Item 1. Business
References in this report to “we,”
“us” or the “Company” refer to Mana Capital Acquisition Corp. References to our “management” or our
“management team” refer to our officers and directors, and references to the “Sponsor” refer to Mana Capital LLC,
a Delaware limited liability company.
Company Profile
Mana Capital Acquisition Corp. was formed on May 19,
2021 formed under the laws of the State of Delaware, as a blank check company for the purpose of engaging in a merger, share exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, with one or more target businesses
or entities. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region,
although we intend to focus our search on target businesses operating in North
America, Europe and Asia in the healthcare, technology, green economy, and consumer products sectors. We believe that we will add
value to these businesses primarily by providing them with access to the U.S. capital markets.
Our Registration Statement on Form S-1 was declared
effective by the SEC on November 22, 2021. Ladenburg Thalmann & Co., Inc., acted as lead bookrunner for our initial public offering.
We may refer to our initial public offering in this Annual Report on Form 10-K as our “IPO”. On November 26, 2021, we consummated
our initial public offering of 6,200,000 units. Each unit consists of one share of common stock, par value $0.00001 per share, one-half
of one redeemable warrant, with each whole warrant entitling the holder thereof to purchase one share of common stock for $11.50 per share,
subject to adjustment, and one right to receive one-seventh (1/7) of one share of common stock upon the consummation of our initial business
combination. The units were sold at a price of $10.00 per unit, generating gross proceeds to us of $62,000,000. In
connection with our initial public offering, the underwriters were granted a 45-day option to purchase up to 930,000 additional
units to cover over-allotments, if any. On November 30, 2021, the underwriters purchased an additional 300,000 units pursuant to the partial
exercise of the over-allotment option. The additional units were sold at an offering price of $10.00 per unit, generating additional gross
proceeds of $3,000,000.
Simultaneously with the consummation of the initial
public offering, we completed the private sale of an aggregate of 2,500,000 private warrants to our Sponsor at a purchase price of $1.00
per private warrant, generating gross proceeds to the Company of $2,500,000.
A
total of $65,000,000 of the proceeds from the sale of the units and private placement warrants, including the sale of the units from the
partial exercise of the over-allotment option, were placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental
Stock Transfer & Trust Company acting as trustee.
On June 22, 2021, the Sponsor purchased 1,437,500 shares
of our common stock, or founder shares, for $25,000. Subsequently, in September 2021, we amended and restated the subscription agreement
(the “First Amended and Restated Subscription Agreement”) and issued the Sponsor an additional 62,500 shares so that it would
hold an aggregate of 20% of our outstanding common stock after our initial public offering. In November 2021, we entered into a second
amendment and restatement of the subscription agreement with the Sponsor (the “Second Amended and Restated Subscription Agreement”)
pursuant to which we issued it an additional 50,000 shares of Common Stock (so that the Sponsor would hold 20% of our issued and outstanding
shares of common stock after the initial public offering. Further, we agreed that if the underwriters exercise the over-allotment option,
we will issue the Sponsor such number of additional shares of common stock (up to 232,500 shares) so as to enable it to maintain
its ownership of 20% of our issued and outstanding shares of common stock. In connection with the partial exercise by the underwriters
of the over-allotment option, on November 30, 2021, we issued an additional 75,000 shares to the Sponsor pursuant to the Second Amended
and Restated Subscription Agreement.
As a result of the IPO and the private placement, and
assuming all of the units separate into their component parts, we had: (i) 6,500,000 units, (ii) 8,125,000 shares of common stock, (iii)
6,500,000 rights to acquire an aggregate of 928,571 shares of common stock; and (iv) 5,750,000 whole warrants to acquire 5,750,000 shares
of common stock issued and outstanding as of November 30, 2021. We have not issued any securities since such date.
Prior to the IPO, there had been no public market for
our units, shares of common stock, rights or warrants. Our units, are listed for trading on the Nasdaq Global Market, or Nasdaq, under
the symbol “MAAQU”. The shares of common stock, rights and warrants comprising the units began separate trading on January
14, 2022 and are traded on Nasdaq under the symbols “MAAQ,” “MAAQR” and “MAAQW,” respectively. As
our IPO registration statement and Form 8A were not declared effective by the SEC until November 22, 2021, we were not a filing company
under the Securities and exchange Act of 1934, as amended until such date.
A total of $65,000,000
of the proceeds from the sale of the units and private placement warrants, including the sale of the units from the partial exercise of
the over-allotment option, were placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer &
Trust Company acting as trustee.
As of December 31, 2021, there was $65,000,484 in investments
and cash held in the trust account, which includes interest income available to us for franchise tax obligations of approximately $484
and $526,625 of cash held outside the trust account. As of December 31, 2021, we have not withdrawn any interest earned from the trust
account to pay taxes.
The funds held in trust has been invested only 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, so that we are not deemed to be an investment company under the Investment Company
Act. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay our income or other
tax obligations, the proceeds will not be released from the trust account until the earlier of the completion of a business combination
or our redemption of 100% of the outstanding public shares if we have not completed a business combination in the required time period.
The proceeds held in the trust account may be used as consideration to pay the sellers of a target business with which we complete a business
combination. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target
business.
Since our IPO, our sole business activity has been
identifying and evaluating suitable acquisition transaction candidates and engaging in non-binding discussions with potential target entities.
To date we have not entered into any binding agreement with any target entity. We presently have no revenue and have had losses since
inception from incurring formation and operating costs since completion of our IPO.
Management Business Combination Experience
Our management team
is led by Jonathan Intrater, Allan Liu and Loren Mortman; each has distinctive and complementary experience and extensive networks in
the healthcare, technology,
green economy and consumer products sectors as well as various other industries in North America, Europe, and Asia which we believe can
provide a suitable selection of potential targets. We intend to focus on targeting middle market entities with a valuation in the $150
million to $500 million range.
We
believe that our management team is well positioned to identify attractive business combination opportunities with compelling characteristics
and further potential. Members of our management team have extensive experience in executing business combinations, as they are long-term
advisors to buyers and sellers in mergers and acquisitions, private equity investors, or buy and sell-side investment bankers. Jonathan
Intrater, our Chief Executive Officer, is a Managing Director in the investment banking department at Ladenburg, Thalmann and has extensive
experience in merger advisory and public offerings. He also served as a member of the Board and Chairman of the audit committee of GreenVision
Acquisition Corp., a Nasdaq Capital Market-listed special purpose acquisition company that completed its initial business combination
in August 2021. Allan Liu, one of the members of our Board of Directors, is a veteran investment manager in Asia. He has almost 40 years
of broad experience in the financial industry, specializing in capital markets, private equity and venture capital investment. Mr.
Liu has been involved in advising, managing and investing over US $20 billion in capital in hundreds of projects for international
corporations and investors, and participated in building successful funds and asset management platforms. Loren
Mortman, another member of our Board of Directors, has been President of The Equity Group Inc., an investor relations consulting firm
founded in 1974 that specializes in investor communications, investment community outreach, and IR advisory for small-to-mid-cap public
and pre-public companies, since 2013, Ms. Mortman has over 20 years of experience in developing public company clients’ critical
communications, and advising on transactions and relations with the investment community. Prior to joining The Equity Group, Ms. Mortman
was a Financial Analyst at Brenner Securities, an Investment Bank.
Our
management team will actively source target candidates they believe will be attractive candidates for acquisition, and utilize their deal-making
track record, professional relationships, and capital markets expertise to enhance the growth potential and value of a target business
and provide opportunities for attractive returns to our stockholders. Past performance of our management team is not a guarantee (i) that
we will be able to identify a suitable candidate for our initial business combination or (ii) of success with respect to any business
combination we may consummate. You should not rely on the historical record of our management’s performance as indicative of our
future performance.
Business Strategy
Our business strategy is to identify and complete
a business combination with a company that meets one or more of the acquisition criteria described below.
Our objective is to generate an attractive return
for stockholders through a merger with an operating company with a strong record and growth potential. We expect to favor opportunities
with certain business characteristics including some or all of the following: compelling long-term growth prospects, attractive competitive
dynamics, consolidation opportunities, leading technological position and strong management. We will also consider additional factors
such as high barriers to entry, significant streams of recurring revenue, margin profiles, and attractive free cash flow characteristics.
Our efforts to identify a prospective target business will not be limited to a particular industry or geographic region, although we intend
to focus our search on target businesses operating in North America, Europe and Asia in the healthcare, technology, green economy, and
consumer products sectors.
Our selection process will leverage our management
team’s broad and deep relationship network, industry experience, and deal sourcing capabilities to access a range of opportunities.
Our management team has a distinctive combination of capabilities including:
• analyzing
performance, financial and otherwise, of public and private entities; and
• an
extensive history of accessing the capital markets across various business cycles, including financing businesses and assisting companies
with transition to public ownership.
Our founders intend to communicate with their networks
of relationships to articulate the parameters for our search for a target company and a potential business combination, and begin the
process of pursuing and reviewing potential opportunities.
Acquisition Criteria
Consistent with our business strategy, we have identified
the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We will use these
criteria and guidelines in evaluating acquisition opportunities, but we may ultimately decide to enter into our initial business combination
with a target business that does not meet these criteria and guidelines. We intend to seek to acquire companies that we believe:
• have
exhibited strong growth in revenue or profit in recent fiscal periods or have healthy cash flow from operations;
• will
offer an attractive return for our stockholders, potential benefit from growth in the target’s business and with an improved capital
structure will provide favorable upside measured against any identified downside risks;
• meet
some key characteristics such as being or having the capability of being a disruptive participant within an industry;
• are
capable of achieving significant organic and/or acquisitive growth;
• are
positioned to build stockholder value;
• have
the potential to achieve a leading position in the industry in which it competes; or
• possess
a proven management team prepared for being a public company.
These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant. If we decide to enter into our
business combination with a target business that does not meet all or some of the above criteria and guidelines, we will disclose that
the target business does not meet the above criteria in our stockholder communications related to our initial business combination, which
would be in the form of proxy solicitation materials or tender offer documents that we would file with the SEC and deliver to stockholders.
Our Acquisition Process
In evaluating a prospective target business, we
expect to conduct a thorough due diligence review that will encompass, among other things, meetings with incumbent management and key
employees, document reviews and review of facilities, as well as a review of financial and other information that will be made available
to us.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial
business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm that our
initial business combination is fair to our company from a financial point of view. Our stockholders may not be provided with a copy of
such opinion and they may not be able to rely upon such opinion.
Members of our management team and our independent
directors own or will own, directly or indirectly sponsor shares and/or private warrants following this offering which securities will
be worthless if we fail to complete a business combination and, accordingly, may have a conflict of interest in determining whether a
particular target business is an appropriate business with which to effectuate our initial business combination. Further, each of our
officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or
resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial
business combination.
Each of our officers and directors presently has,
and any of them in the future may have additional fiduciary or contractual obligations to another entity pursuant to which such officer
or director is or will be required to present a business combination opportunity to such entity. Accordingly, if any of our officers or
directors becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such business combination
opportunity to such other entity, subject to their fiduciary duties under Delaware law.
We do not believe, however, that the fiduciary
duties or contractual obligations of our officers or directors will materially affect our ability to complete our initial business combination.
Our Certificate of Incorporation will provide 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 subject
to his or her fiduciary duties under the laws of the State of Delaware and such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue.
Effecting A Business Combination
We will either (1) seek stockholder approval of
our initial business combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless
of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit
in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares to us by means
of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount
then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described herein. The decision as
to whether we will seek stockholder approval of our proposed business combination or 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. In the case of a tender offer, we will
file tender offer documents with the SEC which will contain substantially the same financial and other information about the initial business
combination as is required under the SEC’s proxy rules. In either case, we will consummate our initial business combination only
if upon such consummation either our shares are listed on a national securities exchange as contemplated by Rule 3a51-1(a) under the Securities
Exchange Act of 1934 (the “Exchange Act”) or we have net tangible assets (as determined in accordance with Rule 3a51-1(g)
of the Exchange Act, or any successor rule) of at least $5,000,001 (in either case, so that we are not subject to Rule 3a51-1, which we
refer to as the SEC’s “penny stock” rules) and, if we seek stockholder approval, a majority of the outstanding shares
of common stock voted are voted in favor of the business combination.
We have nine months (or up to 21 months if we
extend the period of time to consummate a business combination, as described in more detail below) from the consummation of our IPO to
consummate our initial business combination. Public stockholders will not be offered the opportunity to vote on or redeem their shares
in connection with such extensions. If we are unable to consummate our initial business combination within such time period, we will distribute
the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account (net of taxes
payable), pro rata to our public stockholders, by way of redemption of their shares, and thereafter cease operations except for the purpose
of winding up our affairs, as further described herein. We expect the pro rata redemption price to be $10.00 per share (regardless of
whether or not the underwriters exercise their over-allotment option), without taking into account any interest earned on such funds.
However, we cannot assure you that we will in fact be able to distribute such amounts as a result of claims of creditors which may take
priority over the claims of our public stockholders.
As stated above, we will have nine months from
the consummation of our IPO to consummate our initial business combination. However, if we anticipate that we may not be able to consummate
our initial business combination within nine months, we may, but are not obligated to, extend the period of time to consummate a business
combination up to twelve times, each by an additional one month (for a total of up to 21 months to complete a business combination), subject
to our board of directors authorizing such extension and the sponsor or its affiliates or designees depositing additional funds into the
trust account as set out below. Pursuant to the terms of our amended and restated certificate of incorporation and the trust agreement
entered into between us and Continental Stock Transfer & Trust Company, in order to extend the time available for us to consummate
our initial business combination, our board of directors would adopt a resolution approving such extension and our founders or their respective
affiliates or designees (which may include the potential target business), upon five days advance notice prior to each applicable deadline,
must deposit into the trust account $216,667 (approximately $0.0333 per public share) for each one-month extension, up to an aggregate
of $2,600,004, or $0.40 per public share (for an aggregate of 12 months), on or prior to the date of the applicable deadline, for each
extension. The insiders or sponsor (or their respective affiliates or designees) providing such additional funds will receive non-interest
bearing, unsecured promissory notes equal to the amount of any such deposit. The final and definitive terms of any such loans have not
yet been negotiated, but any such loan would be interest free and will not be repaid in the event that we are unable to close a business
combination unless there are funds available outside the trust account to do so. Such notes would either be paid upon consummation of
our initial business combination, or, at the purchaser's discretion, converted upon consummation of our business combination into additional
warrants on the basis of $1.00 per private warrant for each dollar amount deposited. These warrants would have an exercise price of $11.50
per share. Public stockholders will not be offered the opportunity to vote on or redeem their shares in connection with such extension.
