Item
1. Business
Introduction
We
are a blank check company formed under the laws of the State of Delaware on October 19, 2020 for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.
We intend to effectuate a business combination utilizing cash from the proceeds of the Initial Public Offering, the underwriters’
exercise of their full over-allotment option and the sale of the private placement warrants, our capital stock, debt or a combination
of cash, stock and debt. Although we are not limited to a particular industry or sector for purposes of consummating a business combination,
we have initially focused our search on identifying a prospective target business in the technology, media and telecommunications (“TMT”)
industries in the United States and other developed countries. We are an emerging growth company and, as such, we are subject to all
of the risks associated with emerging growth companies.
The
registration statement for our Initial Public Offering was declared effective on February 23, 2021. On February 26, 2021, we consummated
the Initial Public Offering of 34,500,000 units, including the underwriters’ exercise of their full over-allotment option of 4,500,000
units, at $10.00 per unit (“Over-Allotment Option”), generating gross proceeds of $345.0 million, and incurring
offering costs of approximately $18.8 million, inclusive of approximately $11.8 million in deferred underwriting commissions.
Simultaneously
with the closing of the Initial Public Offering, we completed the private sale of an aggregate of 5,933,333 private placement warrants
to our sponsor at a purchase price of $1.50 per warrant, generating gross proceeds of $8.9 million.
Upon
the closing of the Initial Public Offering and the sale of the private placement warrants, a total of $345.0 million ($10.00 per unit)
was placed in a trust account located in the United States at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer &
Trust Company acting as trustee, and has been, and will only be, invested in U.S. government securities, within the meaning set
forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct
U.S. government treasury obligations.
Our
Mission
We
seek to capitalize on the experience of our co-founders, Craig McCaw and Randy Russell, who together have nearly 70 years of combined
operating, investing and financing experience. Mr. McCaw’s skills as a serial entrepreneur across public and private markets, and
Mr. Russell’s experience as a senior investment banker and trusted advisor to a broad range of companies and c-suite executives
in the TMT industry and leading private equity firms, represent a compelling combination. We believe our founders’ distinctive
and complementary backgrounds can facilitate a positive, transformational outcome in an initial business combination.
Opportunities
for a potential business combination will be developed through our multi-decade relationships and proprietary network of corporate executives,
family offices, financial sponsors, investment bankers, private investors, and strategic advisors. We intend to be proactive and highly
selective in sourcing potential targets. We are focusing our efforts on opportunities where our founders’ strategic vision, operating
expertise, deep relationships, and capital markets experience can be catalysts to enhance the growth, competitive position and financial
upside in an initial business combination. We intend to execute an initial business combination with a target either within the TMT industry
or in any other business, industry, sector, in each case either operating within the United States or any other geographical location.
We
believe that our management team is well positioned to identify attractive business combination opportunities during a time of compelling
industry and economic transformation. In seeking our initial business combination, we expect to favor a mix of targeted industry and
business characteristics, which may include:
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Attractive market and competitive
dynamics |
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Compelling long-term growth
prospects |
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Leadership in technology
driven transformation |
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High barriers to entry
for new entrants |
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Low or manageable risks
of technological obsolescence |
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Defensible position in
intellectual property |
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Strong recurring revenues |
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Attractive steady-state
margins |
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High incremental margins |
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Opportunities for operational
improvement |
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Opportunities for further
consolidation |
Competitive
Advantages
Our
business strategy is to identify and complete our initial business combination with a company that complements the experience of our
founders and can benefit from their operational expertise. Our selection process will leverage our management teams’ broad and
deep relationship network, unique industry experiences and proven deal sourcing capabilities to access a broad spectrum of differentiated
opportunities. This network has been developed through their extensive experience and demonstrated success in both investing in and operating
businesses across a variety of industries, developing a distinctive combination of capabilities including:
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a track record of building
industry-leading companies and proven ability to deliver shareholder value over an extended time period with above-market-average
investment returns; |
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a prolific acquisition
history, having completed in excess of 100 transactions that have in sum contributed to such companies’ financial results and
strategic position. This acquisition history has been executed using extensive deal sourcing and differentiated transaction execution/structuring
capabilities; |
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experience deploying broad
value creation strategies, including recruiting world-class talent and delivering operating efficiency by consistently exceeding
synergy targets; and |
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an extensive history of
accessing the capital markets across various business cycles, including financing businesses and assisting companies with transition
to public ownership. |
Following
completion of the Initial Public Offering, our founders have been communicating with their networks of relationships to articulate the
parameters for our search for a target company and a potential business combination and have been pursuing and reviewing potential opportunities.
