Item 1A. Risk Factors
An investment in
our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the
other information contained in this Form 10-K, before making a decision to invest in our securities. If any of the following events
occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading
price of our securities could decline, and you could lose all or part of your investment.
We are a recently 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 recently formed
company with no operating results, and we will not commence operations until completing a business combination. Because we have
no operating history and have no operating results, you have no basis upon which to evaluate our ability to achieve our business
objective of completing our initial business combination with one or more target businesses. We have no current plans, arrangements
or understandings with any prospective target business concerning an initial business combination and may be unable to complete
our initial business combination. If we fail to complete our initial business combination, we will never generate any operating
revenues.
Our 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,
2019, we had approximately $698,000 outside of the trust account and a working capital surplus of approximately $699,000 (excluding
the warrant liability and tax obligations). Further, we have incurred and expect to continue to incur costs in pursuit of our financing
and acquisition plans. Management’s plans to address this need for capital are discussed in the section of this report titled
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We cannot assure you
that our plans to raise capital or to consummate an initial business combination will be successful. These factors, among others,
raise 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.
Our public stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination
even though a majority of our public stockholders do not support such a combination.
We may choose not to
hold a stockholder vote to approve our initial business combination unless the initial business combination would require stockholder
approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or
other legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval of a proposed initial
business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our
discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction
would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial business combination even if
holders of a majority of our public shares do not approve of the initial business combination we complete.
If we seek stockholder approval of our
initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless
of how our public stockholders vote.
Our initial stockholders
own 20% of our outstanding shares of common stock and have agreed to vote their founder shares, as well as any public shares purchased
during or after our initial public offering (including in open market and privately negotiated transactions), in favor of our initial
business combination. Our second amended and restated certificate of incorporation provides that, if we seek stockholder approval
of an initial business combination, such initial business combination will be approved if we receive the affirmative vote of a
majority of the shares of common stock that are voted, including the founder shares. Accordingly, if we seek stockholder approval
of our initial business combination, the agreement by our initial stockholders to vote in favor of our initial business combination
will increase the likelihood that we will receive the requisite stockholder approval for such initial business combination.
Your only opportunity to affect the
investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares
from us for cash, unless we seek stockholder approval of the initial business combination.
You may not be provided
with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our board of directors
may complete an initial business combination without seeking stockholder approval, public stockholders may not have the right or
opportunity to vote on the initial business combination, unless we seek such stockholder vote. Accordingly, if we do not seek stockholder
approval, your only opportunity to affect the investment decision regarding a potential business combination may be limited to
exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer
documents mailed to our public stockholders in which we describe our initial business combination.
The ability of our public stockholders
to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which
may make it difficult for us to enter into an initial business combination with a target.
We may seek to enter
into an initial business combination agreement with a prospective target that requires as a closing condition that we have a minimum
net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to
meet such closing condition and, as a result, would not be able to proceed with the initial business combination. Furthermore,
in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon
consummation of our initial business combination (so that we are not subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less
than $5,000,001 upon consummation of our initial business combination or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for an
alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into an initial
business combination with us.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business
combination or optimize our capital structure.
At the time we enter
into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights,
and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to
pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash
in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares
are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion
of the cash in the trust account or arrange for third party financing. Raising additional third party financing may involve dilutive
equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability
to complete the most desirable business combination available to us or optimize our capital structure. The amount of the fee payable
to EarlyBirdCapital and Oppenheimer & Co. Inc. (or, at our discretion, other FINRA members) pursuant to the terms of the business
combination marketing agreement will not be adjusted for any shares that are redeemed in connection with an initial business combination.
The per-share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the
fees payable to EarlyBirdCapital and Oppenheimer & Co. Inc. (or, at our discretion, other FINRA members) pursuant to the terms
of the business combination marketing agreement and after such redemptions, the per-share value of shares held by non-redeeming
stockholders will reflect our obligation to pay such fees to EarlyBirdCapital and Oppenheimer & Co. Inc. (or, at our discretion,
other FINRA members).
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business
combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If our initial business
combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to
have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the 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.
The requirement that we complete our
initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating
an initial business combination and may decrease our ability to conduct due diligence on potential business combination targets
as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms
that would produce value for our stockholders.
Any potential target
business with which we enter into negotiations concerning an initial business combination will be aware that we must complete our
initial business combination by April 18, 2020, which is the date that is 18 months from the closing of the initial public offering.
Consequently, such target business may obtain leverage over us in negotiating an initial business combination, knowing that if
we do not complete our initial business combination with that particular target business, we may be unable to complete our initial
business combination with any target business. This risk will increase as we get closer to the timeframe described above. In addition,
we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have
rejected upon a more comprehensive investigation.
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 $10.00 per share,
or less than such amount in certain circumstances, and our warrants will expire worthless.
Our second amended and
restated certificate of incorporation provides that we must complete our initial business combination by April 18, 2020, which
is the date within 18 months from the closing of the initial public offering. We may not be able to find a suitable target business
and complete our initial business combination within such time period. If we have not completed our initial business combination
within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and
not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and
(iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. In such case, our public stockholders may only receive $10.00 per share,
or less than such amount in certain circumstances, and our warrants will expire worthless. In certain circumstances, our public
stockholders may receive less than $10.00 per share on the redemption of their shares. See “— If third parties
bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by
stockholders may be less than $10.00 per share” and other risk factors below.