If we are unable to consummate our initial business combination within such time period, we will distribute the aggregate amount then
on deposit in the trust account including interest earned on the funds held in the trust account (net of taxes payable), pro rata to our
public stockholders, by way of redemption of their shares, and thereafter cease operations except for the purpose of winding up our affairs,
as further described herein.
In the event that we receive notice from our sponsor
or their respective affiliates or designees at least five days prior to an applicable deadline of their intent to affect an extension,
we intend to issue a press release announcing such intention at least three days prior to such applicable deadline. In addition, we intend
to issue a press release the day after such applicable deadline announcing whether or not the funds had been timely deposited. Our sponsor
and its affiliates or designees and their affiliates or designees are not obligated to fund the trust account to extend the time for us
to complete our initial business combination. To the extent that some, but not all, of our insiders, decide to extend the period of time
to consummate our initial business combination, such insiders (or their affiliates or designees) may deposit the entire amount required.
If we are unable to consummate our initial business combination within such time period, we will, as promptly as possible but not more
than ten business days thereafter, redeem 100% of our outstanding public shares for a pro rata portion of the funds held in the trust
account and then seek to dissolve and liquidate. In such event, all warrants and rights will expire and will be worthless.
The rules of The Nasdaq Stock Market require that
our business combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80%
of the assets held in the trust account (excluding taxes payable on the interest earned on the trust account) at the time of our signing
a definitive agreement in connection with our business combination. The fair market value of the target or targets will be determined
by our Board of Directors based upon one or more standards generally accepted by the financial community (such as actual and potential
sales, earnings, cash flow and/or book value). Although our Board of Directors will rely on generally accepted standards, our Board of
Directors will have discretion to select the standards employed. In addition, the application of the standards generally involves a substantial
degree of judgment. Accordingly, investors will be relying on the business judgment of the Board of Directors in evaluating the fair market
value of the target or targets. The proxy solicitation materials or tender offer documents used by us in connection with any proposed
transaction will provide public stockholders with our analysis of the fair market value of the target business, as well as the basis for
our determinations. If our Board is not able independently to determine the fair market value of the target business or businesses, we
will obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions,
with respect to the satisfaction of such criteria. Our stockholders may not be provided with a copy of such opinion nor will they be able
to rely on such opinion. However, if Nasdaq delists our securities from trading on its exchange after this offering, we would not be required
to satisfy the fair market value requirement described above and could complete a business combination with a target business having a
fair market value substantially below 80% of the balance in the trust account.
We anticipate structuring our initial business
combination so that the post-transaction company in which our public stockholders own or acquire shares will own or acquire 100% of the
outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial business combination
such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to
meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment
Company Act. Even if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target, our
stockholders prior to our initial business combination may collectively own a minority interest in the post-transaction company, depending
on valuations ascribed to the target and us in our initial business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target, or issue a substantial
number of new shares to third parties in connection with financing our initial business combination. In such cases, we would acquire a
100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders
immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial
business combination. If less than 100% of the outstanding equity interests or assets of a target business or businesses are owned or
acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired by us is what will be valued
for purposes of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net
assets test will be based on the aggregate value of all of the target businesses.
Status as a Public Company and Financial Considerations
We believe our structure will make us an attractive
business combination partner to target businesses. As an existing public company, we offer a target business an alternative to the traditional
initial public offering through a merger or other business combination. In this situation, the owners of the target business would exchange
their shares of stock in the target business for our shares of common stock or for a combination of our shares of common stock and cash,
allowing us to tailor the consideration to the specific needs of the sellers. We believe target businesses might find this method a more
certain and cost-effective method to becoming a public company than the typical initial public offering. In a typical initial public offering,
there are additional expenses incurred in marketing, roadshow and public reporting efforts that will likely not be present to the same
extent in connection with a business combination with us. Furthermore, once the business combination is consummated, the target business
will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete
the offering, as well as general market conditions that could prevent the offering from occurring. We believe the target business would
then have greater access to capital and an additional means of providing management incentives consistent with stockholders’ interests
than it would have as a privately-held company. It can offer further benefits by augmenting a company’s profile among potential
new customers and vendors and aid in attracting talented employees.
While we believe that our status as a public company
will make us an attractive business partner, some potential target businesses may view the inherent limitations in our status as a blank
check company as a deterrent and may prefer to effect a business combination with a more established entity or with a private company.
These inherent limitations include limitations on our available financial resources, which may be inferior to those of other entities
pursuing the acquisition of similar target businesses; the requirement that we seek stockholder approval of a business combination, which
may delay the consummation of a transaction; and the existence of our outstanding rights, which may represent a source of future dilution.
With funds in the trust account of $65,000,000 available
to use for a business combination, we offer a target business a variety of options such as providing the owners of a target business with
shares in a public company and a public means to sell such shares, providing capital for the potential growth and expansion of its operations
or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial business combination using
our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination
that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. In connection with any
potential acquisition, we may be required to obtain acquisition financing. However, since we have no specific business combination under
consideration, we have not taken any steps to secure third party financing and there can be no assurance that it will be available to
us. We may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our business combination, and we may effectuate our business combination using the proceeds of such offering rather than using the amounts
held in the trust account.
We chose our net tangible asset threshold of $5,000,001
to ensure that we would avoid being subject to Rule 419 promulgated under the Securities Act of 1933, as amended. However, if we seek
to consummate an initial business combination with a target business that imposes any type of working capital closing condition or requires
us to have a minimum amount of funds available from the trust account upon consummation of such initial business combination, we may need
to have more than $5,000,001 in net tangible assets upon consummation and this may force us to seek third party financing which may not
be available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination and
we may not be able to locate another suitable target within the applicable time period, if at all. Public stockholders may therefore have
to wait up to 21 months from the closing of our IPO in order to be able to receive a pro rata share of the trust account.
Summary Information Related to Our Securities,
Redemption Rights and Liquidation
We are a Delaware corporation and our affairs are governed
by our amended and restated certificate of incorporation, and the Delaware General Corporation Law. Pursuant to our amended and restated
certificate of incorporation, we are authorized to issue 300,000,000 shares of common stock, $0.00001 par value each. The information
provided below is a summary only and we refer you to our amended and restated certificate of incorporation and our warrant agreement and
rights agreement with Continental Stock Transfer & Trust Company as warrant and rights agent for additional important and material
information.
Upon completion of our IPO and as of March 29, 2022,
we had and have 8,125,000 shares of common stock issued and outstanding. Common stockholders of record are entitled to one vote for each
share held on all matters to be voted on by stockholders and vote together as a single class, except as required by law. Unless specified
by applicable law, our amended and restated certificate of incorporation or applicable stock exchange rules, the affirmative vote of a
majority of our shares of common stock that are voted is required to approve any such matter voted on by our stockholders. Directors are
elected for a term of one year. Our stockholders are entitled to receive ratable dividends when, as and if declared by the Board of Directors
out of funds legally available therefor.
We will provide our public stockholders with the opportunity
to redeem all or a portion of their public shares upon the completion of our business combination at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our business combination,
including interest (which interest shall be net of taxes payable) divided by the number of then issued and outstanding public shares,
subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.00 per public
share (subject to increase of up to an additional $0.40 per public share in the event that our sponsor elects to extend the period of
time to consummate a business combination).
Our sponsor, officers and directors have entered into
a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares,
private placement shares and any public shares they may hold in connection with the completion of our business combination.
If a stockholder vote is not required by law and we
do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated certificate
of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC
prior to completing our business combination. If, however, stockholder approval of the transaction is required by law, or we decide to
obtain stockholder approval for business or other legal reasons, we will, like many blank check companies, offer to redeem shares in conjunction
with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, we
will complete our business combination only if a majority of the issued and outstanding shares of common stock voted are voted in favor
of the business combination. However, the participation of our sponsor, officers, directors or their affiliates in privately-negotiated
transactions, if any, could result in the approval of our business combination even if a majority of our public stockholders vote, or
indicate their intention to vote, against such business combination.
If we seek stockholder approval of our business combination
and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated
certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with
whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted
from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in our IPO, which we refer to as the “Excess
Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our business combination.
If we do not complete a business combination within
9 months (or up to 21 months, as discussed above) from the closing of our IPO, we will (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding
public shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law
to provide for claims of creditors and the requirements of other applicable law.
In connection with our IPO and consummation of the
private placement with our sponsor we issued an aggregate of 6,500,000 rights to acquire an aggregate of 928,571 shares of common stock
as a component of the public units. If we enter into a definitive agreement for a business combination in which we will be the surviving
entity, each holder of a right will receive one-seventh (1/7) of one share upon consummation of our business combination, even if the
holder of such right redeemed all shares of common stock held by him, her or it in connection with the business combination or an amendment
to our certificate of incorporation with respect to our pre-business combination activities. No additional consideration will be required
to be paid by a holder of rights in order to receive his, her or its additional shares upon consummation of an business combination as
the consideration related thereto has been included in the unit purchase price paid for by investors in our IPO. The shares issuable upon
exchange of the rights will be freely tradable (except to the extent held by affiliates of ours). Holders of rights are not entitled to
any redemption of voting rights. If we are unable to complete an business combination within the required time period and we liquidate
the funds held in the trust account, holders of rights will not receive any of such funds with respect to their rights, nor will they
receive any distribution from our assets held outside of the trust account with respect to such rights, and the rights will expire worthless.
In connection with our IPO we issued an aggregate of
3,250,000 whole warrants to acquire an aggregate of 3,250,000 shares of common stock. In addition, in the private placement with our sponsor
that we completed simultaneously with the IPO, we issued 2,500,000 warrants to acquire 2,500,000 shares of common stock. The warrants
purchased in our IPO have been issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company,
as warrant agent, and us. Each warrant entitles the registered holder to purchase one share of common stock at a price of $11.50 per share,
subject to adjustment as discussed below, at any time commencing on the later of 12 months from the date we consummated our IPO or 30
days from the completion of our business combination. Because the warrants may only be exercised for whole numbers of shares, only an
even number of warrants may be exercised at any given time. Pursuant to the warrant agreement, a warrantholder may exercise its warrants
only for a whole number of shares. This means that only an even number of warrants may be exercised at any given time by a warrantholder.
The warrants will expire five years after the completion of our business combination, at 5:00 p.m., New York City time, or earlier upon
redemption or liquidation.
Once the warrants become exercisable, we may call the
warrants for redemption:
• in
whole and not in part;
• upon
a minimum of 30 days’ prior written notice of redemption,
•
if, and only if, the last sales price of our shares of common stock equals or exceeds $18.00 per share for any 20 trading days within
a 30-trading day period ending three business days before we send the notice of redemption, and
• if,
and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date
of redemption.
The
redemption price for the warrants shall be either (i) if the holder of a warrant has followed the procedures specified in
our notice of redemption and surrendered the warrant, the number of shares of common stock as determined in accordance with the “cashless
exercise” provisions of the warrant agreement or (ii) if the holder of a warrant has not followed such procedures specified in our
notice of redemption, the price of $0.01 per warrant. If the foregoing conditions
are satisfied and we issue a notice of redemption, each warrant holder can exercise his, her or its warrant prior to the scheduled redemption
date either by paying the cash exercise price or on a “cashless exercise” basis. However, the price of our shares of common
stock may fall below the $18.00 trigger price, as well as the $11.50 warrant exercise price after the redemption notice is issued.
The private warrants are identical to the warrants
included in the units sold in our IPO except for certain transfer restrictions as described herein. The purchasers of the private warrants
have agreed not to transfer, assign or sell any of the private warrants or underlying securities (except to the same permitted transferees
as the Sponsor and provided the transferees agree to the same terms and restrictions as the permitted transferees of the Sponsor must
agree to) until the completion of our initial business combination. In the event of a liquidation prior to our initial business combination,
the private warrants will expire worthless.
Competition
In identifying, evaluating and selecting a target business
for our initial business combination, we may encounter intense competition from other entities having a business objective similar to
ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic
business combinations. Many of these entities are well established and have extensive experience identifying and effecting business combinations
directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than
we do. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation
gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay cash in
connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial
business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by
certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business
combination.
Employees
We currently have one officer. This individual is not
obligated to devote any specific number of hours to our matters, but he intends to devote as much of his time as he deem necessary to
our affairs until we have completed our initial business combination. The amount of time that he will devote in any time period will vary
based on whether a target business has been selected for our initial business combination and the stage of the initial business combination
process we are in. We do not intend to have any full-time employees prior to the completion of our initial business combination.
Corporate Information
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the Jumpstart Our Business
Startups Act of 2012, or the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market
for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides
that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the
Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay
the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage
of the benefits of this extended transition period.
We will remain an emerging growth company until the
earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our IPO, (b) in which we have
total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means
the market value of our shares of common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th,
and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting company”
as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations,
including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until
the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as
of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such completed fiscal
year and the market value of our common stock held by non- affiliates exceeds $700 million as of the end of that year’s second fiscal
quarter.
We are a Delaware corporation incorporated on May
19, 2021. Our executive offices are located at 8 The Green, Suite #12490, Dover,
Delaware 19901, and our telephone number is (302) 281-2147.
Available Information
We are required to file Annual Reports on Form 10-K
and Quarterly Reports on Form 10-Q with the SEC on a regular basis, and are required to disclose certain material events in a Current
Report on Form 8-K. The SEC maintains an Internet website that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC. The SEC’s Internet website is located at www.sec.gov. In addition, the
Company will provide copies of these documents without charge upon request from us in writing at 8
The Green, Suite #12490, Dover, Delaware 19901.
Item 1A. Risk Factors
An investment in our securities involves a high degree
of risk. You should consider carefully all of the risks described below, together with the other information contained in this Annual
Report, 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.
Summary of Risk Factors
Our business is subject to numerous risks and
uncertainties, including those highlighted in the section titled “Risk Factors” immediately following this prospectus summary.