We
intend to capitalize on the following competitive advantages in our pursuit of a target company:
Proactive
and Proprietary Transaction Sourcing. Our management team believes that its market reputation, proactive approach to sourcing transactions,
and extensive network of relationships provide proprietary investment opportunities. Our team’s deep industry expertise across
numerous parts of the TMT industries and throughout the capital structure often make them a viable option for TMT companies seeking capital
solutions. Our management team believes that it has an established record of generating proprietary investment opportunities resulting
from original research. Within targeted sub-sectors, our management team analyzes current trends, develops investment theses and creates
strategies for originating and evaluating investment opportunities. This research-oriented, data-intensive process allows us to proactively
identify trends, find opportunities and execute transactions ahead of potential competitors. Additionally, given Mr. McCaw’s long
track record and reputation in the communications services sector as well as his broad and diverse network, there is significant potential
to source new opportunities that may not be broadly marketed.
Execution
and Structuring Capability. Our management team believes that its industry expertise and reputation allow it to source and complete
transactions possessing structural attributes that create an attractive investment thesis. These types of transactions are typically
complex and require creativity, industry knowledge and expertise, rigorous due diligence, and extensive negotiation and documentation.
Our team has experience investing in TMT assets throughout a company’s life cycle. In addition, complexity associated with TMT
relationships and operating logistics are also well understood by the management team and provide for a broader opportunity set. Our
management team believes that by focusing its investment activities on these types of transactions, it is able to generate investment
opportunities that have attractive risk/reward profiles based on their valuations, structural characteristics and relatively low levels
of financial leverage.
Broad
and Extensive Experience in Both Public and Private Markets. Our management team boasts decades of combined operating, investing
and financing experience across both public and private markets. Mr. McCaw has a long track record of investing across the TMT landscape,
with over 65 transactions completed, representing approximately $35 billion in capital raised. Mr. Russell has close to 20 years of deal
making experience as a trusted advisor to high profile c-suite executives, management teams and board of director’s members, participating
in over $230 billion in public and private market transactions. We believe that this versatility of experience and complementary skills
will allow our sponsor to identify companies that could make successful public market candidates and prepare them to make the transition
to strong publicly-traded companies.
Significant
Value-Add Capability. The sector expertise and broad network of relationships of our management team allow it to add significant
value after consummation of an initial transaction. We anticipate that our management team will be involved with a target company in
a number of capacities, including: (i) assisting in setting strategic direction and priorities; (ii) designing specific performance improvement
projects; (iii) helping to identify and recruit managers; (iv) advising on acquisition and financing transactions; (v) contributing market
information; and (vi) developing a targeted investor relations program. Furthermore, our management team is also experienced in navigating
complex regulatory issues that many companies in TMT businesses manage over time. Our management believes that its ability to identify
and implement value creation initiatives has been an essential driver of past performance and will remain central to its acquisition
strategy.
Industry
Opportunity
While
we may engage in a business combination with a company in any industry, our focus is on the TMT industries in the United States and other
developed countries. We believe the TMT industries are attractive for a number of reasons:
Large
Target Market. The TMT sector benefits from positive macroeconomic trends and substantial actionable targets of meaningful scale
that fit our acquisition criteria. According to Thomson Reuters, from 2010 to 2019, the sector has benefited from robust M&A deal
flow with over 550 transactions completed between $1 billion and $10 billion, with a cumulative deal volume of over $1 trillion.
We
believe changes occurring within the TMT sector are propelling this strategic activity. For instance, technology advancements and over-the-top content
providers have caused what we believe are massive shifts in the media sector as key players look to consolidate and scale in order to
compete. Similarly, new technologies have reduced barriers to entry, introducing increased, low-cost competition, and the need for
strategic actions to address growing structural challenges. Additionally, the telecommunications industry is facing significant consolidation
and increased spending as the next generation of wireless and broadband technology nears. These critical themes in TMT, among many, provide
what we believe is a strong environment for sourcing a differentiated opportunity and consummating a business combination.
Broad
Universe of Potential Targets. We intend to focus our investment effort broadly across TMT industries. We believe that our investment
and operating expertise in TMT across multiple industry verticals will give us a large, addressable universe of potential targets. The
diversity of the target universe and the number of largely uncorrelated sub-sectors maximizes that likelihood that the management team
will be able to identify and execute an attractive transaction.
Limited
Competition. Our management team believes that the complexity of the TMT industries acts as a barrier to entry, requiring investors
to have significant sector-specific knowledge and expertise to identify and appropriately analyze investment opportunities. Technical
knowledge, an understanding of the regulatory landscape, complex valuation methodologies, specialized accounting treatments, and regulatory
and political considerations may deter competition from generalist firms.
Favorable
Trends. Total global TMT expenditure has grown at a pace substantially above the rate of inflation in the recent past, and this growth
is projected to continue over the years to come, including an increasing pool of available services and economies those services provide
and improved access to such services.