If we seek stockholder approval of our
initial business combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares or warrants
from public stockholders, which may influence a vote on a proposed initial business combination and reduce the public “float”
of our 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 sponsor, directors, officers, advisors or their affiliates may purchase shares or public
warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination, although they are under no obligation to do so. However, they have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None
of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
Such a purchase may include a contractual
acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof
and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or their
affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their
redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose
of such purchases could be to vote such shares in favor of the initial business combination and thereby increase the likelihood
of obtaining stockholder approval of the initial business combination, or to satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be
to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for
approval in connection with our initial business combination. Any such purchases of our securities may result in the completion
of our initial business combination that may not otherwise have been possible. Any such purchases will be reported pursuant to
Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
In addition, if such
purchases are made, the public “float” of our common stock or public warrants and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities
on a national securities exchange.
If a stockholder fails to receive notice
of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures
for tendering its shares, such shares may not be redeemed.
We will comply with
the proxy rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination.
Despite our compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable,
such stockholder may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly tender or redeem public shares. For example, we may require
our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents
mailed to such holders, or up to two business days prior to the vote on the proposal to approve the initial business combination
in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In addition, if we
conduct redemptions in connection with a stockholder vote, a public stockholder seeking redemption of its public shares must also
submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial
owner of such shares is included. In the event that a stockholder fails to comply with these or any other procedures, its shares
may not be redeemed.
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be
forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders
will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion of an initial business
combination, and then only in connection with those shares of common stock that such stockholder properly elected to redeem, subject
to the limitations described herein, (ii) the redemption of any public shares properly submitted in connection with a stockholder
vote to amend our second amended and restated certificate of incorporation to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from the closing of
our initial public offering or to provide for redemption in connection with a business combination and (iii) the redemption of
our public shares if we are unable to complete an initial business combination within 18 months from the closing of the initial
public offering, subject to applicable law and as further described herein. In no other circumstances will a public stockholder
have any right or interest of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in
the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public
shares or warrants, potentially at a loss.
The NYSE may delist our securities from
trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional
trading restrictions.
Our units, shares of
common stock and warrants are listed on the NYSE. We cannot assure you that our securities will continue to be listed on the NYSE
in the future or prior to our initial business combination. In order to continue listing our securities on the NYSE prior to our
initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain
a minimum average global market capitalization and a minimum number of holders our securities. Additionally, in connection with
our initial business combination, we will be required to demonstrate compliance with the NYSE’s initial listing requirements,
which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain the listing of our
securities on the NYSE. For instance, our share price would generally be required to be at least $4.00 per share, our global market
capitalization would be required to be at least $150 million, the aggregate market value of our publicly-held shares would be required
to be at least $40 million and we would be required to have a minimum of 400 round lot holders and 1,100,000 publicly held shares.
We cannot assure you that we will be able to meet those initial listing requirements at that time.
If the NYSE delists
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange,
we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
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a limited availability of market quotations
for our securities;
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reduced liquidity for our securities;
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a determination that our common stock
is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly
result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage;
and
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a decreased ability to issue additional
securities or obtain additional financing in the future.
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The National Securities
Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain
securities, which are referred to as “covered securities.” Because we expect that our units and eventually our common
stock and warrants will be listed on the NYSE, our units, common stock and warrants will be covered securities under the statute.
Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate
companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or
bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit
or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators
view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our
initial business combination.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds
of our initial public offering and the sale of the private placement warrants are intended to be used to complete an initial business
combination with a target business that has not been identified, we may be deemed to be a “blank check” company under
the United States securities laws. However, because we have net tangible assets in excess of $5,000,000, we are exempt from
rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be
afforded the benefits or protections of those rules. Among other things, this means that we will have a longer period of time to
complete our initial business combination than do companies subject to Rule 419. Moreover, if our initial public offering had been
subject to Rule 419, that rule would have prohibited the release of any interest earned on funds held in the trust account to us
unless and until the funds in the trust account were released to us in connection with our completion of an initial business combination.
Because of our limited resources and
the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business
combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will
expire worthless.
We expect to encounter
intense competition from other entities having a business objective similar to ours, including private investors (which may be
individuals or investment partnerships), other blank check companies and other entities competing for the types of businesses we
intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and
effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of
these competitors possess greater technical, human and other resources or more industry knowledge than we do, and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous
target businesses we could potentially acquire, our ability to compete with respect to the acquisition of certain target businesses
that are sizable will be limited by our available financial resources. Moreover, as our warrants will become exercisable for three-quarters
of one share of common stock if we have not completed our initial business combination within 15 months from the closing of our
initial public offering, we may be a less competitive business combination partner after such 15-month period as compared to other
special purpose acquisition companies. This inherent competitive limitation gives others an advantage in pursuing the acquisition
of certain target businesses. Furthermore, because we are obligated to pay cash for the shares of common stock which our public
stockholders redeem in connection with our initial business combination, target companies will be aware that this may reduce the
resources available to us for our initial business combination. This may place us at a competitive disadvantage in successfully
negotiating an initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation. See “— If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and other risk factors below.
If the funds held outside the trust
account are insufficient to allow us to operate until April 18, 2020, we may be unable to complete our initial business combination,
in which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and
our warrants will expire worthless.