These risks include, but are not limited to:
| |
• |
Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our sponsor shares will participate in such vote, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination. |
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• |
Your only opportunity to effect your investment decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash. |
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• |
Our search for a business combination, and any partner business with which we ultimately complete a business combination, may be materially adversely affected by the recent coronavirus (COVID-19) pandemic, any worsening of the pandemic or other disease outbreaks and the status of debt and equity markets. |
| |
• |
We may not be able to complete our initial business combination within nine months after the closing of this offering (or such later period, if extended), in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate. |
| |
• |
As the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination. |
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• |
If third parties bring claims against us, the funds 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. |
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• |
We may not hold an annual general meeting until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to appoint directors. |
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• |
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. |
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• |
We are not required to obtain an opinion from an independent investment banking firm or from a valuation or appraisal 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 stockholders from a financial point of view. |
| |
• |
We may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us. |
| |
• |
We may attempt to complete our initial business combination with a private company about which little information is available, which may result in a business combination with a company that is not as profitable as we suspected, if at all. |
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• |
We do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which a substantial majority of our stockholders do not agree. |
| |
• |
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. |
| |
• |
Our initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support. |
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• |
We may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest. |
| |
• |
Since our sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed (other than with respect to public shares they may acquire during or after this offering), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination. |
| |
• |
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. |
| |
• |
We may seek business combination opportunities in industries or sectors that may be outside of our management’s areas of expertise. |
| |
• |
Our ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business. |
| |
• |
You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss. |
| |
• |
Our initial stockholders paid an aggregate of $25,000, or approximately $0.0161 per sponsor share and, accordingly, you will experience immediate and substantial dilution from the purchase of shares of our common stock. |
| |
• |
You will not be permitted to exercise your warrants unless we register and qualify the underlying shares of common stock or certain exemptions are available. |
| |
• |
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless. |
| |
• |
We are a blank check company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. |
| |
• |
Past performance by our management team and their affiliates, including investments and transactions in which they have participated and businesses with which they have been associated, may not be indicative of future performance of an investment in the Company. |
General Risks Factors in Investing in a SPAC
Entity and Completing a Business Combination
We are an early stage 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 an early stage company established with no operating
results, and we will not commence operations until obtaining funding through our IPO. Because we lack an operating history, you have no
basis upon which to evaluate our ability to achieve our business objective of completing our business combination with one or more target
businesses. We have no plans, arrangements or understandings with any prospective target business concerning a business combination and
may be unable to complete our business combination. We will not generate any revenues
until, at the earliest, after the consummation of a business combination. If we fail to complete our business combination, we will
never generate any operating revenues.
Our public shareholders may not be afforded an
opportunity to vote on our proposed business combination, which means we may complete our business combination even though a majority
of our public shareholders do not support such a combination.
We may not hold a stockholder vote to approve our business
combination unless the business combination would require stockholder approval under applicable Delaware law or the rules of the Nasdaq
or if we decide to hold a stockholder vote for business or other reasons. Examples of transactions that would not ordinarily require stockholder
approval include asset acquisitions and share purchases, while transactions such as direct mergers with our company or transactions where
we issue more than 20% of our outstanding shares would require stockholder. For instance, the Nasdaq rules currently allow us to engage
in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval if we were seeking to issue
more than 20% of our outstanding shares to a target business as consideration in any business combination. Therefore, if we were structuring
a business combination that required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business
combination. Except as required by law or Nasdaq rules, the decision as to whether we will seek stockholder approval of a proposed business
combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and
will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise
require us to seek stockholder approval. Accordingly, we may consummate our business combination even if holders of a majority of the
issued and outstanding shares of common stock do not approve of the business combination we consummate.
If we seek stockholder approval of our business
combination, our sponsor, officers and directors have agreed to vote in favor of such business combination, regardless of how our public
shareholders vote.
Unlike other blank check companies in which the initial
stockholders agree to vote their sponsor shares in accordance with the majority of the votes cast by the public stockholders in connection
with an initial business combination, our sponsor, officers and directors have agreed (and any permitted transferees will agree), pursuant
to the terms of a letter agreement entered into with us, to vote any sponsor shares held by them, as well as any public shares purchased
during or after our IPO, in favor of our initial business combination. We expect that our sponsor and its permitted transferees will own
approximately 20% of our issued and outstanding shares at the time of any such stockholder vote (assuming it does not purchase units in
our IPO, and not taking into account ownership of the private placement warrants). As a result, in addition to our initial stockholder’s
sponsor shares, we would need only 2,437,501, or approximately 37.5%, of the 6,500,000 public shares sold in our IPO to be voted in favor
of a transaction in order to have our initial business combination approved. Further, assuming that only a quorum of 4,062,501 shares
of our common stock is present in person or by proxy at stockholder meeting to approve our initial business combination, if only the minimum
number of shares representing a quorum are voted, such approval would require the affirmative vote of 2,031,251 shares of our common stock,
which means that, in addition to our initial stockholders’ shares, we would need only 406,251, or approximately 6.25%, of the 6,500,000
public shares sold in our IPO to be voted in favor of an initial business combination in order to have our initial business combination
approved. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder
approval will be received than would be the cast if such persons agreed to vote their sponsor shares in accordance with the majority of
the votes cast by our public stockholders.
Our sponsor has the right to extend the term we
have to consummate our business combination, without providing our stockholders with redemption rights.
We will have until nine months from the closing of this
offering to consummate our initial business combination. However, if we anticipate that we may not be able to consummate our initial business
combination within nine months, our board of directors may extend the period of time to consummate a business combination up to twelve
(12) times, each by an additional one month period (for a total of up to 21 months to complete a business combination), subject to the
authorization by our board of directors and the deposit of additional funds into the trust account by our sponsor or its affiliates or
designees as described elsewhere in this prospectus. Our stockholders will not be entitled to vote or redeem their shares in connection
with any such extension. In order for the time available for us to consummate our initial business combination to be extended, our sponsor
or its affiliates or designees must deposit into the trust account $216,667 (approximately $0.0333 per public share) for each one-month
extension, on or prior to the date of the applicable deadline, up to an aggregate of $2,600,004, or $0.40 per public share if we extend
for the full twelve months. (for an aggregate of 12 months).
Any such payments may be made in the form of a non-interest-bearing
loan from our sponsor or its affiliates or designees and would be repaid, if at all, from funds released to us upon completion of our
initial business combination. Any obligation to repay such loans may reduce the amount available to us to pay as purchase price in our
initial business combination, and/or may reduce the amount of funds available to the combined company following the initial business combination.
This feature is different than the traditional special purpose acquisition company structure, in which any extension of the company’s
period to complete a business combination requires a vote of the company’s stockholders and stockholders have the right to redeem
their public shares in connection with such vote, and which do not provide the sponsor with the right to loan funds to the company to
fund extension payments.
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 shareholder approval of the business combination.
At the time of your investment in us, you will not
be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our Board of Directors
may complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to
vote on the business combination, unless we seek such stockholder approval. 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 business combination.
The ability of our public shareholders to redeem
their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult
for us to enter into a business combination with a target.
We may seek to enter into a business combination transaction
agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash.
If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as a result,
would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an amount that
would cause our net tangible assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 upon consummation
of our 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 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 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 a business combination transaction with us.
The ability of our public shareholders 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 business
combination, we will not know how many stockholders may exercise their redemption rights, and therefore we will need to structure the
transaction based on our expectations as to the number of shares that will be submitted for redemption. If our business combination agreement
requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party financing.
In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction
to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional third-party financing
may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may
limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
The ability of our public shareholders to exercise
redemption rights with respect to a large number of our shares could increase the probability that our business combination would be unsuccessful
and that you would have to wait for liquidation in order to redeem your shares.
If our business combination agreement requires us to
use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing,
the probability that our business combination would be unsuccessful is increased. If our 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 shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount
per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds expected
in connection with our redemption until we liquidate or you are able to sell your shares in the open market.
The requirement that we complete our business combination
within the prescribed time frame may give potential target businesses leverage over us in negotiating a business combination and may decrease
our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine
our ability to complete our business combination on terms that would produce value for our shareholders.
Any potential target business with which we enter into
negotiations concerning a business combination will be aware that we must complete our business combination within 9 months from the closing
of our IPO (or up to 21 months from the closing of our IPO if we extend the period of time to consummate a business combination, as described
in more detail in this report). Consequently, such target business may obtain leverage over us in negotiating a business combination,
knowing that if we do not complete our business combination with that particular target business, we may be unable to complete our 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 business combination on terms that we would have rejected upon a more comprehensive
investigation.
In connection with any vote to approve a business combination,
we will offer each public stockholder the option to vote in favor of a proposed business combination and still seek redemption of his,
her or its shares.
In connection with any vote to approve a business
combination, we will offer each public stockholder (but not our founders, officers or directors) the right to have his, her or its shares
of common stock redeemed for cash (subject to the limitations described elsewhere in this prospectus) regardless of whether such stockholder
votes for or against such proposed business combination. This ability to seek redemption while voting in favor of our proposed business
combination may make it more likely that we will consummate a business combination.
We may not be able to complete our 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 shareholders may only receive $10.00 per share, or less than such amount in
certain circumstances, and our rights and warrants will expire worthless.
Our sponsor, officers and directors have agreed that
we must complete our business combination within 9 months from the closing of our IPO (or up to 21 months from the closing of our IPO
if we extend the period of time to consummate a business combination). We may not be able to find a suitable target business and complete
our business combination within such time period. If we have not completed our 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 (which interest shall be net of taxes payable, and less interest to pay dissolution expenses) divided
by the number of then issued and outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board of Directors, liquidate
and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other
applicable law. In such case, our public stockholders may only receive $10.00 per share, and our rights and warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares. If third parties
bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.00 per share” and other risk factors herein.
Our search for a business combination, and any
target business with which we ultimately consummate a business combination, may be materially adversely affected by the COVID-19 outbreak
and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus was
reported to have surfaced, which has and is continuing to spread throughout the world. On January 30, 2020, the World Health Organization
declared the outbreak of COVID-19 a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and
Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community
in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic.”
The COVID-19 outbreak has resulted in a widespread health crisis that has adversely affected economies and financial markets worldwide,
business operations and the conduct of commerce generally, and the business of any potential target business with which we consummate
a business combination could be, or may already have been, materially and adversely affected. Furthermore, we may be unable to complete
a business combination if concerns relating to COVID-19 continue to restrict travel or limit the ability to have meetings with potential
investors, or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction
in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which
are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions
to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue
for an extensive period of time, our ability to consummate a business combination, or the operations of a target business with which we
ultimately consummate a business combination, may be materially adversely affected.
In addition, our ability to consummate
a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including
as a result of increased market volatility and decreased market liquidity and third-party financing being unavailable on terms acceptable
to us or at all.
Our sponsor may decide not to extend the term we
have to consummate our business combination, in which case we would cease all operations except for the purpose of winding up and we would
redeem our public shares and liquidate, and the warrants and rights will be worthless.
We will have until nine months from the closing of this
offering to consummate our initial business combination. However, if we anticipate that we may not be able to consummate our initial business
combination within nine months, we may extend the period of time to consummate a business combination up to twelve (12) times, each by
an additional one month period (for a total of up to 21 months to complete a business combination), subject to our board of directors
authorizing such extension and the sponsor depositing additional funds into the trust account as described elsewhere in this report. However,
our sponsor and its affiliates or designees are not obligated to fund the trust account to extend the time for us to complete our initial
business combination. If we are unable to consummate our initial business combination within the applicable time period, we will, as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares for a pro rata portion of the funds held
in the trust account and as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. In such event, the warrants and rights will be worthless.
If we seek stockholder approval of our initial
business combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from public stockholders,
which may influence a vote on a proposed business combination and reduce the public “float” of our 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 in privately negotiated transactions or in the open
market either prior to or following the completion of our initial business combination, although they are under no obligation to do so.
Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no
longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already
elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their
shares. The price per share paid in any such transaction may be different than the amount per share a public stockholder would receive
if it elected to redeem its shares in connection with our initial business combination. The purpose of such purchases could be to vote
such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business
combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain
amount of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met.
This may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public
“float” of our common stock and the number of beneficial holders of our securities may be reduced, possibly making it difficult
to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
If a shareholder fails to receive notice of our
offer to redeem our public shares in connection with our business combination, or fails to comply with the procedures for tendering its
shares, such shares may not be redeemed
We
will comply with the 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 solicitation or tender offer materials,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender
offer materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination
will describe the various procedures that must be complied with in order to validly redeem or tender 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
or proxy materials documents mailed to such holders, or up to two business days prior to the scheduled 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
the event that a stockholder fails to comply with these procedures, its shares may not be redeemed.
If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on our redemption, and our warrants and
rights will expire worthless.
We may be unable to complete our initial business combination
for a number of reasons. For example, we expect to encounter intense competition from other entities having a business objective similar
to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other entities,
domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established
and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries and possess greater technical, human and other resources or more local industry knowledge than we do. Further,
our financial resources may be relatively limited when contrasted with those of many of these competitors. While we believe there are
numerous target businesses we could potentially acquire with the net proceeds of our IPO and the sale of the private placement warrants,
our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available
financial resources. Furthermore, if we are obligated to pay cash for the shares of common stock redeemed, it would reduce the resources
available to us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully
negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share (or less in certain circumstances) on the liquidation of our trust account and our warrants and rights
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their
shares.
Because
of our structure, limited resources and the significant competition for business combination opportunities, other companies
may have a competitive advantage and we may not be able to consummate an attractive business combination.
We expect to encounter intense competition from
entities other than blank check companies having a business objective similar to ours, including private investors (which may be individuals
or investment partnerships), venture
capital funds, leveraged buyout funds and operating businesses competing for acquisitions. Many of these entities are well established
and have extensive experience in identifying and effecting business combinations directly or through affiliates. Many of these competitors
possess greater technical, human and other resources than we do and our financial resources will be relatively limited when compared to
those of many of these competitors. While we believe that there are numerous potential target businesses that we could acquire with the
net proceeds of this offering, our ability to compete in acquiring certain sizable target businesses will be limited by our available
financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.
Our obligation to pay cash in connection with
our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination
may not be viewed favorably by target businesses. Furthermore,
seeking stockholder approval or engaging in a tender offer in connection with any proposed business combination may delay the consummation
of such a transaction. Additionally, our outstanding rights and warrants, and the future dilution they potentially represent, may not
be viewed favorably by certain target businesses. Any of the foregoing may place us at a competitive disadvantage in successfully negotiating
and consummating a business combination.
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, rights or warrants, potentially at a loss.