Business
Combination Criteria
Consistent
with our strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating prospective
target businesses. We will utilize our management teams’ extensive network of contacts, which provides access to differentiated
deal flow and significant deal-sourcing capabilities and use these criteria and guidelines in evaluating acquisition opportunities, but
we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
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Middle-Market Businesses.
We believe that the middle market segment provides the greatest number of opportunities for investment and is consistent with
Pendrell’s historical investment history. This segment is where we believe we also have the strongest network to identify the
greatest number of attractive opportunities and we believe the larger market capitalization and public float of the resulting company
is more attractive to our investors. |
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Established Companies
with Proven Track Records. We seek to engage in a business combination with one or more established companies with consistent
historical financial performance. We typically focus on companies with a history of strong operating and financial results and strong
fundamentals. We do not intend to consider start-up companies or companies without a path to long-term profitability. |
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Companies with Recurring
and Embedded Revenue and Earnings Growth or Potential for Revenue and Earnings Growth. We seek to engage in a business combination
with one or more businesses that have achieved or have the potential for significant revenue and earnings growth through a combination
of organic growth, synergistic add-on acquisitions, new product markets and geographies, increased production capacity, expense reduction
and increased operating leverage. |
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Companies with, or with
the Potential for, Strong Free Cash Flow Generation. We seek to engage in a business combination with one or more businesses
that already have, or have the potential to generate, consistent, stable and recurring free cash flow. We will focus on one or more
businesses that have predictable revenue streams with high visibility. |
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Strong Competitive Position.
We intend to focus on targets that have a leading, growing or niche market position in its industries. We will analyze the strengths
and weaknesses of target businesses relative to their competitors. We will seek to engage in a business combination with one or more
businesses that demonstrate advantages when compared to their competitors, which may help to protect their market position and profitability. |
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Experienced Management
Team. We seek to engage in a business combination with one or more businesses with a complete, experienced management team that
provides a platform for us to further develop the acquired business’s management capabilities. We seek to partner with a potential
target’s management team and expect that the operating and financial abilities of our executive team and board will complement
their own capabilities. |
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Benefit from Being a
Public Company. We intend to engage in a business combination with one or more businesses that will benefit from being publicly
traded and can effectively utilize the broader access to capital and the public profile that are associated with being a publicly
traded 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 from time to time
our management may deem relevant.
Initial
Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on
the trust account) at the time of our signing a definitive agreement in connection with our initial business combination and that any
such business combination be approved by a majority of our independent directors. Our board of directors will make the determination
as to the fair market value of our initial business combination. If our board of directors is not able to independently determine the
fair market value of our initial business combination, we will obtain an opinion from an independent investment banking firm which is
a member of FINRA or a valuation or appraisal firm with respect to the satisfaction of such criteria. While we consider it unlikely that
our board of directors will not be able to make an independent determination of the fair market value of our initial business combination,
it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there is a significant
amount of uncertainty as to the value of the target’s assets or prospects.
We
may pursue an initial business combination opportunity jointly with the corporate parent of our sponsor, Pendrell, or one or more of
its affiliates, which we refer to as an Affiliated Joint Acquisition. Any such parties may co-invest with us in the target business at
the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by issuing to such parties
a class of equity or equity-linked securities. Any such issuance of equity or equity-linked securities would, on a fully diluted basis,
reduce the percentage ownership of our then-existing stockholders. Notwithstanding the foregoing, pursuant to the anti-dilution provisions
of our Class B common stock, issuances or deemed issuances of Class A common stock or equity-linked securities would result in an adjustment
to the ratio at which shares of Class B common stock shall convert into shares of Class A common stock such that our initial stockholders
and their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the total number of all
shares of common stock outstanding upon completion of the Initial Public Offering plus all shares of Class A common stock and equity-linked
securities issued or deemed issued in connection with the business combination (excluding any shares or equity-linked securities issued,
or to be issued, to any seller in the business combination), unless the holders of a majority of the then-outstanding shares of Class
B common stock agree to waive such adjustment with respect to such issuance or deemed issuance at the time thereof. Neither our sponsor
nor its affiliates have an obligation to make any such investment, and may compete with us for potential business combinations.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders own shares
will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial
business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target
business in order to meet certain objectives of the target management team or stockholders or for other reasons, including an Affiliated
Joint Acquisition, as described above. However, we will only complete such business combination if the post- transaction company owns
or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended, which
we refer to as the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities
of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case,
we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares,
our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken
into account for purposes of the 80% of net assets test described above. If the business combination involves more than one target business,
the 80% of net assets test will be based on the aggregate value of all of the target businesses.
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate our
initial business combination using cash from the proceeds of the Initial Public Offering and the private placement of the private placement
warrants, the proceeds of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements
or backstop agreements we may enter into following the consummation of the Initial Public Offering or otherwise), shares issued to the
owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing. We may seek
to complete our initial business combination with a company or business that may be financially unstable or in its early stages of development
or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our initial business combination or used for redemptions of our Class A
common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for
maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred
in completing our initial business combination, to fund the purchase of other companies or for working capital.