As of December 31, 2019,
we have approximately $698,000 available to us outside the trust account to fund our working capital requirements. The funds available
to us outside of the trust account may not be sufficient to allow us to operate until April 18, 2020, assuming that our initial
business combination is not completed during that time. We believe that the funds available to us outside of the trust account
will be sufficient to allow us to operate until April 18, 2020; however, we cannot assure you that our estimate is accurate. Of
the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our
search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision
(a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for
transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed initial
business combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement
where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds
(whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due
diligence with respect to, a target business.
If we are unable to
complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation
of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less
than $10.00 per share upon our liquidation. See “— If third parties bring claims against us, the proceeds held
in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per
share” and other risk factors below.
If our funds held outside the trust
account are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete
our initial business combination and we will depend on loans from our sponsor or management team to fund our search for an initial
business combination, to pay our franchise and income taxes and to complete our initial business combination. If we are unable
to obtain these loans, we may be unable to complete our initial business combination.
As of December 31, 2019,
we have approximately $698,000 available to us outside the trust account to fund our working capital requirements. If we are required
to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or
may be forced to liquidate. None of our sponsor, members of our management team nor any of their affiliates is under any obligation
to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account
or from funds released to us upon completion of our initial business combination. Up to $1,500,000 of such working capital loans
may be convertible into additional warrants at a price of $0.50 (or $0.75 if we have not consummated our initial business
combination within 15 months from the closing of our initial public offering) per warrant at the option of the lender. Prior to
the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate
of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights
to seek access to funds in our trust account. If we are unable to obtain these loans, we may be unable to complete our initial
business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive
approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our
warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the
redemption of their shares. See “— If third parties bring claims against us, the proceeds held in the trust
account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share”
and other risk factors below.
Subsequent to the completion of our
initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges
that could have a significant negative effect on our financial condition, results of operations and our stock price, which could
cause you to lose some or all of your investment.
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues
that may be present inside a particular target business, that it would be possible to uncover all material issues through a customary
amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result
of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or
other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even
though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of
this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may
cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a
target business or by virtue of our obtaining debt financing to partially finance the initial business combination. Accordingly,
any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the value
of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them,
or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials,
as applicable, relating to the initial business combination constituted an actionable material misstatement or omission.
If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share.
Our placing of funds
in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors,
service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
such parties may not execute such agreements, or even if they execute such agreements (except for our independent registered public
accounting firm) they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust
account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has
not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to
us than any alternative.
Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that
would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any
reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per share
initially held in the trust account, due to claims of such creditors. Our sponsor has agreed that it will be liable to us if and
to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which
we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce
the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount
per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share
due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims
by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the trust account
(whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of our initial
public offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our sponsor
to reserve for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to
satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Therefore, we
cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available
for distribution to our public stockholders.
In the event that the
proceeds in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per share
held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to reductions
in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts
that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently expect
that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations
to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties
may choose not to do so in any particular instance if, for example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome
is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the
trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
We may not have sufficient funds to
satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify
our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any
right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust
account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i)
we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to
indemnify our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for
breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against
our officers and directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore,
a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against
our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of
punitive damages.
If, after we distribute
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed
as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims
of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and
the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law,
and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
If we are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to
be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments;
and
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restrictions on the issuance of securities,
each of which may make it difficult for us to complete our initial business combination.
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In addition, we may have imposed upon us
burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate
structure; and
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reporting, record keeping, voting, proxy
and disclosure requirements and other rules and regulations.
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In order not to be regulated
as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged
primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing,
reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive
of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete an initial
business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy
businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or
to be a passive investor.
We do not believe that
our principal activities subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only
be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company
Act having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under
the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the
trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments,
and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling
businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company”
within the meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest
to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our second amended and restated certificate of incorporation to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18
months from the closing of our initial public offering or to provide for redemption in connection with a business combination;
or (iii) absent an initial business combination within 18 months from the closing of our initial public offering, our return of
the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not invest
the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject
to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which
we have not allotted funds and may hinder our ability to complete an initial business combination or may result in our liquidation.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per
share on the liquidation of our trust account and our warrants will expire worthless.
Changes in laws or regulations, or a
failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete
our initial business combination and results of operations.
We are subject to laws
and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain
SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming
and costly.
Those laws and regulations
and their interpretation and application may also change from time to time and those changes could have a material adverse effect
on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as
interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete
our initial business combination and results of operations.
Our stockholders may be held liable
for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the Delaware’s
General Corporation Law (“DGCL”), stockholders may be held liable for claims by third parties against a corporation
to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our
public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within
18 months from the closing of our initial public offering may be considered a liquidating distribution under Delaware law. If a
corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision
for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation,
a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any
liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is
limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and
any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to
redeem our public shares as soon as reasonably possible following the 18th month from the closing of our initial public offering
in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing
procedures.
Because we will not
be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our
operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies
with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the
stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess
all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to
the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary
of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination within 18 months from the closing of our
initial public offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed
to be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that
are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then
be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of
stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders
to elect directors.