Our public stockholders will be entitled to receive
funds from the trust account only upon the earlier to occur of: (i) our completion of an initial business combination, and then only in
connection with those shares of common stock that such stockholder properly elected to redeem, subject to the limitations described herein,
(ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our Amended and Restated Certificate
of Incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial
business combination within nine months (or 21 months) from the closing of this offering and (iii) the redemption of our public shares
if we are unable to complete an initial business combination within nine months (or 21 months) from the closing of our IPO, subject to
applicable law and as further described herein. In addition, if we have not completed an initial business combination within the required
time period for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then existing stockholders
for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait
beyond the end of such period before they receive funds from our trust account. In no other circumstances will a public stockholder have
any right or interest of any kind in the trust account. Holders of warrants and rights will not have any right to the proceeds held in
the trust account with respect to the warrants and rights. Accordingly, to liquidate your investment, you may be forced to sell your public
shares, warrants, or rights, potentially at a loss.
The requirement that the target business or businesses that we
acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in the trust account (less any taxes
payable on interest earned and less any interest earned thereon that is released to us for taxes) at the time of the execution of a definitive
agreement for our initial business combination may limit the type and number of companies that we may complete such a business combination
with.
Pursuant to the Nasdaq listing rules, the target
business or businesses that we acquire must collectively have a fair market value equal to at least 80% of the balance of the funds in
the trust account (less any taxes payable on interest earned and less any interest earned thereon that is released to us for taxes) at
the time of the execution of a definitive agreement for our initial business combination. This restriction may limit the type and number
of companies that we may complete an initial business combination with. If we are unable to locate a target business or businesses that
satisfy this fair market value test, we may be forced to liquidate and you will only be entitled to receive your pro rata portion of the
funds in the trust account. If Nasdaq delists our securities from trading on its exchange after this offering, we would not be required
to satisfy the fair market value requirement described above and could complete a business combination with a target business having a
fair market value substantially below 80% of the balance in the trust account.
In connection with any stockholder meeting called to approve a
proposed initial business combination, we may require stockholders who wish to redeem their shares in connection with a proposed business
combination to comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption
rights prior to the deadline for exercising their redemption rights.
In connection with any stockholder meeting called
to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he is voting for
or against such proposed business combination, to demand that we redeem his or her shares into a pro rata share of the trust account as
of two business days prior to the consummation of the initial business combination. We may require public stockholders who wish to redeem
their shares in connection with a proposed business combination to either (i) tender their certificates (if any) to our transfer agent
or (ii) deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holders’ option, in each case prior to a date set forth in the tender offer documents or proxy materials
sent in connection with the proposal to approve the business combination. In order to obtain a physical share certificate, a stockholder’s
broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders
should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any
control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical share certificate.
While we have been advised that it takes a short time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly,
if it takes longer than we anticipate for stockholders to deliver their shares, stockholders who wish to redeem may be unable to meet
the deadline for exercising their redemption rights and thus may be unable to redeem their shares.
If, in connection with any stockholder meeting called to approve
a proposed business combination, we require public stockholders who wish to redeem their shares to comply with specific requirements for
redemption, such redeeming stockholders may be unable to sell their securities when they wish to in the event that the proposed business
combination is not approved.
We may require our public stockholders seeking to
exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender
their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders,
or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials
or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At
Custodian) System, rather than simply voting against the initial business combination at the holder’s option. The tender offer or
proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business combination
will indicate whether we are requiring public stockholders to satisfy such delivery requirements, which will include the requirement that
a beneficial holder must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the
time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior to the scheduled
vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise
its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and, in the
case of a stockholder vote, a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote.
However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing additional
notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise period, it
is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced
tendering process and the act of certificating the shares or delivering them through The Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System. The transfer agent will typically charge the tendering broker a nominal fee and it would be up to the broker whether
or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders
seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights
regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures used
by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check
companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply
vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her
redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him or her to
deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion
of the business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose
above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to
the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder
meeting, would become “option” rights surviving past the completion of the business combination until the redeeming holder
delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any request to redeem such shares, once made, may
be withdrawn at any time up to the date set forth in the tender offer materials or two business days prior to the scheduled date of the
stockholder meeting set forth in our proxy materials, as applicable (unless we elect to allow additional withdrawal rights). Furthermore,
if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior
to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate
(physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem
their shares will be distributed promptly after the completion of our initial business combination.
If our initial proposed business combination is not
completed, we may continue to try to complete a business combination until nine months from the consummation of this offering or during
any extension period. If our initial business combination is not approved or completed for any reason, then our public stockholders who
elected to exercise their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust
account. In such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
You will not be entitled to protections normally
afforded to investors of many other blank check companies.
Since the net proceeds of our IPO and the sale of the
private placement warrants are intended to be used to complete an 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 listed our
securities on the Nasdaq Global Market and have net tangible assets in excess of $5,000,001 upon the completion of our IPO and the sale
of the private placement warrants and filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact,
we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors
will not be afforded the benefits or protections of those rules. Among other things, this means our units will be immediately tradable
and we may have a longer period of time to complete our business combination than do companies subject to Rule 419. Moreover, if our IPO
were subject to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless
and until the funds in the trust account were released to us in connection with our completion of an business combination.
If we seek shareholder approval of our business
combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of shareholders
are deemed to hold in excess of 15% of our shares of common stock, you will lose the ability to redeem all such shares in excess of 15%
of our shares of common stock.
If we seek stockholder approval of our business combination
and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated
certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with
whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted
from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our IPO, which we refer to as the “Excess
Shares.” However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete
our business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions.
Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our business combination.
And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required
to sell your shares in open market transactions, potentially at a loss.
If the net proceeds of our IPO not being held in
the trust account are insufficient to allow us to operate for at least the next 9 months (or up to 21 months from the closing of our IPO
if we extend the period of time to consummate a business combination), we may be unable to complete our business combination.
The funds available to us outside of the trust account
may not be sufficient to allow us to operate for at least the next 9 months (or up to 21 months from the closing of our IPO if we extend
the period of time to consummate a business combination), assuming that our business combination is not completed during that time. We
expect to incur significant costs in pursuit of our acquisition plans. We may need to borrow funds from our founders, officers or directors
or their affiliates to operate or may be forced to liquidate. Our founders, officers, directors and their affiliates may, but are not
obligated to, loan us funds, from time to time or at any time, in whatever amount that they deem reasonable in their sole discretion for
our working capital needs. Each working capital loan would be evidenced by a promissory note. The working capital notes would either be
paid upon consummation of our initial business combination, without interest, or, at holder’s discretion, an amount not to exceed
$2,400,000, may be converted into working capital warrants at a price of $1.00 per warrant with an exercise price of $11.50 per share.
We may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future
may negatively impact the analysis regarding our ability to continue as a going concern at such time.
We believe that, upon the closing of our IPO, the funds
available to us outside of the trust account, will be sufficient to allow us to operate for at least the next 9 months (or up to 21 months
from the closing of our IPO if we extend the period of time to consummate a business combination); 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 designed to keep target businesses from “shopping” around for transactions with
other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although
we do not have any current intention to do so. If we entered into a letter of intent 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 business combination, our public stockholders may receive only approximately $10.00 per share (or less in certain circumstances)
on the liquidation of our trust account and our rights and warrants will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share on the redemption of their shares. If third parties bring claims against us, the proceeds held
in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share”
and other risk factors herein.
If the net proceeds of our IPO and the sale of
the private placement warrants not being held in the trust account are insufficient, it could limit the amount available to fund our search
for a target business or businesses and complete our business combination and we will depend on loans from our sponsor or management team
to fund our search, to pay our taxes and to complete our business combination.
Of the net proceeds of our IPO and the sale of the
private placement warrants and after payment of estimated offering expenses, only approximately $900,000 was available to us initially
outside the trust account to fund our working capital requirements. In the event that our offering expenses exceed our estimate of approximately
$360,000, we may fund such excess with funds not held in the trust account. In such case, the amount of funds available for working
capital purposes would decrease by a corresponding amount. If we are required to seek additional capital, we would need to borrow funds
from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor, members of our
management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would
be repaid only from funds held outside the trust account or from funds released to us upon completion of our business combination. If
we are unable to complete our 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 (or
less in certain circumstances) on our redemption of our public shares, and our rights and warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share on the redemption of their shares. If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors herein.
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
or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even
if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to,
fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of
the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust
account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed
a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Further, a court may not uphold the validity of such agreements. Making such a request of potential target businesses may make our acquisition
proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver, it may limit the field
of potential target businesses that we might pursue.
Examples of possible instances where we may engage a
third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are
believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where
management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will
agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with
us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to complete
our business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our business combination,
we will be required to provide for payment of claims of creditors that were not waived that may be brought against us. 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.
If we are unable to complete a business combination
and distribute the proceeds held in trust to our public stockholders, our sponsor has agreed (subject to certain exceptions) that it will
be liable to ensure that the proceeds in the trust account are not reduced below $10.00 per share by the claims of target businesses or
claims of vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. We believe
that the primary assets of the sponsor are comprised of our securities and therefore we cannot assure you it will have sufficient liquid
assets to satisfy such obligations if it is required to do so. Therefore, the per-share distribution from the trust account may be less
than $10.00, plus interest, due to such claims.
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds
held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the
claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account,
we may not be able to return to our public stockholders at least $10.00.
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.
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
shareholders.
In the event that the proceeds in the trust account
are reduced below $10.00 per public share and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor
to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf
against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their
business judgment may choose not to do so in any particular instance. For example, the cost of such legal action may be deemed by the
independent directors to be too high relative to the amount recoverable or the independent directors may determine that a favorable outcome
is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the trust
account available for distribution to our public stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds in the trust
account to our public shareholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our Board of Directors may be viewed as having breached
their fiduciary duties to our creditors, thereby exposing the members of our Board of Directors and us to claims of punitive damages.
If, after we distribute the proceeds in the trust account
to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed,
any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover 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 shareholders, 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 shareholders and the per-share amount that
would otherwise be received by our shareholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account
to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed,
the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and
subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete
the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be
reduced.
If we are deemed to be an investment company under
the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which
may make it difficult for us to complete our business combination.
A
company that, among other things, is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business
of investing, reinvesting, owning, trading or holding certain types of securities would be deemed an investment company under the Investment
Company Act, as amended, or the Investment Company Act. Since we will invest the proceeds held in the trust account, it is possible that
we could be deemed an investment company. If we are deemed to be an investment company under the Investment Company Act, our activities
may be restricted, including:
· restrictions
on the nature of our investments; and
· restrictions
on the issuance of securities;
each of which may make it difficult
for us to complete our business combination.
In addition, we may have imposed
upon us burdensome requirements, including:
· registration
as an investment company;
· adoption
of a specific form of corporate structure; and
· reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
Compliance with these additional regulatory burdens
would require additional expense for which we have not allotted.
We do not believe that our anticipated principal activities
will subject us to the Investment Company Act. The proceeds held in the trust account may be invested by the trustee only in United States
government treasury bills with a maturity of 180 days or less or in money market funds investing solely in United States Treasuries and
meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be restricted
to these instruments, we believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment
Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would
require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we
are unable to complete our business combination, our public stockholders may receive only approximately $10.00 per share, or less in certain
circumstances, on the liquidation of our trust account and our rights and warrants will expire worthless.
The securities in which we invest the funds held in the trust account
could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount
received by public stockholders may be less than $10.00 per share.
The proceeds held in the trust account will be
invested only in U.S. government treasury obligations with a maturity of 180 days or less or in money market funds meeting certain conditions
under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While
short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative
interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open
Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United
States. In the event that we are unable to complete our initial business combination or make certain amendments to our amended and restated
certificate of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust
account, plus any interest income, net of taxes paid or payable (less, in the case we are unable to complete our initial business combination,
$50,000 of interest). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption
amount received by public stockholders may be less than $10.00 per share.
If we are unable to consummate our business combination
within 9 months (or up to 21 months from the closing of our IPO if we extend the period of time to consummate a business combination)
of the closing of our IPO, our public shareholders may be forced to wait beyond such 9 months (or up to 21 months) before redemption from
our trust account.
If we are unable to consummate our business
combination within 9 months from the closing of our IPO (or up to 21 months from the closing of our IPO if we extend the period of time
to consummate a business combination), we will distribute the aggregate amount then on deposit in the trust account (less the net interest
earned thereon to pay dissolution expenses), pro rata to our public stockholders by way of redemption and cease all operations except
for the purposes of winding up of our affairs, as further described herein. If we are required to windup, liquidate the trust account
and distribute such amount therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation
and distribution must comply with the applicable provisions of applicable Delaware law. In that case, investors may be forced to wait
beyond the 9 months (or up to 21 months) before the redemption proceeds of our trust account become available to them and they receive
the return of their pro rata portion of the proceeds from our trust account. Only after the expiration of this full time period will public
security holders be entitled to distributions from the trust account if we are unable to complete a business combination. Accordingly,
investors’ funds may be unavailable to them until after such date and to liquidate your investment, public security holders may
be forced to sell their public shares or warrants, potentially at a loss. We have no obligation to return funds to investors prior to
the date of our redemption or liquidation unless we consummate our business combination prior thereto and only then in cases where investors
have sought to redeem their shares of common stock. Only upon our redemption or any liquidation will public stockholders be entitled to
distributions if we are unable to complete our business combination.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.
Under the Delaware General Corporation Law, or the
DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them
in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares
in the event we do not complete our initial business combination within the required time period 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 ninth (9th) month from the closing of this offering (or the end
of any extension period) 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 do not intend to comply 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, consultants, 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 the required
time period is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful,
then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful
redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of shareholders
until after the consummation of our business combination.
The
Nasdaq corporate governance requirements do not require us to hold an annual meeting until the first anniversary of our first fiscal year
end following our listing on Nasdaq. We may not hold an annual meeting of stockholders until after we consummate our initial
business combination and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of
stockholders be held for the purposes of electing directors in accordance with a company’s bylaws unless such election is made by
written consent in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation
of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery
in accordance with Section 211(c) of the DGCL. Until we hold an annual meeting of stockholders, public stockholders may not
be afforded the opportunity to discuss company affairs with management.
Holders of rights and public warrants will
not have redemption rights with respect to such securities.
If we are unable to complete an initial business combination
within the required time period and we redeem the funds held in the trust account, the rights and public warrants will expire and holders
of such securities will not receive any of the amounts held in the trust account in exchange for their rights or public warrants.