At
the present time, we have not selected any specific business combination target. Accordingly, there is no current basis for investors
in our securities to evaluate the possible merits or risks of any target business with which we may ultimately complete our initial business
combination. Although our management will assess the risks inherent in a particular target business with which we may combine, we cannot
assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those
risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely
affect a target business or the value of our common stock.
We
may need to obtain additional financing to complete our initial business combination, either because the transaction requires more cash
than is available from the proceeds held in our trust account or because we become obligated to redeem a significant number of our public
shares upon completion of the business combination, in which case we may issue additional securities or incur debt in connection with
such business combination. There are no prohibitions on our ability to issue securities or incur debt in connection with our initial
business combination. We are not currently a party to any arrangement or understanding with any third party with respect to raising any
additional funds through the sale of securities, the incurrence of debt or otherwise.
We
have filed a Registration Statement on Form 8-A with the Securities and Exchange Commission (the ”SEC”) to voluntarily register
our securities under Section 12 of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. As a result,
we will be subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15
to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business
combination.
Sourcing
of Potential Initial Business Combination Targets
Our
management team has spent significant portions of their careers working with businesses in the TMT industries, and have developed a wide
network of professional services contacts and business relationships in those industries. The members of our board of directors also
have significant executive management and public company experience with TMT companies.
This
network has provided our management team with a flow of referrals that have resulted in numerous transactions. We believe that the network
of contacts and relationships of our management team will provide us with an important source of acquisition opportunities. In addition,
we anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
market participants, private equity groups, investment banks, consultants, accounting firms and large business enterprises.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor or any of its executive
officers or directors, or making the acquisition through a joint venture or other form of shared ownership with our sponsor. In the event
we seek to complete an initial business combination with a target that is affiliated with our sponsor or any of its executive officers
or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking which is a
member of FINRA or a qualified independent accounting firm that such an initial business combination is fair to our company from a financial
point of view. We are not required to obtain such an opinion in any other context.
If
any of our executive officers becomes aware of a business combination opportunity that falls within the line of business of any entity
to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business combination
opportunity to such entity prior to presenting such business combination opportunity to us. All of our executive officers currently have
certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. In addition, we may pursue
an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a fiduciary or contractual obligation.
Any such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional
proceeds to complete the acquisition by issuing to such entity a class of equity or equity-linked securities. Our amended and restated
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 and
such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
We
anticipate that target business candidates will also be brought to our attention from various unaffiliated sources, including investment
bankers, private investment funds and other intermediaries. Target businesses may be brought to our attention by such unaffiliated sources
as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses in which they
think we may be interested on an unsolicited basis, since many of these sources will have read the prospectus for the Initial Public
Offering and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring
to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal
inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of
proprietary opportunities that would not otherwise necessarily be available to us as a result of the track record and business relationships
of our officers and directors.
Financial
Position
With
funds available for a business combination initially in the amount of $333,246,125 (assuming no redemptions), after payment of $11,753,875
of deferred underwriting fees, we offer a target business a variety of options such as creating a liquidity event for its owners, providing
capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because
we are able to complete 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. However, we have not taken any steps to secure third party financing and there can be no assurance
it will be available to us.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. By completing our initial business combination with only a single entity, our lack of
diversification may:
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subject us to negative
economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry
in which we operate after our initial business combination, and |
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cause us to depend on the
marketing and sale of a single product or limited number of products or services. |
Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial
business combination with that business, our assessment of the target business’s management may not prove to be correct. In addition,
the future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination
as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial
business combination.
Moreover,
we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of
the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The
determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business
combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We
cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended
and restated certificate of incorporation. However, we will seek stockholder approval if it is required by law or applicable stock exchange
rule, or we may decide to seek stockholder approval for business or other legal reasons.
Presented
in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder approval
is currently required under Delaware law for each such transaction.
TYPE
OF TRANSACTION |
|
WHETHER
STOCKHOLDER
APPROVAL IS
REQUIRED |
Purchase of assets |
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No |
Purchase of stock of target
not involving a merger with the company |
|
No |
Merger of target into a
subsidiary of the company |
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No |
Merger of the company with
a target |
|
Yes |
Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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We issue shares of common
stock that will be equal to or in excess of 20% of the number of our shares of common stock then outstanding (other than in a public
offering); |
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Any of our directors, officers
or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest earned on the trust account (or such persons
collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise
and the present or potential issuance of common stock could result in an increase in outstanding common stock or voting power of
5% or more; or |
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The issuance or potential
issuance of common stock will result in our undergoing a change of control. |
Permitted
Purchases of Our Securities
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, initial stockholders, directors, executive officers, advisors or their affiliates
may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors
or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have
no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such
transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions. If they
engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material non-public
information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.
