target company and the chance of realizing future gains on your investment through any price appreciation
in the combined company.
Compliance with the Sarbanes-Oxley Act will
require substantial financial and management resources and may increase the time and costs of completing an acquisition.
We were required to evaluate
and report on our internal control procedures for the fiscal year ended December 31, 2022 as required by Section 404 of the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, would we be required to comply with the independent registered public accounting firm attestation requirement on our internal
control over financial reporting. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny,
civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business.
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 may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition. Furthermore, any failure to implement
required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes
and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations. Inferior internal
controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the
trading price of our stock.
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. In addition, the invasion of Ukraine by Russia, and the impact of sanctions against Russia and the potential for retaliatory
acts from Russia, could result in increased cyber-attacks against U.S. companies. We may not have sufficient resources to adequately protect
against, or to investigate and remediate any vulnerability to, cyber incidents or attacks. 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.