In accordance with the
NYSE corporate governance requirements, we are not required to hold an annual meeting until no later than one full year after our
first fiscal year end following our listing on the NYSE. Under Section 211(b) of the DGCL, we are, however, required to hold an
annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made
by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to
the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which
requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial
business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in
accordance with Section 211(b) of the DGCL.
We have not registered the shares of
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws, and such registration
may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its
warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt
from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may
have no value and expire worthless.
We are have not registered
the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws. However,
under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than 15 business days
after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement
for the registration under the Securities Act of the shares of common stock issuable upon exercise of the warrants and thereafter
will use our best efforts to cause the same to become effective within 60 business days following our initial business combination
and to maintain a current prospectus relating to the common stock issuable upon exercise of the warrants, until the expiration
of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so
if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration
statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or
the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act,
we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for
cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless
the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising
holder, or an exemption from registration is available. Notwithstanding the above, if our common stock is at the time of any exercise
of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security”
under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their warrants
to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect,
we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use
our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants
in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws
and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified
or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such
warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units
will have paid the full unit purchase price solely for the shares of common stock included in the units. If and when the warrants
become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities
for sale under all applicable state securities laws.
If you exercise your public warrants
on a “cashless basis,” you will receive fewer shares of common stock from such exercise than if you were to exercise
such warrants for cash.
There are circumstances
in which the exercise of the public warrants may be required or permitted to be made on a cashless basis. First, if a registration
statement covering the shares of common stock issuable upon exercise of the warrants is not effective by the 60th business
day after the closing of our initial business combination, warrantholders may, until such time as there is an effective registration
statement, exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption
from registration. Second, if our common stock is at any time of any exercise of a warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act,
we may, at our option, require holders of public warrants who exercise their warrants to do so on a cashless basis in accordance
with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect
a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under
applicable blue sky laws to the extent an exemption is not available. Third, if we call the public warrants for redemption, our
management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis. In the event
of an exercise on a cashless basis, a holder would pay the warrant exercise price by surrendering the warrants for that number
of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying
the warrants, multiplied by the excess of the “fair market value” of our common stock (as defined in the next sentence)
over the exercise price of the warrants by (y) the fair market value. The “fair market value” is the average reported
last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice
of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable.
As a result, you would receive fewer shares of common stock from such exercise than if you were to exercise such warrants for cash.
The grant of registration rights to
our initial stockholders and EarlyBirdCapital may make it more difficult to complete our initial business combination, and the
future exercise of such rights may adversely affect the market price of our common stock.
Pursuant to an agreement
entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial stockholders
and their permitted transferees can demand that we register the private placement warrants, the shares of common stock issuable
upon exercise of the founder shares and the private placement warrants held by them and holders of warrants that may be issued
upon conversion of working capital loans may demand that we register such warrants or the common stock issuable upon exercise of
such warrants. We will bear the cost of registering these securities. We have also granted EarlyBirdCapital certain registration
rights with respect to the shares we will issue to it pursuant to the business combination marketing agreement. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the
market price of our common stock. In addition, the existence of the registration rights may make our initial business combination
more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they
seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our common
stock that is expected when the securities owned by our initial stockholders and EarlyBirdCapital or holders of working capital
loans or their respective permitted transferees are registered.
Because we are neither limited to evaluating
a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our
initial business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
We may pursue business
combination opportunities in any industry or sector, except that we will not, under our second amended and restated certificate
of incorporation, be permitted to effectuate our initial business combination with another blank check company or similar company
with nominal operations. Because we have not yet selected or approached any specific target business with respect to a business
combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations, results
of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination,
we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with
a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks
inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of
these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely
impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable
to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders
who choose to remain stockholders following our initial business combination could suffer a reduction in the value of their securities.
Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the
reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as
applicable, relating to the business combination contained an actionable material misstatement or material omission.
Past performance by our management team
may not be indicative of future performance of an investment in the Company.
Past performance by
our management team is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii)
that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical
record of our management team’s 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.
We may seek business combination opportunities
in industries or sectors which may or may not be outside of our management’s area of expertise.
We will consider an
initial business combination outside of our management’s area of expertise if an initial business combination candidate is
presented to us and we determine that such candidate offers an attractive business combination opportunity for our company or we
are unable to identify a suitable candidate in this sector after having expanded a reasonable amount of time and effort in an attempt
to do so. Although our management will endeavor to evaluate the risks inherent in any particular business combination candidate,
we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot assure you
that an investment in our units will not ultimately prove to be less favorable to investors in our initial public offering than
a direct investment, if an opportunity were available, in an initial business combination candidate. In the event we elect to pursue
a business combination outside of the areas of our management’s expertise, our management’s expertise may not be directly
applicable to its evaluation or operation, and the information contained in the prospectus regarding the areas of our management’s
expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not
be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain
stockholders following our initial business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial
business combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which
we enter into our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which
we enter into our initial business combination will not have some or all of these attributes. If we complete our initial business
combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination
with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination
with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption
rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation
of our trust account and our warrants will expire worthless.
We may seek business combination opportunities
with a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings, which could
subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete
our initial business combination with a financially unstable business or an entity lacking an established record of revenues or
earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include
volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will
endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all
of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may
be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact
a target business.