In
the event that our sponsor, initial stockholders, directors, officers, advisors or their affiliates purchase shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be
required to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going- private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to
such rules, the purchasers will comply with such rules.
The
purpose of any such purchases of shares could be to (i) vote such shares in favor of the business combination and thereby increase the
likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with
a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce
the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection
with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our Class A common stock or public warrants may be reduced and
the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing
or trading of our securities on a national securities exchange.
Our
sponsor, initial stockholders, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom
our initial stockholders, officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders
contacting us directly or by our receipt of redemption requests submitted by stockholders (in the case of Class A common stock) following
our mailing of proxy materials in connection with our initial business combination. To the extent that our sponsor, officers, directors,
advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have
expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business combination,
whether or not such stockholder has already submitted a proxy with respect to our initial business combination but only if such shares
have not already been voted at the stockholder meeting related to our initial business combination. Our sponsor, executive officers,
directors, advisors or any of their affiliates will select which stockholders to purchase shares from based on a negotiated price and
number of shares and any other factors that they may deem relevant and will only purchase shares if such purchases comply with Regulation
M under the Exchange Act and the other federal securities laws. Our sponsor, officers, directors and/or their affiliates will be restricted
from making purchases of shares if the purchases would violate Section 9(a)(2) of, or Rule 10b-5 under, the Exchange Act. We expect any
such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to
such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of Our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the
completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account calculated as of two business days prior to the consummation of the initial business combination, including interest
(less amounts released to us to pay our taxes), divided by the number of then outstanding public shares, subject to the limitations and
on the conditions described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share
amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting commissions
we will pay to the underwriters. The redemption rights will include the requirement that any beneficial owner on whose behalf a redemption
right is being exercised must identify itself in order to validly redeem its shares. Our initial stockholders, sponsor, officers and
directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect
to any founder shares and public shares they may hold in connection with the completion of our initial business combination.
Limitations
on Redemptions
Our
amended and restated certificate of incorporation provide that in no event will we redeem our public shares in an amount that would cause
our net tangible assets to be less than $5,000,001. In addition, our proposed initial business combination may impose a minimum cash
requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions. In the event the aggregate cash consideration we would be required
to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete
the initial business combination or redeem any shares in connection with such initial business combination, and all shares of Class A
common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked
securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to
forward purchase agreements or backstop arrangements we may enter into following consummation of the Initial Public Offering, in order
to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our
initial business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or
(ii) without a stockholder vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed
initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of
factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval
under applicable law or stock exchange listing requirements. Asset acquisitions and stock purchases would not typically require stockholder
approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding
common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval. So long as we
obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with Nasdaq’s stockholder approval rules.
The
requirement that we provide our public stockholders with the opportunity to redeem their public shares by one of the two methods listed
above will be contained in provisions of our amended and restated certificate of incorporation and will apply whether or not we maintain
our registration under the Exchange Act or our listing on Nasdaq. Such provisions may be amended if approved by holders of 65% of our
common stock entitled to vote thereon.
If
we provide our public stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
|
● |
conduct the redemptions
in conjunction with a proxy solicitation pursuant to Regulation 14A under the Exchange Act, which regulates the solicitation of proxies,
and not pursuant to the tender offer rules, and |
|
● |
file proxy materials with
the SEC. |
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common
stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in
person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding
shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count towards this quorum and,
pursuant to the letter agreement, our sponsor, officers and directors have agreed to vote any founder shares they hold and any public
shares purchased during or after the Initial Public Offering (including in open market and privately-negotiated transactions) in favor
of our initial business combination.
As
a result, we would need 12,537,501, or 36.3%, of the 34,500,000 public shares sold in the Initial Public Offering (including the underwriters
exercise of their Over-Allotment Option) to be voted in favor of an initial business combination in order to have our initial business
combination approved (assuming all outstanding shares are voted). These quorum and voting thresholds, and the voting agreements of our
initial stockholders, may make it more likely that we will consummate our initial business combination. Each public stockholder may elect
to redeem its public shares irrespective of whether they vote for or against the proposed transaction or whether they were a stockholder
on the record date for the stockholder meeting held to approve the proposed transaction.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will:
|
● |
conduct the redemptions
pursuant to Rule 13e-4 and Regulation 14E under the Exchange Act, which regulate issuer tender offers, and |
|
● |
file tender offer documents
with the SEC prior to completing our initial business combination, which contain substantially the same financial and other information
about the initial business combination and the redemption rights as is required pursuant to Regulation 14A under the Exchange Act,
which regulates the solicitation of proxies. |
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination until
the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more
than a specified number of public shares, which number will be based on the requirement that we may not redeem public shares in an amount
that would cause our net tangible assets to be less than $5,000,001. If public stockholders tender more shares than we have offered to
purchase, we will withdraw the tender offer and not complete the initial business combination.