The grant of registration rights to our sponsor
and holders of our private placement warrants may make it more difficult to complete our business combination, and the future exercise
of such rights may adversely affect the market price of our shares of common stock.
We entered into a registration rights agreement with
our sponsor and our other initial stockholders, pursuant to which such persons and their permitted transferees can demand that we register
their founder shares, the private placement warrants, the shares underlying such warrants, and any warrants we may issue upon conversion
of working capital loans. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our shares of common stock. In
addition, the existence of the registration rights may make our 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 shares of common stock that is expected when the shares owned by our sponsor,
holders of our private placement warrants or holders of our working capital loans or their respective permitted transferees are registered.
Because we are neither limited to evaluating target businesses in a
particular industry, sector or geographic area 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 seek to complete a business combination with
an operating company in any industry, sector or geographic area. However, we will not, under our amended and restated certificate of incorporation,
be permitted to effectuate our initial business combination solely 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 or warrant holders who choose to remain a stockholder or warrant holder following our initial business
combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have a remedy
for such reduction in value.
We may seek acquisition opportunities in industries
or sectors that may be outside of our management’s areas of expertise.
Although we expect to
focus our search for a target business in the healthcare, technology,
green economy and consumer products sectors, we will consider a business combination outside of our management’s areas of expertise
if a business combination candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity
for our company. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this report regarding the areas
of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our
management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose
to remain stockholders following our business combination could suffer a reduction in the value of their shares. Such stockholders are
unlikely to have a remedy for such reduction in value.
Although we have identified general criteria and
guidelines that we believe are important in evaluating prospective target businesses, we may enter into our 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 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 business combination
will not have all of these positive attributes. If we complete our 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 business combination if the target business does not meet our general criteria
and guidelines. If we are unable to complete our business combination, our public stockholders may receive only approximately $10.00 per
share on the liquidation of our trust account and our rights and warrants will expire worthless.
If we do not conduct an adequate due diligence investigation
of a target business, we may be required to subsequently take write-downs or write-offs, restructuring, and impairment or other charges
that could have a significant negative effect on our financial condition, results of operations and our stock price, which could cause
you to lose some or all of your investment.
We
must conduct a due diligence investigation of the target businesses we intend to acquire. Intensive due diligence is time consuming and
expensive due to the operations, accounting, finance and legal professionals who must be involved in the due diligence process. Even if
we conduct extensive due diligence on a target business, this diligence may not reveal all material issues that may affect a particular
target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors
outside the control of the target business and outside of our control may later arise. If our diligence fails to identify issues specific
to a target business, industry or the environment in which the target business operates, we may 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 shares of common stock. In addition, charges of this nature may cause us to violate net worth
or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our
obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain stockholders following the business
combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction
in value.
We may seek acquisition opportunities with a financially
unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our business combination
with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by numerous risks
inherent in the operations of the business with which we combine. These risks include 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.
Because we must furnish our stockholders with target
business financial statements, we may lose the ability to complete an otherwise advantageous business combination with some prospective
target businesses.
The federal proxy rules require that a proxy statement
with respect to a vote on a business combination meeting certain financial significance tests include 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 U.S. GAAP, or international
financing 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 statements in time for us to disclose such statements in accordance with federal proxy
rules and complete our business combination within the prescribed time frame.
Because we must furnish our stockholders with target
business financial statements, we may lose the ability to complete an otherwise advantageous business combination with some prospective
target businesses.
The federal proxy rules require that a proxy statement
with respect to a vote on a business combination meeting certain financial significance tests include 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 U.S. GAAP, or international
financing 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 statements in time for us to disclose such statements in accordance with federal proxy
rules and complete our business combination within the prescribed time frame.
We are not required to obtain an opinion from an
independent investment banking or from an independent accounting firm, and consequently, you may have no assurance from an independent
source that the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our business combination with an
affiliated entity, or our Board of Directors cannot independently determine the fair market value of the target business or businesses,
we are not required to obtain an opinion from an independent investment banking firm, another independent firm that commonly renders valuation
opinions for the type of company we are seeking to acquire or from an independent accounting firm that the price we are paying for a target
is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the business judgment
of our Board of Directors, which will have significant discretion in choosing the standard used to establish the fair market value of
the target or targets, and different methods of valuation may vary greatly in outcome from one another. Such standards used will be disclosed
in our tender offer documents or proxy solicitation materials, as applicable, related to our business combination. However, if our Board
of Directors is unable to determine the fair value of an entity with which we seek to complete an business combination based on such standards,
we will be required to obtain an opinion as described above.
We may issue shares of our capital stock
or debt securities to complete a business combination, which would reduce the equity interest of our stockholders and could cause a change
in control of our ownership.
Our Certificate of Incorporation authorizes the
issuance of up to 300,000,000 shares of common stock, $0.00001 par value, and 100,000,000 shares of preferred stock, $0.00001 par value.
Following our IPO, we have 285,196,429 authorized but unissued shares of common stock available for issuance (after appropriate reservation
for the issuance of the shares underlying the public and private warrants and the rights, but excluding any working capital warrants).
Although we have no commitment as of the date of this report, we may issue a substantial number of additional shares of common stock or
preferred stock, or a combination of shares of common stock and preferred stock, to obtain additional working capital or to complete a
business combination. The issuance of additional shares of common stock or preferred stock will not reduce the per-share redemption amount
in the trust account, but:
• may
significantly dilute the equity interest of investors in our IPO;
• may
subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded
to our shares of common stock;
• may
cause a change in control if a substantial number of shares of 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
• may
adversely affect prevailing market prices for our shares of common stock.
Similarly, if we issue debt securities, it could
result in:
• default
and foreclosure on our assets if our operating revenues after a business combination are insufficient to repay our debt obligations;
• 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;
• our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; and
• 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.
• our
inability to pay dividends on our common stock;
• 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, expenses, capital expenditures, acquisitions and other general corporate purposes;
• limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
• increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and
• limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of
our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
If we incur indebtedness, our lenders will not
have a claim on the cash in the trust account and such indebtedness will not decrease the per-share redemption amount in the trust account.
We may reincorporate in another jurisdiction in
connection with our business combination and such reincorporation may result in taxes imposed on shareholders.
We may, in connection with our business combination
and subject to requisite stockholder approval under Delaware law, reincorporate in the jurisdiction in which the target company or business
is located. The transaction may require a stockholder to recognize taxable income in the jurisdiction in which the stockholder is a tax
resident or in which its members are resident if it is a tax transparent entity. We do not intend to make any cash distributions to stockholders
to pay such taxes. Stockholders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
Resources could be spent in researching acquisitions
that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
If we are unable to complete our business combination, our public shareholders 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 rights and warrants will expire worthless.
We anticipate that the investigation of each specific
target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require
substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a
specific 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 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 business combination,
our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our rights and warrants
will expire worthless.
Ladenburg Thalmann may have a conflict of interest in rendering services
to us in connection with our initial business combination.
We have entered into a Business Combination Marketing
Agreement with Ladenburg Thalmann. Pursuant to this agreement, Ladenburg Thalmann will provide certain specified services to us in connection
with our initial business combination, though such services will not include the provision of any M&A-related advisory services. This
agreement will provide that we will pay Ladenburg Thalmann the Marketing Fee for such services upon the consummation of our initial business
combination in an amount equal to, in the aggregate, 2.5% of the gross proceeds of our IPO. In the ordinary course of business, Ladenburg
Thalmann and its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for its own
account and the accounts of customers, in the debt or equity securities of us, our affiliates or other entities that may be involved in
the transactions contemplated by the Business Combination Marketing Agreement, and may provide advisory and other services to one or more
actual or potential business combination targets, investors or other parties to any business combination or other transaction entered
into by us, for which services Ladenburg Thalmann or one or more of its affiliates may be paid fees, including fees conditioned upon the
closing of a particular business combination or other transaction or transactions. This financial interest may result in Ladenburg Thalmann
having a conflict of interest when providing the services to us in connection with an initial business combination.
We may issue notes or other debt securities, or
otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our stockholders’ investment in us.
Although we presently have no commitments to issue
any notes or other debt securities, or to otherwise incur outstanding debt following our IPO, we may choose to incur substantial debt
to complete our business combination. We have agreed that we will not incur any indebtedness unless we have obtained from the lender a
waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt
will affect the per-share amount available for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety
of negative effects, including:
· default
and foreclosure on our assets if our operating revenues after an business combination are insufficient to repay our debt obligations;
· 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;
· our
immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
· 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;
· our
inability to pay dividends on our shares of common stock;
· 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 shares of common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
· limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
· increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and
· limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of
our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
We may only be able to complete one business combination
with the proceeds of our IPO and the sale of the private placement warrants, which will cause us to be solely dependent on a single business
which may have a limited number of products or services. This lack of diversification may negatively impact our operations and profitability.
Of the net proceeds from our IPO and the sale of the
private placement warrants, $65,000,000 is available to complete our business combination and pay related fees and expenses (which includes
up to approximately $1,625,000 for the payment of fees under the Business Combination Marketing Agreement).
We may effectuate our business combination with a single
target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to effectuate
our business combination with more than one target business because of various factors, including the existence of complex accounting
issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating results and the
financial condition of several target businesses as if they had been operated on a combined basis. By completing our business combination
with only a single entity our lack of diversification may subject us to numerous economic, competitive and regulatory risks. Further,
we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other
entities which may have the resources to complete several business combinations in different industries or different areas of a single
industry. Accordingly, the prospects for our success may be:
· solely
dependent upon the performance of a single business, property or asset; or
· dependent
upon the development or market acceptance of a single or limited number of products, processes or services.
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 business combination.
We may attempt to simultaneously complete business
combinations with multiple prospective targets, which may hinder our ability to complete our business combination and give rise to increased
costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several businesses
that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent on
the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete
our 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 business combination
with a private company about which little information is available, which may result in a business combination with a company that is
not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek to
effectuate our 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 business combination on the basis of limited information,
which may result in a business combination with a company that is not as profitable as we suspected, if at all.
Risks Relating to our Management and Directors
Our ability
to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel,
some of whom may join us following a business combination. While we intend to closely scrutinize any individuals we engage after a business
combination, we cannot assure you that our assessment of these individuals will prove to be correct. Further, the loss of
key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect a business combination
is dependent upon the efforts of our key personnel. We believe that our success depends on the continued service of our key personnel,
at least until we have consummated our initial business combination. We cannot assure you that any of our key personnel will remain with
us for the immediate or foreseeable future, either due to health conditions or otherwise. In addition, none of our officers is required
to commit any specified amount of time to our affairs and, accordingly, our officers will have conflicts of interest in allocating management
time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
We do not have employment agreements with, or key-man insurance on the life of, any of our officers. The unexpected loss of the services
of our key personnel could have a detrimental effect on us.
The role of our key personnel after a business
combination, however, cannot presently be ascertained. Although some of our key personnel may serve in senior management or as members
of the Board of Directors or advisory positions following a business combination, it is likely that most, if not all, of the management
of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after a business combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a public company which could cause us to have to expend time and resources helping them become familiar with such requirements.
This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
We are dependent upon our officers and directors
and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively small
group of individuals and, in particular, Mr. Liu and our other officers and directors. We believe that our success depends on the continued
service of our officers and directors, at least until we have completed our business combination. In addition, our officers and directors
are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating
management time among various business activities, including identifying potential business combinations and monitoring the related due
diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected
loss of the services of one or more of our directors or officers could have a detrimental effect on us.
Our 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 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 business combination only if they are able to negotiate employment or consulting agreements in connection
with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and
could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would
render to us after the completion of the business combination. The personal and financial interests of such individuals may influence
their motivation in identifying and selecting a target business, subject to his or her fiduciary duties under Delaware law. However, we
believe the ability of such individuals to remain with us after the completion of our business combination will not be the determining
factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that
any of our key personnel will remain with us after the completion of our 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 business combination.
Our officers and directors may not have significant experience
or knowledge regarding the jurisdiction or industry of the target business we may seek to acquire.
We may consummate a business combination with a
target business in any geographic location or industry we choose. We cannot assure you that our officers and directors will have enough
experience or have sufficient knowledge relating to the jurisdiction of the target or its industry to make an informed decision regarding
a business combination.
We may have a limited ability to assess the management
of a prospective target business and, as a result, may effect our business combination with a target business whose management may not
have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting our
business combination with a prospective target business, our ability to assess the target business’s management may be limited due
to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore, may prove
to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s management
not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability of the post-combination
business may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following the business combination
could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
The officers and directors of an acquisition candidate
may resign upon completion of our business combination. The departure of a business combination target’s key personnel could negatively
impact the operations and profitability of our post-combination business. The role of an acquisition candidates’ key personnel upon
the completion of our business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition
candidate’s management team will remain associated with the acquisition candidate following our business combination, it is possible
that members of the management of an acquisition candidate will not wish to remain in place. As a result, we may need to reconstitute
the management team of the post-transaction company in connection with our initial business combination, which may adversely impact our
ability to complete an acquisition in a timely manner or at all.
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 business combination.
Our officers and directors are not required to, and
will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations
and our search for a business combination and their other businesses. We do not intend to have any full-time employees prior to the completion
of our business combination. Each of our officers is engaged in several other business endeavors for which he or she may be entitled to
substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent
directors also serve as officers and board members for other entities. If our officers’ and directors’ other business affairs
require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their
ability to devote time to our affairs which may have a negative impact on our ability to complete our 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 determining to which entity a particular business opportunity should be presented.
Following the completion of our IPO and until we consummate
our business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our sponsor and
officers and directors are, or may in the future become, affiliated with other blank check companies like ours or other entities (such
as operating companies or investment vehicles) that are engaged in making and managing investments 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 other entities prior to its presentation
to us, subject to his or her fiduciary duties under applicable law.
We have not adopted a policy that expressly prohibits
our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment
to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business
combination with a target business that is affiliated with our sponsor, our directors or officers, although we do not intend to do so.
Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types
conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
Our sponsor, officers and directors may have a conflict of interest
in determining whether a particular target business is appropriate for a business combination.
Our sponsor and officers and directors have waived
their right to redeem their sponsor shares or any other shares purchased in this offering or thereafter, or to receive distributions from
the trust account with respect to their sponsor shares upon our liquidation if we are unable to consummate a business combination. Accordingly,
the shares and any private warrants acquired prior to this offering will be worthless if we do not consummate a business combination.
The personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting
a target business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying
and selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing
of a particular business combination are appropriate and, in our stockholders’, best interest. This risk may become more acute
as the deadline for completing our initial business combination nears.