We are not required to obtain an opinion
from an independent investment banking firm or from an independent accounting firm, and consequently, you may have no assurance
from an independent source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our
initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment
banking firm or from another independent valuation or appraisal firm that regularly prepares fairness opinions that the price we
are paying is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on
the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial
community. Such standards used will be disclosed in our proxy solicitation materials or tender offer documents, as applicable,
related to our initial business combination.
We may issue additional common stock
or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our initial
business combination. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our second amended and
restated certificate of incorporation authorizes the issuance of up to 400,000,000 shares of common stock, par value $0.0001 per
share and 1,000,000 shares of preferred stock, par value $0.0001 per share. There are 369,529,360 authorized but unissued shares
of common stock available for issuance, which amount takes into account the shares of common stock available for issuance, which
amount takes into account the shares of common stock reserved for issuance upon exercise of outstanding warrants. There are no
shares of preferred stock issued and outstanding.
We may issue a substantial
number of additional shares of common or preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination (although our second amended and restated certificate of incorporation
provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial business
combination activity). However, our second amended and restated certificate of incorporation provides, among other things, that
prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof
to (i) receive funds from the trust account or (ii) vote on any initial business combination. The issuance of additional shares
of common or preferred stock:
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may significantly dilute the equity interest
of investors in our initial public offering;
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may subordinate the rights of holders
of common stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change of control if a substantial
number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss
carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market
prices for our units, common stock and/or warrants.
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Resources could be wasted in researching
business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation of our trust account
and our warrants will expire worthless.
We anticipate that the
investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys,
consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire
worthless.
Our ability to successfully effect our
initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some
of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the
target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our initial business combination, it is likely that some or all of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we employ after our initial
business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals
may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time
and resources helping them become familiar with such requirements. In addition, the officers and directors of an initial business
combination candidate may resign upon completion of our initial business combination. The departure of an initial business combination
target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role
of an initial business combination candidate’s key personnel upon the completion of our initial business combination cannot
be ascertained at this time. Although we contemplate that certain members of an initial business combination candidate’s
management team will remain associated with the initial business combination candidate following our initial business combination,
it is possible that members of the management of an initial business combination candidate will not wish to remain in place. The
loss of key personnel could negatively impact the operations and profitability of our post-combination business.
We are dependent upon our executive
officers and directors, and their departure could adversely affect our ability to operate.
Our operations are dependent
upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success
depends on the continued service of our executive officers and directors, at least until we have completed our initial business
combination. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive
officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect
on us.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide
for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of
interest in determining whether a particular business combination is the most advantageous.
Our key personnel may
be able to remain with the company after the completion of our initial business combination only if they are able to negotiate
employment or consulting agreements in connection with the initial business combination. Such negotiations would take place simultaneously
with the negotiation of the initial business combination and could provide for such individuals to receive compensation in the
form of cash payments and/or our securities for services they would render to us after the completion of the initial business combination.
The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business.
However, we believe the ability of such individuals to remain with us after the completion of our initial business combination
will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial business
combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us.
The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may affect our initial business combination with a target business
whose management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively
impact the value of our stockholders’ investment in us.
When evaluating the
desirability of effecting our initial business combination with a prospective target business, our ability to assess the target
business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to
manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders who choose to remain stockholders following the initial business combination could suffer a reduction in the value
of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Our officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our
affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for an initial business combination and their other businesses. Mr. Graf will
focus substantially all of his professional time on the company. We do not intend to have any full-time employees prior to the
completion of our initial business combination. Each of our officers is engaged in other business endeavors for which he may be
entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to
our affairs. Our independent directors may also serve as officers or board members of other entities. If our officers’ and
directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current
commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to
complete our initial business combination.
Certain of our officers and directors
are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended
to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity
a particular business opportunity should be presented.
Until we consummate
our initial business combination, we intend to continue to engage in the business of identifying and combining with one or more
businesses. Our sponsor and officers and directors are, and may in the future become, affiliated with entities (such as operating
companies or investment vehicles) that are engaged in a similar business.
Our officers and directors
also may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which
they owe certain fiduciary or contractual duties.
Accordingly, they may
have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts
may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to
us. Our second amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as
a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us
without violating another legal obligation.
Our officers, directors, security holders
and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted
a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary
or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have
an interest. In fact, we may enter into an initial business combination with a target business that is affiliated with our sponsor,
our directors or officers, although we do not intend to do so. We do not have a policy that expressly prohibits any such persons
from engaging for their own account in business activities of the types conducted by us. Accordingly, such persons or entities
may have a conflict between their interests and ours.
We may engage in an initial business
combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers,
directors or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our
sponsor, officers or directors. Our directors and officers also serve as officers and board members of other entities, including,
without limitation, those described under the section of this report entitled “Management — Conflicts
of Interest.” Such entities may compete with us for business combination opportunities. Our sponsor, officers and directors
are not currently aware of any specific opportunities for us to complete our initial business combination with any entities with
which they are affiliated, and there have been no preliminary discussions concerning an initial business combination with any such
entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities,
we would pursue such a transaction if we determined that such affiliated entity met our criteria for an initial business combination
and such transaction was approved by all of our directors. Despite our agreement to obtain an opinion from an independent investment
banking firm, or from another independent valuation or appraisal firm, regarding the fairness to our stockholders from a financial
point of view of an initial business combination with one or more domestic or international businesses affiliated with our officers,
directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the initial business
combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
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 June 26, 2018,
our sponsor purchased an aggregate of 8,625,000 founder shares for an aggregate purchase price of $25,000, or approximately
$0.003 per share. On September 13, 2018, our sponsor returned to us, at no cost, 2,156,250 shares of common stock, which we cancelled,
resulting in our sponsor holding 6,468,750 founder shares. On October 9, 2018, our sponsor transferred 25,000 founder shares to
each of Keith Abell and Sabrina McKee, two of our directors (then-director nominees), resulting in our sponsor holding 6,418,750
founder shares prior to its forfeiture of 374,622 shares when the over-allotment option was not exercised in full. In addition,
on October 17, 2019, our sponsor transferred 18,000 founder shares to Julie J. Levenson, one of our directors, resulting in
our sponsor holding 6,026,128 founder shares.