Upon
the public announcement of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we
or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in the
open market, in order to comply with Rule 14e-5 under the Exchange Act.
We
intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent
or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials,
this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In addition,
if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its
public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the
name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will furnish
to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders
to satisfy such delivery requirements. We believe that this will allow our transfer agent to efficiently process any redemptions without
the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional
administrative cost. If the proposed initial business combination is not approved and we continue to search for a target company, we
will promptly return any certificates or shares delivered by public stockholders who elected to redeem their shares.
Our
amended and restated certificate of incorporation provide that in no event will we redeem our public shares in an amount that would cause
our net tangible assets to be less than $5,000,001. In addition, our proposed initial business combination may impose a minimum cash
requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions. In the event the aggregate cash consideration we would be required
to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete
the initial business combination or redeem any shares in connection with such initial business combination, and all shares of Class A
common stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked
securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to
forward purchase agreements or backstop arrangements we may enter into following consummation of the Initial Public Offering, in order
to, among other reasons, satisfy such net tangible assets or minimum cash requirements.
Limitation
on Redemption Upon Completion of Our Initial Business Combination If We Seek Stockholder Approval
Notwithstanding
the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct redemptions
in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is
acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in the Initial Public Offering without our prior consent, which
we refer to as the “Excess Shares.” We believe this restriction will discourage stockholders from accumulating large blocks
of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed business
combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market price
or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in
the Initial Public Offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us, our
sponsor or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’
ability to redeem no more than 15% of the shares sold in the Initial Public Offering without our prior consent, we believe we will limit
the ability of a small group of stockholders to unreasonably attempt to block our ability to complete our initial business combination,
particularly in connection with a business combination with a target that requires as a closing condition that we have a minimum net
worth or a certain amount of cash.
However,
we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our
initial business combination.
Delivering
Stock Certificates in Connection with the Exercise of Redemption Rights
As
described above, we intend to require our public stockholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to, at the holder’s option, either deliver their stock certificates to our transfer
agent or deliver their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) system, prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy
materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In
addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption
of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which
the name of the beneficial owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will
furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public
stockholders to satisfy such delivery requirements, which will include the requirement that any beneficial owner on whose behalf a redemption
right is being exercised must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have up
to two business days prior to the vote on the initial business combination if we distribute proxy materials, or from the time we send
out our tender offer materials until the close of the tender offer period, as applicable, to submit or tender its shares if it wishes
to seek to exercise its redemption rights. In the event that a stockholder fails to comply with these or any other procedures disclosed
in the proxy or tender offer materials, as applicable, its shares may not be redeemed. 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 process and the act of certificating the shares or delivering them through the
DWAC system. The transfer agent will typically charge the broker submitting or tendering shares a fee of approximately $80.00 and it
would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless
of whether or not we require holders seeking to exercise redemption rights to submit or tender their shares. The need to deliver shares
is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials or tender offer
documents, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of redemption
rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request that
the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders
of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares. We will then continue to try
to complete an initial business combination with a different target until 24 months from the closing of the Initial Public Offering.
Redemption
of Public Shares and Liquidation if No Initial Business Combination
Our
amended and restated certificate of incorporation provides that we have only 24 months from the closing of the Initial Public Offering
to complete our initial business combination. If we do not complete our initial business combination within such 24-month 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 (less amounts released to us to pay our taxes and up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), 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. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we
fail to complete our initial business combination within the 24-month time period.
Our
initial stockholders, sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived
their rights to liquidating distributions from the trust account with respect to any founder shares they hold if we fail to complete
our initial business combination within 24 months from the closing of the Initial Public Offering. However, if our initial stockholders,
sponsor or management team acquired public shares in or after the Initial Public Offering, they will be entitled to liquidating distributions
from the trust account with respect to such public shares if we fail to complete our initial business combination within the allotted
24-month time period.
Our
initial stockholders, sponsor, officers and directors have agreed, pursuant to a letter agreement with us, that they will not propose
any amendment to our amended and restated certificate of incorporation 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 24 months from the closing of the Initial Public
Offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity, unless we provide our public stockholders with the opportunity to redeem their public shares upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less amounts
released to us to pay our taxes), divided by the number of then outstanding public shares. However, we may not redeem our public shares
in an amount that would cause our net tangible assets to be less than $5,000,001. If this optional redemption right is exercised with
respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement, we would not proceed
with the amendment or the related redemption of our public shares at such time.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be
funded from amounts remaining out of the approximately $1,000,000 of proceeds held outside the trust account, although we cannot assure
you that there will be sufficient funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses
associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the trust account not required
to pay taxes, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those
costs and expenses.