Our officers and directors or their affiliates have pre-existing
fiduciary and contractual obligations and accordingly, may have conflicts of interest in determining to which entity a particular business
opportunity should be presented.
Our
officers and directors or their affiliates have pre-existing fiduciary and contractual obligations to other companies. Accordingly, they
may participate in transactions and have obligations that may be in conflict or competition with our consummation of our initial business
combination. Additionally, a potential target business may be presented by our management team to another entity prior to its presentation
to us and we may not be afforded the opportunity to engage in a transaction with such target business. Our amended and restated
certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless
such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity
is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue. Accordingly, if any
of our officers or directors becomes aware of a business combination opportunity which is suitable for one or more entities to which he
or she has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such business
combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines
to present the opportunity to us.
For example, our Chief Executive Officer is affiliated
with Ladenburg, Thalmann, which was also the underwriter in our IPO. He owes a pre-existing fiduciary duty to Ladenburg, Thalmann
and will present opportunities to them prior to presenting them to us, if, for example, a potential target company is open to either raising
funds in an offering or engaging in a transaction with a SPAC. This may limit the number of potential targets they present to us for purposes
of completing a business combination.
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. For a more detailed description of
the pre-existing fiduciary and contractual obligations of our management team,
and the potential conflicts of interest that such obligations may present, see the section titled “Management — Conflicts
of Interest.”
Our officers and directors and their affiliates will control a
substantial interest in us and thus may influence certain actions requiring a stockholder vote.
Upon consummation of our IPO, our sponsor, officers
and directors and their affiliates will own approximately 20% of our issued and outstanding shares of common stock (excluding accounting
for any private warrants). Further, our sponsor, officers, directors or their affiliates could determine in the future to purchase our
securities in the open market or in private transactions, to the extent permitted by law, to increase their holdings in order to influence
the vote or magnitude of the number of stockholders seeking to tender their shares to us. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation
of our trust account, and our warrants and rights will expire worthless. In connection with any vote for a proposed business combination,
our sponsor officers and directors have agreed to vote their sponsor shares, as well as any public shares acquired in or after this offering
in favor of any proposed business combination.
Past performance by members of our management
team and their respective affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by, or businesses
associated with, members of our management team and their respective affiliates, is presented for informational purposes only. Any past
experience and performance, including related to acquisitions, of members of our management team and their respective affiliates, is not
a guarantee either: (1) that we will be able to successfully identify a suitable candidate for our initial business combination;
or (2) of any results with respect to any initial business combination we may consummate. You should not rely on the historical record
of our management team’s or their affiliates’ performance, as indicative of the future performance of an investment in us
or the returns we will, or are likely to, generate going forward.
Our officers, directors, security holders and their respective affiliates
may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits
our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any investment
to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business
combination with a target business that is affiliated with one or more of our sponsors, directors or officers. We do not have a policy
that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly,
such persons or entities may have a conflict between their interests and ours.
We may engage in a business combination with one
or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers, directors or existing
holders which may raise potential conflicts of interest.
In light of the involvement of our initial stockholders,
officers and directors, and their affiliates with other businesses, we may decide to acquire one or more businesses affiliated with or
competitive with our initial stockholders, officers and directors, and their respective affiliates. Our directors also serve as officers
and/or board members for other entities. Such entities may compete with us for business combination opportunities. Our initial stockholders,
officers and directors are not currently aware of any specific opportunities for us to complete our initial business combination with
any entities with which they are affiliated, and there have been no substantive discussions concerning a business combination with any
such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities,
we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination and such transaction
was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent
investment banking firm that is a member of FINRA or from an independent accounting firm, regarding the fairness to our company from a
financial point of view of a business combination with one or more domestic or international businesses affiliated with our sponsors,
officers or directors, potential conflicts of interest still may exist and, as a result, the terms of the business combination may not
be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Moreover, we may, at our option, pursue an affiliated
joint acquisition opportunity with an initial stockholder or one of their affiliates or with other entities to which an officer or director
has a fiduciary, contractual or other obligation or duty. Any such parties may co-invest with us in the target business at the time of
our initial business combination, or we could raise additional proceeds to complete the acquisition by making a future issuance of securities
to any such parties, which may give rise to certain conflicts of interest.
Since our sponsor, officers and directors will
lose their entire investment in us if our business combination is not completed, a conflict of interest may arise in determining whether
a particular business combination target is appropriate for our business combination.
In June 2021, our sponsor purchased 1,437,500 shares
of our common stock, for $25,000. Subsequently, we amended and restated our subscription agreement with the sponsor on two occasions and
ultimately issued it an additional 187,500 shares of common stock, for an aggregate of 1,625,000 shares prior to the investment in the
company of $25,000 by our sponsor, the company had no assets, tangible or intangible. Giving effect to these issuances, our sponsor and
other initial stockholders own 20% of our issued and outstanding shares after our IPO. The founder shares will be worthless if we do not
complete an business combination. In addition, our sponsor has purchased an aggregate of 2,500,000 private placement warrants, for a purchase
price of $2,500,000, or $1.00 per warrant, that will also be worthless if we do not complete a business combination.
The founder shares are identical to the shares of common
stock included in the units being sold in our IPO except that (i) the founder shares are subject to certain transfer restrictions and
(ii) our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed (A) to waive
their redemption rights with respect to their founder shares, private placement shares and public shares in connection with the completion
of our business combination, (B) to waive their redemption rights with respect to any founder shares, private placement shares and public
shares held by them in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation
(x) to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an business
combination or to redeem 100% of our public shares if we have not consummated our business combination within the timeframe set forth
therein or (y) with respect to any other provision relating to stockholders’ rights or pre-business combination activity and (C)
to waive their rights to liquidating distributions from the trust account with respect to their founder shares and private placement shares
if we fail to complete our business combination within 9 months from the closing of our IPO (or up to 21 months from the closing of our
IPO if we extend the period of time to consummate a business combination) (although they will be entitled to liquidating distributions
from the trust account with respect to any public shares they hold if we fail to complete our business combination within the prescribed
time frame).
The personal and financial interests of our officers
and directors may influence their motivation in identifying and selecting a target business combination, completing an business combination
and influencing the operation of the business following the business combination.
Since our sponsor, officers and directors may not
be eligible to be reimbursed for their out-of-pocket expenses if our business combination is not completed, a conflict of interest may
arise in determining whether a particular business combination target is appropriate for our business combination.
At the closing of our business combination, our sponsor,
officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection
with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations.
There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred in connection with activities on our behalf. These
financial interests of our sponsor, officers and directors may influence their motivation in identifying and selecting a target business
combination and completing an business combination.
Risks Relating to the Post-Business Combination
Company
Our management may not have control of a target business after
our initial business combination. We cannot provide assurance that new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We may structure our initial business combination
so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity interests or assets
of a target business, but we will only complete such business combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target 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 our 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 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 shares than we initially acquired. Accordingly, this may make it more likely that our management will not
be able to maintain control of the target 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 our initial business combination with which a substantial majority
of our stockholders do not agree.
Our amended and restated certificate of incorporation
will not provide a specified maximum redemption threshold, except that in no event will we redeem, upon our initial business combination,
our public shares in an amount that would cause our net tangible assets to be less than $5,000,001, nor will we consummate our initial
business combination if we would otherwise become subject to the SEC’s “penny stock” rules. 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 founders, officers, directors, advisors or any of their respective 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 business combination exceed the aggregate amount of cash available
to us, we will not complete the business combination or redeem any shares, all shares of common stock submitted for redemption will be
returned to the holders thereof, and we instead may search for an alternate business combination (including, potentially, with the same
target).
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. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation or governing instruments,
including our warrant agreement, in a manner that will make it easier for us to complete our initial business combination that some of
our stockholders or warrant holders 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, 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. 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. To the extent any such amendment would be deemed to fundamentally change the nature of any of the securities offered
through the registration statement of which this prospectus forms a part, we would register, or seek an exemption from registration for,
the affected securities.
The provisions of our amended and restated certificate
of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release
of funds from our trust account), 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 a majority of our shares of common stock who attend and vote in a general meeting, which is a lower amendment threshold
than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation
to facilitate the completion of an business combination that some of our stockholders may not support.
Some other blank check companies have a provision in
their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s pre-business
combination activity, without approval by a supermajority of the company’s stockholders. Our amended and restated certificate of
incorporation provides that any of its provisions, including those related to pre-business combination activity may be amended if approved
by holders of at least a majority of our outstanding shares of common stock. Our sponsor and other initial stockholders, which beneficially
own 20% of our shares of common stock upon the closing of our IPO (not taking into account ownership of the private placement warrants),
will participate in any vote to amend our amended and restated certificate of incorporation. As a result, we may be able to amend the
provisions of our amended and restated certificate of incorporation which govern our pre-business combination behavior more easily than
some other blank check companies, and this may increase our ability to complete a business combination with which you do not agree. Our
stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Certain agreements related to our IPO may be amended
without stockholder approval.
Certain agreements, including the letter agreement
among us and our initial stockholders, officers and directors and the registration rights agreement among us and our initial stockholders
may be amended without stockholder approval. These agreements contain various provisions, including transfer restrictions on our sponsor
shares and private placement warrants and the securities included therein, that our public stockholders might deem to be material. While
we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial business combination,
it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve
one or more amendments to any such agreement in connection with the consummation of our initial business combination. Any such amendments
would not require approval from our stockholders, may result in the completion of our initial business combination that may not otherwise
have been possible, and may have an adverse effect on the value of an investment in our securities.
We may be unable to obtain additional financing
to complete our 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.
Although we believe that the net proceeds of our IPO
and the sale of the private placement warrants will be sufficient to allow us to complete our business combination, because we have not
yet identified any prospective target business we cannot ascertain the capital requirements for any particular transaction. If the net
proceeds of our IPO and the sale of the private placement warrants prove to be insufficient, either because of the size of our business
combination, the depletion of the available net proceeds in search of a target business, the obligation to redeem for cash a significant
number of shares from stockholders who elect redemption in connection with our business combination or the terms of negotiated transactions
to purchase shares in connection with our business combination, we may be required to seek additional financing or to abandon the proposed
business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to complete our business combination, we would be compelled to either restructure the transaction
or abandon that particular business combination and seek an alternative target business candidate. In addition, even if we do not need
additional financing to complete our 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 business combination. If we are unable to complete our business combination, our public stockholders may only receive approximately
$10.00 per share on the liquidation of our trust account, and our rights and warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share on the redemption of their shares.
Risk Related to Our Securities
We may amend the terms of the warrants in a manner that may be
adverse to holders with the approval by the holders of at least a majority of the then outstanding warrants.
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. The
warrant agreement requires the approval by the holders of at least a majority of the then outstanding warrants in order to make any change
that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the public warrants in a
manner adverse to a holder if holders of at least a majority of the then outstanding public warrants approve of such amendment. Although
our ability to amend the terms of the public warrants with the consent of at least a majority of the then outstanding public warrants
is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert
the warrants into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of
shares of our common stock purchasable upon exercise of a warrant.
We may amend the terms of the rights in a
way that may be adverse to holders with the approval by the holders of a majority of the then outstanding rights.
Our rights are issued in registered form under a rights
agreement between Continental Stock Transfer & Trust Company, as rights agent, and us. The rights agreement provides that the terms
of the rights may be amended without the consent of any holder to cure any ambiguity or correct any defective provision. The rights agreement
requires the approval by the holders of a majority of the then outstanding rights in order to make any change that adversely affects the
interests of the registered holders
Our founders paid an aggregate of $25,000 or approximately
an average of $0.0161 per share, for the sponsor shares and, accordingly, you will experience immediate and substantial dilution from
the purchase of our shares of common stock.
The difference between the public offering price per
share (allocating all of the unit purchase price to the shares of common stock and none to the rights or warrants included in the units)
and the pro forma net tangible book value per share after our IPO constitutes the dilution to you and the other the investors in our IPO.
Our founders acquired the sponsor shares at a nominal price, significantly contributing to this dilution. Upon the consummation of our
IPO, and assuming no value is ascribed to the warrants included in the units, you and the other public stockholders will incur an immediate
and substantial dilution of approximately 95.7% (or $8.37 per share) (assuming no exercise of the underwriters’ over-allotment option)
(or 96.2%, or $8.42 per share if the over-allotment is exercised in full), the difference between the pro forma net tangible book value
per share of $0.38 (or $0.33 if the over-allotment is exercised in full) and the effective initial offering price of $8.75 per unit (adjusted
to include the value of the rights.
Investors may view our units as less attractive
than those of other blank check companies.
Unlike other blank check companies that sell units
comprised of shares and warrants each to purchase one full share in their public offerings, in our IPO we sold units comprised of shares
of common stock, rights entitling the holder to receive one-seventh (1/7) of one share of common stock, and one-half of a warrant. The
rights and warrants will not have any voting rights and will expire and be worthless if we do not consummate an business combination.
Furthermore, no fractional shares will be issued upon exercises of the warrants and it is not our intent to issue fractional shares upon
conversion of any rights. As a result, unless you acquire at least two warrants, you will not be able to receive a share upon exercise
of your warrants and if you acquire less than ten rights, you may, in our discretion, not receive one whole share. Any rounding down and
extinguishment may be done with or without any in lieu cash payment or other compensation being made to the holder of the relevant rights.
Accordingly, investors in our IPO will not be issued the same securities as part of their investment as they may have in other blank check
company offerings, which may have the effect of limiting the potential upside value of your investment in our company.
Because each unit contains one-half of one redeemable
warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
Each unit contains one-half of one redeemable warrant
to acquire a share of common stock. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.
Accordingly, unless you purchase at least two units, you will not be able to receive or trade a whole warrant. This is different from
other offerings similar to ours whose units include one share and one warrant to purchase one whole share. We have established the components
of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants
will be exercisable in the aggregate for one half of the number of shares compared to units that each contain a warrant to purchase one
whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure may
cause our units to be worth less than if they included a warrant to purchase one whole share.
There is no guarantee that our warrants will be
in the money at the time they become exercisable, and they may expire worthless.
The exercise price
for our warrants, including our public warrants, is $11.50 per share of common stock. There is no guarantee that any of our warrants will
be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.
A significant portion of our total outstanding
shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our
common stock and/or warrants to drop significantly.