The number of founder
shares issued was determined based on the expectation that such founder shares would represent 20% of the outstanding shares. The
founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor purchased an aggregate
of 14,150,605 private placement warrants for a purchase price of $7,075,303, or $0.50 per warrant, that will also
be worthless if we do not complete an initial business combination. The private placement warrants are identical to the warrants
sold as part of the units in our initial public offering. 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 or in connection with a tender offer. In addition, we may obtain loans
from our sponsor, affiliates of our sponsor or an officer or director. Our sponsor is owned by James A. Graf, Michael Dee, Owl
Creek and certain other investors with longstanding relationships with Mr. Graf. In his capacity as the manager of our sponsor,
Mr. Graf has agreed to take certain actions on behalf of the sponsor for the benefit of its members which may result in conflicts
of interest. These actions include Mr. Graf’s agreement to provide Owl Creek with the right to consent to any potential initial
business combination, representation on our current board of directors, ongoing information relating to our search for an initial
business combination, and the option to participate in any equity investments relating to or at the time of our initial business
combination. The personal and financial interests of our officers and directors may influence their motivation in identifying and
selecting a target business combination, completing an initial business combination and influencing the operation of the business
following the initial business combination.
Our initial business combination will
require approval of Owl Creek and all of our directors.
Our sponsor is owned
by James A. Graf, Michael Dee, Owl Creek and certain other investors with longstanding relationships with Mr. Graf. In his capacity
as the manager of our sponsor, Mr. Graf has agreed, among other things, to provide Owl Creek with the right to consent to any potential
business combination. Our second amended and restated certificate of incorporation provides that, prior to the consummation of
our initial business combination, Owl Creek may designate a director to serve on our board. Prior to the consummation of our initial
business combination, amending our second amended and restated certificate of incorporation or bylaws require the approval of such
designee and such designee’s presence will be required to form a quorum of the board. Our second amended and restated certificate
of incorporation provides that our initial business combination will require the unanimous approval of the board. Unless we receive
the requisite consent of Owl Creek, we will not be able to enter into any agreements relating to our initial business combination,
and if we are unable to receive the requisite board member approvals, we will not be able to enter into a definitive agreement
relating to our initial business combination.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete an initial business combination, which may adversely affect our leverage and financial
condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no
commitments as of the date of this Form 10-K to issue any notes or other debt securities, or to otherwise incur outstanding debt
following our initial public offering, we may choose to incur substantial debt to complete our initial business combination. We
have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest
or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per-share amount
available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects,
including:
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default and foreclosure on our assets
if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay
the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance
of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal
and accrued interest, if any, if the debt security is payable on demand;
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our inability to obtain necessary additional
financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our
common stock;
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using a substantial portion of our cash
flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared,
our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
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limitations on our flexibility in planning
for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes
in general economic, industry and competitive conditions and adverse changes in government regulation;
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limitations on our ability to borrow additional
amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
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other disadvantages compared to our competitors
who have less debt.
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We may only be able to complete one
business combination with the proceeds of our initial public offering and the sale of the private placement warrants, which will
cause us to be solely dependent on a single business which may have a limited number of services and limited operating activities.
This lack of diversification may negatively impact our operating results and profitability.
The net proceeds from
our initial public offering and the sale of the private placement warrants provides us with $243.8 million that we may use to complete
our initial business combination and pay related fees and expenses (which includes $8,531,779, for the fee payable to EarlyBirdCapital
and Oppenheimer & Co. Inc. (or, at our discretion, other FINRA members) upon consummation of our initial business combination
for assisting us in connection with our initial business combination pursuant to the business combination marketing agreement).
We may effectuate our
initial business combination with a single target business or multiple target businesses simultaneously or within a short period
of time. However, we may not be able to effectuate our initial business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack
of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different industries or different areas of a single industry.
In addition, we intend to continue to focus our search for an initial business combination in a single industry. Accordingly, the
prospects for our success may be:
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solely dependent upon the performance
of a single business, property or asset, or
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dependent upon the development or market
acceptance of a single or limited number of products, processes or services.
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This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact
upon the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination
and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase
of its business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult
for us, and delay our ability, to complete our initial business combination. We do not, however, intend to purchase multiple businesses
in unrelated industries in conjunction with our initial business combination. With multiple business combinations, we could also
face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these
risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in an initial business
combination with a company that is not as profitable as we suspected, if at all.