If
we were to expend all of the net proceeds of the Initial Public Offering and the sale of the private placement warrants, other than the
proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account and any tax payments
or expenses for the dissolution of the trust, the per-share redemption amount received by stockholders upon our dissolution would be
approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which
would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount
received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the Delaware General Corporation Law (“DGCL”),
our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in full,
as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining
assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay
or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that
they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of
fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third-party refuses
to execute an agreement waiving such claims to the monies held in the trust account, our management will consider whether competitive
alternatives are reasonably available to us and will only enter into an agreement with such third party if management believes that such
third party’s engagement would be in the best interests of the company under the circumstances. Examples of possible instances
where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute
a waiver or in cases where management is unable to find a service provider willing to execute a waiver. The underwriters of the Initial
Public Offering will not execute agreements with us waiving such claims to the monies held in the trust account. In addition, there is
no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect the amounts
held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services
rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality
or other similar agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of
(i) $10.00 per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of
the trust account, if less than $10.00 per public share due to reductions in the value of the trust assets, less taxes payable, provided
that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all
rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our
indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities
Act of 1933, as amended (“Securities Act”). However, we have not asked our sponsor to reserve for such indemnification obligations,
nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that
our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy
those obligations. As a result, if any such claims were successfully made against the trust account, the funds available for our initial
business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete
our initial business combination, and you would receive such lesser amount per share in connection with any redemption of your public
shares. None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount
per public share held in the trust account as of the date of the liquidation of the trust account if less than $10.00 per share due to
reductions in the value of the trust assets, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its
indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would
determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that
our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so in any particular instance.
Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less
than $10.00 per share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not
be liable as to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including
liabilities under the Securities Act. We have access to up to approximately $1,000,000 from the proceeds of the Initial Public Offering
with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated
to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims
and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors.
In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds from the funds not to be
held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding
amount.
Conversely,
in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the
trust account would increase by a corresponding amount.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution.
The
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we
do not complete our initial business combination within 24 months from the closing of the Initial Public Offering may be considered a
liquidating distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL
intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a
liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering, is not considered
a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition
of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of
the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead
of three years, as in the case of a liquidating distribution. If we do not complete our initial business combination within 24 months
from the closing of the Initial Public Offering, 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 (less amounts released to us to pay our taxes and
up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably
possible following our 24th month and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend
well beyond the third anniversary of such date.
Because
we are not complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time
that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the
subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited
to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers,
investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting
agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As
a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that
would result in any liability extending to the trust account is remote.
Further,
our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00
per public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust
account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not
be liable as to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including
liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor
will not be responsible to the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself
and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of
creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares
if we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering, (ii) 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 24 months from the closing of the Initial
Public Offering or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity or (iii) if they redeem their shares for cash upon the completion of our initial business combination. In no other circumstances
will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection
with our initial business combination, a stockholder’s voting in connection with the business combination alone will not result
in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have
also exercised its redemption rights described above. These provisions of our amended and restated certificate of incorporation, like
all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we may encounter competition from other
entities having a business objective similar to ours, including other special purpose acquisition companies, private equity groups and
leveraged buyout funds, public companies and operating businesses seeking strategic acquisitions. Many of these entities are well established
and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these
competitors possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses
will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition
of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution
they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive
disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have three executive officers: Craig McCaw, Randy Russell and Steve Ednie. These individuals are not obligated to devote any
specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we
have completed our initial business combination. The amount of time they devote in any time period varies based on whether a target business
has been selected for our initial business combination and the stage of the business combination process we are in. We do not intend
to have any full-time employees prior to the completion of our initial business combination.
Periodic
Reporting and Financial Information
Our
units, Class A common stock and warrants are registered under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual
reports contain financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the proxy solicitation materials
or tender offer documents sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements
will need to be prepared in accordance with, or reconciled to, generally accepted accounting principles in the United States (“GAAP”),
or international financial reporting standards as issued by the International Accounting Standards Board (“IFRS”), depending
on the circumstances, and the historical financial statements may be required to be audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the pool of
potential target businesses we may conduct an initial business combination with 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 initial business combination within
the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination
candidate will have financial statements prepared in accordance with the requirements outlined above, or that the potential target business
will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements
cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential business combination
candidates, we do not believe that this limitation will be material.
We
are required to evaluate our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley
Act. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, will we be required to have our internal control procedures audited. A target business 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 business combination.
We
have filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange
Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing
a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial
business combination.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business
Startups Act of 2012 (“JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited
to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the
prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of the Initial Public Offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common stock that are 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.
Item 1A.
Risk Factors.