We have registered as part of
our IPO the resale of the 1,625,000 founders shares, 2,500,000 private warrants, and 2,500,000 shares of common stock issuable upon the
exercise of the private warrants, which securities are owned by our sponsor and insiders. Although these shares of common stock and private
warrants are subject to the transfer restrictions described in the insider letter, those securities may be immediately resold upon the
expiration of those lockup periods. The market price of the shares of our common stock and warrants could decline as a result of the sale
of a substantial number of our shares of common stock or warrants in the public market or the perception in the market that the holders
of a large number of shares or warrants intend to sell their shares.
Our warrant agreement and rights agreement with
our transfer agent will designate the courts of the State of New York or the United States District Court for the Southern District of
New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants,
which could limit the ability of warrant holders or rights holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement and rights agreement with our
transfer agent, which govern the terms of the warrants and rights, respectively, provides that, subject to applicable law, (i) any action,
proceeding or claim against us or the warrant agent arising out of or relating in any way to the warrant agreement shall be brought and
enforced in the courts of the State of New York or the United States District Court for the Southern District of New York, and (ii) that
we and the warrant agent and rights agent irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for
any such action, proceeding or claim. We and the warrant agent and rights agent will waive any objection to such exclusive jurisdiction
and that such courts represent an inconvenient forum.
Notwithstanding the foregoing, this exclusive forum
provision shall not apply to suits brought to enforce a duty or liability created by the Exchange Act, any other claim for which the federal
courts have exclusive jurisdiction or any complaint asserting a cause of action arising under the Securities Act against us or any of
our directors, officers, other employees or agents. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits
brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. In addition, stockholders
cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Other than with respect to claims under the Securities
Act or Exchange Act, this choice-of-forum provision may limit a warrant holder’s or right’s holder’s ability to bring
a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage such lawsuits. Alternatively,
if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect to one or more of the specified
types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could
materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and
resources of our management and board of directors.
A provision of our warrant agreement for the public
warrants may make it more difficult for us to consummate an initial business combination.
Unlike most blank check companies, if (i)
we issue additional shares of common stock or equity-linked securities for capital raising purposes in connection with the closing of
our initial business combination at a newly issued price of less than $9.20 per share; (ii) the aggregate gross proceeds from such
issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business
combination on the date of the consummation of our initial business combination (net of redemptions), and (iii) the volume weighted average
trading price of our common stock during the 20 trading day period starting on the trading day prior to the day on which we consummate
our initial business combination (“Market Price”) is below $9.20 per share, the exercise price of the public warrants will
be adjusted (to the nearest cent) to be equal to 115% of the Market Price, and the $18.00 per share redemption trigger price described
above will be adjusted (to the nearest cent) to be equal to 180% of the Market Value. This term of the warrants may make it more difficult
for us to consummate an initial business combination with a target business because the target entity owners may find such adjustment
objectionable.
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 public warrants
at any time after they become exercisable and prior to their expiration, if, among other things, 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 we send the notice
of redemption to the warrant holders. The redemption price shall
be either (i) if the holder of a warrant has followed the procedures specified in our notice of redemption and surrendered the warrant,
the number of shares of common stock as determined in accordance with the “cashless exercise” provisions of the warrant agreement
or (ii) if the holder of a warrant has not followed such procedures specified in our notice of redemption, the price of $0.01 per warrant.
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. As a result, we may redeem the public warrants as set forth
above even if the holders are otherwise unable to exercise the warrants.
Redemption of the outstanding warrants could force
you to: (1) exercise your warrants and pay the exercise price therefor (or exercise such warrants on a “cashless” basis)
at a time when it may be disadvantageous for you to do so; (2) sell your warrants at the then-current market price when you might
otherwise wish to hold your warrants; (3) request that we redeem your warrants
by surrendering such warrants and receiving the redemption price as if the warrants were exercised on a “cashless” basis;
or (4) accept the nominal redemption price of $0.01, which, at the time the outstanding warrants are called for redemption,
we expect would be substantially less than the market value of your warrants.
The private warrants will be subject to redemption
on the same terms as applicable to the public warrants.
Our management’s ability to require holders
of our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares of common stock upon their exercise
of the warrants than they would have received had they been able to exercise their warrants for cash.
If we call our public warrants for redemption after
the redemption criteria described elsewhere in this report have been satisfied, our management will have the option to require any holder
that wishes to exercise his warrant (including any warrants held by our sponsor, officers or directors, other purchasers of our founders’
units, or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require holders to exercise
their warrants on a cashless basis, the number of shares of common stock received by a holder upon exercise will be fewer than it would
have been had such holder exercised his warrant for cash. This will have the effect of reducing the potential “upside” of
the holder’s investment in our company.
Our rights, warrants and founder shares may have
an adverse effect on the market price of our shares of common stock and make it more difficult to effectuate our business combination.
We have issued rights convertible into 928,571 of our
shares of common stock and warrants to purchase 3,250,000 of our shares of common stock as part of the units offered in our IPO and, simultaneously
with the closing of our IPO, an aggregate of 2,500,000 private placement warrants in a private placement. In each case, each whole warrants
is exercisable to purchase one share of common stock at a price of $11.50 per whole share, subject to adjustment as provided herein. In
addition, our sponsor and other initial directors hold an aggregate of 1,625,000 founder shares in a private placement. In addition, if
our sponsor makes any working capital loans, up to $2,400,000 of such loans may be converted into warrants, at the price of $1.00 per
warrant at the option of the lender. To the extent we issue shares of common stock to effectuate a business transaction, the potential
for the issuance of a substantial number of additional shares upon exercise of these warrants or conversion rights could make us a less
attractive acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares and reduce
the value of the shares of common stock issued to complete the business transaction. Therefore, our rights, warrants and founder shares
may make it more difficult to effectuate a business combination or increase the cost of acquiring the target business. Additionally, the
issuance, or even the possibility of issuance, of the shares underlying the warrants could have an adverse effect on the market price
for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, you may experience
dilution to your holdings.
Nasdaq may delist our securities from trading on
its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions
or reduce protections under Nasdaq rules available to them.
Our securities, including our common stock, rights and
warrants, are listed on the Nasdaq Global Market. We cannot guarantee that our securities will be approved for listing on Nasdaq for any
particular period of time. Although after giving effect to our IPO we met, on a pro forma basis, the minimum listing standards set forth
in the Nasdaq listing standards, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future
or prior to our business combination. In order to continue listing our securities on Nasdaq prior to our business combination, we must
maintain certain financial, distribution and stock price levels. Additionally, following closing of our business combination, we will
be required to demonstrate compliance with Nasdaq’s listing requirements on a post-closing basis, which are more rigorous than Nasdaq’s
continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. We cannot assure you that we
will be able to meet those listing requirements at that time.
If Nasdaq delists our securities from trading on its
exchange, we could face significant material adverse consequences, including:
• a
limited availability of market quotations for our securities;
• reduced
liquidity with respect to our securities;
• a
determination that our shares of common stock are “penny stock” which will require brokers trading in our shares of common
stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for
our shares of common stock;
• a
limited amount of media and analyst coverage of our company; and
• a
decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets
Improvement Act of 1996, which is a federal statute, prevents or pre-empts 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 shares of common stock,
warrants, and rights will be listed on the Nasdaq Global Market, our units, shares of common stock, warrants, and rights will be covered
securities. Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states
to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate
or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or
restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view
blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank
check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not be covered securities and
we would be subject to regulation in each state in which we offer our securities.
General Risks
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our business combination, require substantial financial and management resources,
and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires that
we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending December 31,
2022. Only in the event we are deemed to be a large accelerated filer or an accelerated filer 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. If we fail to maintain
the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation.
Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act also requires that
our independent registered public accounting firm report on management’s evaluation of our system of internal controls. A target
company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition. Furthermore, any failure to implement required new or improved controls, or difficulties encountered
in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results
or cause us to fail to meet our reporting obligations. Inferior internal controls could also cause investors to lose confidence in our
reported financial information, which could have a negative effect on the trading price of our shares of common stock.
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 shares of common stock
held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth
company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will
rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading
prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the
trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when
a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has
opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards
used.
Additionally, we are a “smaller reporting
company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure
obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting
company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250
million as of the end of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such completed
fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of that year’s second
fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements
with other public companies difficult or impossible.
Changes in laws or regulations, or a failure to
comply with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations enacted by national, regional and
local governments. In particular, we 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 and results of operations.
We may be subject to cybersecurity risks
following consummation of a business combination.
Any entity we may seek to acquire may rely on information
technology systems, including third-party hosted servers and cloud-based servers, to keep business, financial, and corporate records,
communicate internally and externally, and operate other critical functions. If any of those internal systems or the systems of its third-party
providers are compromised due to cyber incidents, then sensitive documents could be exposed or deleted, and the company’s ability
to conduct business could be impaired. Cyber incidents can result from deliberate attacks or unintentional events. These incidents can
include, but are not limited to, unauthorized access to systems, computer viruses or other malicious code, denial of service attacks,
malware, ransomware, phishing, SQL injection attacks, human error, or other events that result in security breaches or give rise to the
manipulation or loss of sensitive information or assets. Cyber incidents can be caused by various persons or groups, including disgruntled
employees and vendors, activists, organized crime groups, and state-sponsored and individual hackers. Cyber incidents can also be caused
or aggravated by natural events, such as earthquakes, floods, fires, power loss, and telecommunications failures. In addition to operational
and business consequences, if a target business’ cybersecurity is breached, it could be held liable to its customers or other parties
in regulatory or other actions, and it may be exposed to reputation damages and loss of trust and business. This could result in costly
investigations and litigation, civil or criminal penalties, fines, and negative publicity. Any of the foregoing could have a material
adverse effect on the operations and profitability of a target business we seek to acquire.
There may be tax consequences to our business
combinations that may adversely affect us.
While we expect to undertake any merger or acquisition
with a target business so as to minimize taxes both to the acquired target business and us, such business combination might not meet the
statutory requirements of a tax-free reorganization, or the parties might not obtain the intended tax-free treatment upon a transfer of
shares or assets. A non-qualifying reorganization could result in the imposition of substantial taxes.
Tax reform legislation enacted in the U.S.
in 2017 could adversely affect our business and financial condition following a business combination.
On December 22, 2017, the Tax Cuts and Jobs Act
of 2017 (the “Tax Act”) was signed into law, making significant changes to the Internal Revenue Code of 1986, as amended.
Changes under the Tax Act include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning
after December 31, 2017, a mandatory deemed repatriation of previously untaxed cumulative foreign earnings (generally applicable to 10%
U.S. stockholders of a “controlled foreign corporation” or “CFC” and taxed at reduced rates), a limitation of
the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), a limitation of the deduction
for net operating losses to 80% of current year taxable income and the elimination of net operating loss carrybacks the transition to
a “participation exemption system” for the taxation of earnings of foreign corporations, where a U.S. C corporation can generally
deduct 100% of dividends received from the foreign source of income of a 10% owned foreign corporation, immediate deductions for certain
new investments instead of deductions for depreciation expense over time, and modifying or repealing many business deductions and credits.
The overall impact of the Tax Act is uncertain, and it could make completing a business combination with us less appealing than with companies
in other countries. In addition, it is uncertain if and to what extent various states will conform to the Tax Act and what effect any
legal challenges will have on the Tax Act, including litigation in the U.S. and international challenges brought by organizations such
as the World Trade Organization. The impact of the Tax Act on holders of our securities is also uncertain and could be adverse. Investors
should consult with their legal and tax advisors with respect to the Tax Act and the potential tax consequences of investing in or holding
our securities.
We cannot predict how tax
reform legislation will affect us, our initial business combination, or our investors.
Legislative or other actions
relating to taxes could have a negative effect on us, our investors, or our initial business combination. The rules dealing with U.S.
federal income taxation are constantly under review by legislators and by the Internal Revenue Service and the U.S. Treasury Department.
We cannot predict with certainty how any changes in the tax laws might affect us, our investors, or our initial business combination.
New legislation and any U.S. Treasury regulations, administrative interpretations or court decisions interpreting such legislation could
significantly and negatively affect the U.S. federal income tax consequences to us and our investors or could have other adverse consequences,
including changes in tax rates that could impact our effective tax rate. Investors are urged to consult with their tax advisors regarding
tax legislative, regulatory, or administrative developments and proposals and their potential effect on an investment in our securities.
There are no authorities addressing the proper
allocation of tax basis to the components of a unit, and therefore, investors may not appropriately allocate such basis for U.S. federal
income tax purposes.
No statutory, administrative or judicial authority directly
addresses the treatment of a unit or instruments similar to a unit for U.S. federal income tax purposes and, therefore, that treatment
is not entirely clear. We intend to treat the acquisition of a unit, for U.S. federal income tax purposes, as the acquisition of one share
of our common stock, one half of one warrant and one right to receive one-seventh (1/7) of a share of our common stock upon the consummation
of an initial business combination, and, by purchasing a unit, you agree to adopt such treatment for U.S. federal income tax purposes.
For U.S. federal income tax purposes, each holder of a unit must allocate the purchase price paid by such holder for such unit between
the one share of our common stock, one half of one warrant and one right to receive one-seventh (1/7) of a share of our common stock upon
the consummation of an initial business combination based on the relative fair market value of each at the time of issuance. The price
allocated should be the stockholder’s tax basis in such share or right, as the case may be. Any disposition of a unit should be
treated for U.S. federal income tax purposes as a disposition of the share of our share of our common stock, one half of one warrant and
one right to receive one-seventh (1/7) of a share of our common stock upon the consummation of an initial business combination comprising
the unit, and the amount realized on the disposition should be allocated between the common stock and the right based on their respective
relative fair market values at the time of disposition. The foregoing treatment of the unit and a holder’s purchase price allocation
are not binding on the Internal Revenue Service, or “IRS”, or the courts. The IRS or the courts may not agree with such characterization
and investors could suffer adverse U.S. federal income tax consequences as a result. Accordingly, we urge each prospective investor to
consult its own tax advisors regarding the tax consequences of an investment in a unit (including alternative characterizations of a unit).
Our amended and restated certificate of incorporation designates the
Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated
by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with our company
or our company’s directors, officers or other employees.
Our amended and restated certificate of incorporation
requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers,
other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in
the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines
that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent
to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter
jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have
notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision
may limit or make more costly a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation
to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions,
which could harm our business, operating results and financial condition.