In pursuing our initial
business combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very little
public information generally exists about private companies, and we could be required to make our decision on whether to pursue
a potential initial business combination on the basis of limited information, which may result in an initial business combination
with a company that is not as profitable as we suspected, if at all.
Our management may not be able to maintain
control of a target business after our initial business combination.
We may structure an
initial business combination so that the post-transaction company in which our public stockholders own shares less than 100% of
the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will
not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to the initial business combination may collectively own a minority interest in
the post business combination company, depending on valuations ascribed to the target and us in the initial business combination.
For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for
all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result
of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could
own less than a majority of our outstanding shares of common stock subsequent to such transaction. In addition, other minority
stockholders may subsequently combine their holdings resulting in a single person or group obtaining a larger share of the company’s
stock than we initially acquired. Accordingly, this may make it more likely that our management will not be able to maintain our
control of the target business. We cannot provide assurance that, upon loss of control of a target business, new management will
possess the skills, qualifications or abilities necessary to profitably operate such business.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete an initial business combination with
which a substantial majority of our stockholders do not agree.
Our second amended and
restated certificate of incorporation will not provide a specified maximum redemption threshold, except that in no event will we
redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of
our initial business combination (such that we are not subject to the SEC’s “penny stock” rules) or any greater
net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. As
a result, we may be able to complete our initial business combination even though a substantial majority of our public stockholders
do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination
and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered
into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In
the event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination
exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares,
all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate
business combination.
In order to effectuate an initial business
combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments,
including their warrant agreements. We cannot assure you that we will not seek to amend our second amended and restated certificate
of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination
that our stockholders may not support.
In order to effectuate
an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and
modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition
of business combination, increased redemption thresholds and extended the time to consummate an initial business combination and,
with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other
securities. Amendments to our second amended and restated certificate of incorporation pertaining to pre-business combination activity
(including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust
account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders
as described herein) will require the approval of holders of 65% of our common stock, and amending our warrant agreement will require
a vote of holders of at least 50% of the public warrants. In addition, our second amended and restated certificate of incorporation
requires us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment
to our second amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination within 18 months from the closing of our initial public
offering or to offer redemption in connection with a business combination. To the extent any such amendments would be deemed to
fundamentally change the nature of any securities offered through this registration statement, we would register, or seek an exemption
from registration for, the affected securities. We cannot assure you that we will not seek to amend our charter or governing instruments
or extend the time to consummate an initial business combination in order to effectuate our initial business combination.
The provisions of our second amended
and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of
the agreement governing the release of funds from our trust account), including an amendment to permit us to withdraw funds from
the trust account such that the per share amount investors will receive upon any redemption or liquidation is substantially reduced
or eliminated, may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than
that of some other blank check companies. It may be easier for us, therefore, to amend our second amended and restated certificate
of incorporation and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders
may not support.
Our second amended and
restated certificate of incorporation provides that any of its provisions related to pre-initial business combination activity
(including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust
account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders
as described herein and including to permit us to withdraw funds from the trust account such that the per share amount investors
will receive upon any redemption or liquidation is substantially reduced or eliminated) may be amended if approved by holders of
65% of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of
funds from our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all
other instances, our second amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding
common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may
not issue additional securities that can vote on amendments to our second amended and restated certificate of incorporation. Our
initial stockholders, who will collectively beneficially own up to 20% of our common stock, will participate in any vote to amend
our second amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any
manner they choose. As a result, we may be able to amend the provisions of our second amended and restated certificate of incorporation
which govern our pre-initial business combination behavior more easily than some other blank check companies, and this may increase
our ability to complete an initial business combination with which you do not agree. Our stockholders may pursue remedies against
us for any breach of our second amended and restated certificate of incorporation.
Our sponsor, officers
and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our second amended
and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares
if we do not complete our initial business combination within 18 months from the closing of our initial public offering or to offer
redemption in connection with a business combination unless we provide our public stockholders with the opportunity to redeem their
shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account, divided by the number of then outstanding public shares. These agreements are contained in
a letter agreement that we have entered into with our sponsor, officers and directors. Our stockholders are not parties to, or
third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor,
officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to
pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional
financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel
us to restructure or abandon a particular business combination.
We have not selected
any specific business combination target, but intend to target businesses larger than we could acquire with the net proceeds of
the initial public offering and the sale of the private placement warrants. As a result, we may be required to seek additional
financing to complete such proposed initial business combination. We cannot assure you that such financing will be available on
acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial
business combination, we would be compelled to either restructure the transaction or abandon that particular business combination
and seek an alternative target business candidate. Further, the amount of additional financing we may be required to obtain could
increase as a result of future growth capital needs for any particular transaction, the depletion of the available net proceeds
in search of a target business, the obligation to repurchase for cash a significant number of shares from stockholders who elect
redemption in connection with our initial business combination and/or the terms of negotiated transactions to purchase shares in
connection with our initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share plus any pro rata interest earned on the funds held in the trust account and not
previously released to us to pay our franchise and income taxes on the liquidation of our trust account and our warrants will expire
worthless. In addition, even if we do not need additional financing to complete our initial business combination, we may require
such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a
material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders
is required to provide any financing to us in connection with or after our initial business combination. If we are unable to complete
our initial business combination, our public stockholders may only receive approximately $10.00 per share on the liquidation of
our trust account, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our initial stockholders may exert a
substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders
own shares representing 20% of our issued and outstanding shares of common stock. Accordingly, they may exert a substantial influence
on actions requiring a stockholder vote, potentially in a manner that you do not support, including the election of directors,
amendments to our second amended and restated certificate of incorporation and approval of major corporate transactions. If our
initial stockholders purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions,
this would increase their control. Factors that would be considered in making such additional purchases would include consideration
of the current trading price of our common stock. In addition, our board of directors is divided into three classes, each of which,
other than the initial term, will generally serve for a term of three years with only one class of directors being elected in each
year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion of our initial business
combination, in which case all of the current directors will continue in office until at least the completion of the initial business
combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority
of the board of directors will be considered for election and our initial stockholders, because of their ownership position, will
have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least
until the completion of our initial business combination.
We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding
public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and
the number of shares of our common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants are issued
in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us.
The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity
or correct any defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants
to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend
the terms of the public warrants in a manner adverse to a holder 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 common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability
to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the last reported sales price of our common stock equals or exceeds $18.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day
period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain
other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are
unable to register or qualify the underlying securities for sale under all applicable state securities laws. We will use our best
efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in
which the warrants were offered by us in our initial public offering. Redemption of the outstanding warrants could force you (i)
to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to
sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the
nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less
than the market value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held
by the sponsor or its permitted transferees.
Our warrants may have an adverse effect
on the market price of our common stock and make it more difficult to effectuate our initial business combination.
We issued warrants to
purchase 12,188,256 shares of our common as part of the units offered in the initial public offering (or 18,282,384 shares of our
common stock, respectively, if we have not consummated our initial business combination within 15 months from the closing of our
initial public offering) and, simultaneously with the closing of our initial public offering, we issued private placement warrants
to purchase 7,075,303 shares of our common stock in a private placement (or 10,612,954 shares of our common stock, respectively,
if we have not consummated our initial business combination within 15 months from the closing of the initial public offering).
The private placement warrants are identical to the warrants sold as part of the units in our initial public offering. In addition,
if our sponsor or its affiliates, or any of our officers or directors, makes any working capital loans, up to $1,500,000 of such
loans may be converted into additional warrants at a price of $0.50 (or $0.75 if we have not consummated our initial
business combination within 15 months from the closing of our initial public offering) per warrant at the option of the lender.
Such warrants would be identical to the private placement warrants, including as to exercisability and exercise price.
To the extent we issue
shares of common stock to effectuate an initial business combination, the potential for the issuance of a substantial number of
additional shares of common stock upon exercise of these warrants and conversion rights could make us a less attractive business
combination vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our common
stock and reduce the value of the shares of common stock issued to complete the initial business combination. Therefore, our warrants
and founder shares may make it more difficult to effectuate an initial business combination or increase the cost of acquiring the
target business.
The private placement
warrants are identical to the warrants sold as part of the units in our initial public offering except that, so long as they are
held by our sponsor or its permitted transferees, they (including the common stock issuable upon exercise of these warrants) may
not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion
of our initial business combination.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The federal proxy rules
require that a proxy statement with respect to a vote on an initial business combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial
statement disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules.
These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally
accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International
Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to
be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial
statement requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide
such financial statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial
business combination within the prescribed time frame.
We are an emerging growth company within
the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging
growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance
with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions
from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute
payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier,
including if the market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time,
in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors
will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive
as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be,
there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards
until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not
have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies, but any such an election to opt out is irrevocable. We have elected not to opt out
of such extended transition period, which means that when a standard is issued or revised and it has different application dates
for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither
an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult
or impossible because of the differences in accountant standards used.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management
resources, and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley
Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the
year ending December 31, 2019. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no
longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm
attestation requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth
company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our
internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which
we seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such business combination.
Provisions in our second amended and
restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might
be willing to pay in the future for our common stock and could entrench management.
Our second amended and
restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board
of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management more
difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our
securities.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may
make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
Provisions in our second amended and
restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our second amended and
restated certificate of incorporation require, to the fullest extent permitted by law, that derivative actions brought in our name,
actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in
the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing such suit will be
deemed to have consented to service of process on such stockholder’s counsel. This provision may have the effect of discouraging
lawsuits against our directors and officers.
Cyber incidents or attacks directed
at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital
technologies, including information systems, infrastructure and cloud applications and services, including those of third parties
with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against,
or to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination
of them, could have adverse consequences on our business and lead to financial loss.
If we effect our initial business combination
with a company with operations or opportunities outside of the United States, we would be subject to a variety of additional risks
that may negatively impact our operations.
If we effect our initial
business combination with a company with operations or opportunities outside of the United States, we would be subject to any special
considerations or risks associated with companies operating in an international setting, including any of the following:
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higher costs and difficulties inherent
in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;
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rules and regulations regarding currency
redemption;
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complex corporate withholding taxes on
individuals;
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laws governing the manner in which future
business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and import/export
matters;
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longer payment cycles and challenges in
collecting accounts receivable;
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tax issues, including but not limited
to tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances,
terrorist attacks, natural disasters and wars;
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deterioration of political relations with
the United States; and
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government appropriations of assets.
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We may not be able to
adequately address these additional risks. If we were unable to do so, our operations might suffer, which may adversely impact
our results of operations and financial condition.