Our amended and restated certificate of incorporation
will provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain
exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability
created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits
brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
In addition, our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of
an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law,
be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, or the rules
and regulations promulgated thereunder. We note, however, that there is uncertainty as to whether a court would enforce this provision
and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22
of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability
created by the Securities Act or the rules and regulations thereunder.
Risks Associated with Acquiring and Operating
a Business Outside of the United States
We may pursue a target company with operations or opportunities
outside of the United States for our initial business combination. Accordingly, we may face additional burdens in connection with investigating,
agreeing to and completing such initial business combination, and if we effect such initial business combination, we would be subject
to a variety of additional risks that may negatively impact our operations.
We may pursue a target a company with operations
or opportunities outside of the United States for our initial business combination, and therefore may be subject to risks associated with
cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business combination,
conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators or agencies
and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination with
such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting,
including any of the following:
• costs
and difficulties inherent in managing cross-border business operations;
• rules
and regulations regarding currency redemption;
• complex
corporate withholding taxes on individuals;
• laws
governing the manner in which future business combinations may be effected;
• exchange
listing and/or delisting requirements;
• tariffs
and trade barriers;
• regulations
related to customs and import/export matters;
• local
or regional economic policies and market conditions;
• unexpected
changes in regulatory requirements;
• longer
payment cycles;
• tax
issues, such as tax law changes and variations in tax laws as compared to the United States;
• currency
fluctuations and exchange controls;
• rates
of inflation;
• challenges
in collecting accounts receivable;
• cultural
and language differences;
• employment
regulations;
• underdeveloped
or unpredictable legal or regulatory systems;
• corruption;
• protection
of intellectual property;
• social
unrest, crime, strikes, riots and civil disturbances;
• regime
changes and political upheaval;
• terrorist
attacks and wars; and
• deterioration
of political relations with the United States.
We may not be able to adequately address these
additional risks. If we were unable to do so, we may be unable to complete such initial business combination, or, if we complete such
combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
After our initial business combination, substantially
all of our assets may be located in a foreign country and substantially all of our revenue will be derived from our operations in such
country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and
legal policies, developments and conditions in the country in which we operate.
The economic, political and social conditions,
as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be
uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future
such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in
certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find
an attractive target business with which to consummate our initial business combination and if we effect our initial business combination,
the ability of that target business to become profitable.
After our business combination, it is possible
that a majority of our directors and officers will live outside the United States and all of our assets will be located outside the United
States; therefore investors may not be able to enforce federal securities laws or their other legal rights.
It is possible that after our business combination,
a majority of our directors and officers will reside outside of the United States and all of our assets will be located outside of the
United States. As a result, it may be difficult, or in some cases not possible, for investors in the United States to enforce their legal
rights, to effect service of process upon all of our directors or officers or to enforce judgments of United States courts predicated
upon civil liabilities and criminal penalties on our directors and officers under United States laws. In particular, investors should
be aware that there is uncertainty as to whether the courts of other applicable jurisdictions would recognize and enforce judgments of
U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of
the United States or any state in the United States or entertain original actions brought in another jurisdiction’s courts against
us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.
If our management following our business combination
is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such laws, which could
lead to various regulatory issues.
Following our business combination, any or all of our
management could resign from their positions as officers of the Company, and the management of the target business at the time of the
business combination will remain in place. Management of the target business may not be familiar with United States securities laws. If
new management is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with such
laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely affect our operations.
If we effect a business combination with a company
located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may
not be able to enforce our legal rights.
If we effect a business combination with a company
located outside of the United States, the laws of the country in which such company operates will govern almost all of the material agreements
relating to its operations. We cannot assure you that the target business will be able to enforce any of its material agreements or that
remedies will be available in this new jurisdiction. The system of laws and the enforcement of existing laws in such jurisdiction may
not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a remedy under any
of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire
a company located outside of the United States, it is likely that substantially all of our assets would be located outside of the United
States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors
in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments
of United States courts predicated upon civil liabilities and criminal penalties of our directors and officers under Federal securities
laws.
Because of the costs and difficulties inherent
in managing cross-border business operations after we acquire it, our results of operations may be negatively impacted following a business
combination.
Managing a business, operations, personnel or assets
in another country is challenging and costly. Management of the target business that we may hire (whether based abroad or in the U.S.)
may be inexperienced in cross-border business practices and unaware of significant differences in accounting rules, legal regimes and
labor practices. Even with a seasoned and experienced management team, the costs and difficulties inherent in managing cross-border business
operations, personnel and assets can be significant (and much higher than in a purely domestic business) and may negatively impact our
financial and operational performance.
Many countries, and especially those in emerging
markets, have difficult and unpredictable legal systems and underdeveloped laws and regulations that are unclear and subject to corruption
and inexperience, which may adversely impact our results of operations and financial condition.
Our ability to seek and enforce legal protections,
including with respect to intellectual property and other property rights, or to defend ourselves with regard to legal actions taken against
us in a given country, may be difficult or impossible, which could adversely impact our operations, assets or financial condition. Rules
and regulations in many countries, including some of the emerging markets within the regions we will initially focus, are often ambiguous
or open to differing interpretation by responsible individuals and agencies at the municipal, state, regional and federal levels. The
attitudes and actions of such individuals and agencies are often difficult to predict and inconsistent. Delay with respect to the enforcement
of particular rules and regulations, including those relating to customs, tax, environmental and labor, could cause serious disruption
to operations abroad and negatively impact our results.
After our business combination, substantially all
of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in such country.
Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and legal policies,
developments and conditions in the country in which we operate.
The economic, political and social conditions, as well
as government policies, of the country in which our operations are located could affect our business. The economies in developing markets
we will initially focus on differ from the economies of most developed countries in many respects. Such economic growth has been uneven,
both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future such
country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in certain
industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find an attractive
target business with which to consummate our business combination and if we effect our business combination, the ability of that target
business to become profitable.
Exchange rate fluctuations and currency policies
may cause a target business’ ability to succeed in the international markets to be diminished.
In the event we acquire a non-U.S. target, all revenues
and income would likely be received in a foreign currency, the dollar equivalent of our net assets and distributions, if any, could be
adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions fluctuate and are
affected by, among other things, changes in political and economic conditions. Any change in the relative value of such currency against
our reporting currency may affect the attractiveness of any target business or, following consummation of our business combination, our
financial condition and results of operations. Additionally, if a currency appreciates in value against the dollar prior to the consummation
of our business combination, the cost of a target business as measured in dollars will increase, which may make it less likely that we
are able to consummate such transaction.
Because our business objective includes the possibility
of acquiring one or more operating businesses with primary operations in emerging markets we will focus on, changes in the exchange rate
between the U.S. dollar and the currency of any relevant jurisdiction may affect our ability to achieve such objective. For instance,
the exchange rates between the Turkish lira or the Indian rupee and the U.S. dollar has changed substantially in the last two decades
and may fluctuate substantially in the future. If the U.S. dollar declines in value against the relevant currency, any business combination
will be more expensive and therefore more difficult to complete. Furthermore, we may incur costs in connection with conversions between
U.S. dollars and the relevant currency, which may make it more difficult to consummate a business combination.
Because foreign law could govern almost all of
our material agreements, we may not be able to enforce our rights within such jurisdiction or elsewhere, which could result in a significant
loss of business, business opportunities or capital.
Foreign law could govern almost all of our material
agreements. The target business may not be able to enforce any of its material agreements or that remedies will be available outside of
such foreign jurisdiction’s legal system. The system of laws and the enforcement of existing laws and contracts in such jurisdiction
may not be as certain in implementation and interpretation as in the United States. Judiciaries in such jurisdiction may also be relatively
inexperienced in enforcing corporate and commercial law, leading to a higher than usual degree of uncertainty as to the outcome of any
litigation. As a result, the inability to enforce or obtain a remedy under any of our future agreements could result in a significant
loss of business and business opportunities.
We may be exposed to liabilities under the
Foreign Corrupt Practices Act, and any determination that we violated the Foreign Corrupt Practices Act could have a material adverse
effect on our business.
We are subject to the Foreign Corrupt Practice
Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political
parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We will have operations,
agreements with third parties and may make sales overseas, which may experience corruption. Activities overseas may create the risk of
unauthorized payments or offers of payments by one of the employees, consultants, or sales agents of our Company, because these parties
are not always subject to our control. It will be our policy to implement safeguards to discourage these practices by our employees. Also,
our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, or sales agents
of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil
sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which
we invest or that we acquire.
Corporate governance standards in foreign countries
may not be as strict or developed as in the United States and such weakness may hide issues and operational practices that are detrimental
to a target business.
General corporate governance standards in some countries
are weak in that they do not prevent business practices that cause unfavorable related party transactions, over-leveraging, improper accounting,
family company interconnectivity and poor management. Local laws often do not go far to prevent improper business practices. Therefore,
stockholders may not be treated impartially and equally as a result of poor management practices, asset shifting, conglomerate structures
that result in preferential treatment to some parts of the overall company, and cronyism. The lack of transparency and ambiguity in the
regulatory process also may result in inadequate credit evaluation and weakness that may precipitate or encourage financial crisis. In
our evaluation of a business combination we will have to evaluate the corporate governance of a target and the business environment, and
in accordance with United States laws for reporting companies take steps to implement practices that will cause compliance with all applicable
rules and accounting practices. Notwithstanding these intended efforts, there may be endemic practices and local laws that could add risk
to an investment we ultimately make and that result in an adverse effect on our operations and financial results.
Companies in foreign countries may be subject to accounting,
auditing, regulatory and financial standards and requirements that differ, in some cases significantly, from those applicable to public
companies in the United States, which may make it more difficult or complex to consummate a business combination. In particular, the assets
and profits appearing on the financial statements of a foreign company may not reflect its financial position or results of operations
in the way they would be reflected had such financial statements been prepared in accordance with U.S. GAAP and there may be substantially
less publicly available information about companies in certain jurisdictions than there is about comparable United States companies. Moreover,
foreign companies may not be subject to the same degree of regulation as are United States companies with respect to such matters as insider
trading rules, tender offer regulation, stockholder proxy requirements and the timely disclosure of information.
Legal principles relating to corporate affairs and
the validity of corporate procedures, directors’ fiduciary duties and liabilities and stockholders’ rights for foreign corporations
may differ from those that may apply in the U.S., which may make the consummation of a business combination with a foreign company more
difficult. We therefore may have more difficulty in achieving our business objective.
Because a foreign judiciary may determine the scope
and enforcement of almost all of our target business’ material agreements under the law of such foreign jurisdiction, we may be
unable to enforce our rights inside and outside of such jurisdiction.
The law of a foreign jurisdiction, may govern almost
all of our target business’ material agreements, some of which may be with governmental agencies in such jurisdiction. We cannot
assure you that the target business or businesses will be able to enforce any of their material agreements or that remedies will be available
outside of such jurisdiction. The inability to enforce or obtain a remedy under any of our future agreements may have a material adverse
impact on our future operations.
A slowdown in economic growth in the markets that
our business target operates in may adversely affect our business, financial condition, results of operations, the value of its equity
shares and the trading price of our shares following our business combination.
Following the business combination, our results of
operations and financial condition may be dependent on, and may be adversely affected by, conditions in financial markets in the global
economy, and, particularly in the markets where the business operates. The specific economy could be adversely affected by various factors
such as political or regulatory action, including adverse changes in liberalization policies, business corruption, social disturbances,
terrorist attacks and other acts of violence or war, natural calamities, interest rates, inflation, commodity and energy prices and various
other factors which may adversely affect our business, financial condition, results of operations, value of our equity shares and the
trading price of our shares following the business combination.
Regional hostilities, terrorist attacks, communal
disturbances, civil unrest and other acts of violence or war may result in a loss of investor confidence and a decline in the value of
our equity shares and trading price of our shares following our business combination.
Terrorist attacks, civil unrest and other acts of violence
or war may negatively affect the markets in which we may operates our business following our business combination and also adversely affect
the worldwide financial markets. In addition, the countries we will focus on, have from time to time experienced instances of civil unrest
and hostilities among or between neighboring countries. Any such hostilities and tensions may result in investor concern about stability
in the region, which may adversely affect the value of our equity shares and the trading price of our shares following our business combination.
Events of this nature in the future, as well as social and civil unrest, could influence the economy in which our business target operates,
and could have an adverse effect on our business, including the value of equity shares and the trading price of our shares following our
business combination.
The occurrence of natural disasters may adversely
affect our business, financial condition and results of operations following our business combination.
The occurrence of natural disasters, including hurricanes,
floods, earthquakes, tornadoes, fires and pandemic disease may adversely affect our business, financial condition or results of operations
following our business combination. The potential impact of a natural disaster on our results of operations and financial position is
speculative, and would depend on numerous factors. The extent and severity of these natural disasters determines their effect on a given
economy. Although the long term effect of diseases such as the H5N1 “avian flu,” or H1N1, the swine flu, cannot currently
be predicted, previous occurrences of avian flu and swine flu had an adverse effect on the economies of those countries in which they
were most prevalent. An outbreak of a communicable disease in our market could adversely affect our business, financial condition and
results of operations following our business combination. We cannot assure you that natural disasters will not occur in the future or
that its business, financial condition and results of operations will not be adversely affected.
Any downgrade of credit ratings of the country
in which the company we acquire does business may adversely affect our ability to raise debt financing following our business combination.
No assurance can be given that any rating organization
will not downgrade the credit ratings of the sovereign foreign currency long-term debt of the country in which our business target operates,
which reflect an assessment of the overall financial capacity of the government of such country to pay its obligations and its ability
to meet its financial commitments as they become due. Any downgrade could cause interest rates and borrowing costs to rise, which may
negatively impact both the perception of credit risk associated with our future variable rate debt and our ability to access the debt
markets on favorable terms in the future. This could have an adverse effect on our financial condition following our business combination.
Returns on investment in foreign companies may
be decreased by withholding and other taxes.
Our investments will incur tax risk unique to investment
in developing economies. Income that might otherwise not be subject to withholding of local income tax under normal international conventions
may be subject to withholding of income tax in a developing economy. Additionally, proof of payment of withholding taxes may be required
as part of the remittance procedure. Any withholding taxes paid by us on income from our investments in such country may or may not be
creditable on our income tax returns. We intend to seek to minimize any withholding tax or local tax otherwise imposed. However, there
is no assurance that the foreign tax authorities will recognize application of such treaties to achieve a minimization of such tax. We
may also elect to create foreign subsidiaries to effect the business combinations to attempt to limit the potential tax consequences of
a business combination.