You
should carefully consider all of the following risk factors and all of the other information contained in this Report, including the
financial statements. If any of the following risks occur, our business, financial condition or results of operations may be materially
and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect
to us and our business.
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.
We
are a blank check company incorporated under the laws of the State of Delaware with no operating results. Because we lack an operating
history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination.
We have no plans, arrangements or understandings with any prospective target business concerning a business combination and may be unable
to complete our initial business combination. If we fail to complete our initial business combination, we will never generate any operating
revenues.
Our
stockholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders
of our founder shares will participate in such vote, which means we may complete our initial business combination even though a majority
of our public stockholders do not support such a combination.
We
may choose not to hold a stockholder vote to approve our initial business combination if the business combination would not require stockholder
approval under applicable law or stock exchange listing requirement. Except for as required by applicable law or stock exchange requirement,
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. Even if we seek
stockholder approval, the holders of our founder shares will participate in the vote on such approval. Accordingly, we may complete our
initial business combination even if a majority of our public stockholders do not approve of the business combination we complete.
Your
only opportunity to affect the investment decision regarding a potential business combination may be limited to the exercise of your
right to redeem your shares from us for cash.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial
business combination. Since our board of directors may complete a business combination without seeking stockholder approval, public stockholders
may not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only
opportunity to affect the investment decision regarding our initial business combination may be limited to exercising your redemption
rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public
stockholders in which we describe our initial business combination.
If
we seek stockholder approval of our initial business combination, our initial stockholders and management team have agreed to vote in
favor of such initial business combination, regardless of how our public stockholders vote.
Immediately
following the completion of the Initial Public Offering, our initial shareholders owned 20% of our outstanding common stock, excluding
the private placement shares underlying the private placement units. Our initial stockholders and management team also may from
time to time purchase Class A common stock prior to our initial business combination. Our amended and restated certificate of incorporation
provides that, if we seek stockholder approval of an initial business combination, such initial business combination will be approved
if we receive the affirmative vote of a majority of the shares voted at such meeting, including the founder shares.
Pendrell,
and an affiliate of Craig McCaw, our chief executive officer, purchased an aggregate of 400,000 units in the Initial Public Offering
at the public offering price. As a result, in addition to our initial stockholders’ founder shares and the shares underlying the
units purchased by Pendrell in the Initial Public Offering, we would need 12,537,501, or 36.3%, of the 34,500,000 public shares sold
in the Initial Public Offering to be voted in favor of an initial business combination in order to have the initial business combination
approved (assuming all outstanding shares are voted). Accordingly, if we seek stockholder approval of our initial business combination,
the agreement by our initial stockholders and management team to vote in favor of our initial business combination will increase the
likelihood that we will receive the requisite stockholder approval for such initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with minimum cash requirement for (i) cash consideration to be paid
to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy
other conditions. 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 to be less than $5,000,001. Consequently, if accepting all properly submitted redemption
requests would cause our net tangible assets to be less than $5,000,001 or make us unable to satisfy a minimum cash 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 stockholders to exercise
redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or
optimize our capital structure.
At the time we enter into
an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore
will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such
requirements, or arrange for third party financing. In addition, if a larger number of shares is submitted for redemption than we initially
expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third
party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher
than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class B common
stock results in the issues of shares of Class A common stock on a greater than one-to-one basis upon conversion of the shares of Class
B common stock at the time of our initial business combination. In addition, the amount of the deferred underwriting commissions payable
to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination. The per
share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting
commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting
commissions. 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 stockholders to exercise
redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would
be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination
agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business
combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If
you are in need of immediate liquidity, you could attempt to sell your 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 your exercise of redemption rights until we liquidate or you are able
to sell your shares in the open market.
The requirement that we complete our initial
business combination within 24 months from the closing of the Initial Public Offering, or February 26, 2023, may give potential target
businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on
potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete
our initial business combination on terms that would produce value for our stockholders.
Any potential target business
with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business combination
within 24 months from the closing of the Initial Public Offering, or February 26, 2023. Consequently, such target business may obtain
leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that
particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase
as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our
initial business combination on terms that we would have rejected upon a more comprehensive investigation.
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 ongoing coronavirus (COVID-19) pandemic and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout
the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease
(COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary
Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19,
and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. The COVID-19 pandemic has
resulted, and a significant outbreak of other infectious diseases could result, in a widespread health crisis that could adversely affect
the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination
could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating
to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel,
vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19
impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact,
among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability
to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination,
may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity in third-party financing
being unavailable on terms acceptable to us or at all.
We may not be able to complete our initial
business combination within 24 months from the closing of the Initial Public Offering, or February 26, 2023, in which case we would cease
all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able to find
a suitable target business and complete our initial business combination within 24 months from the closing of the Initial Public Offering,
or February 26, 2023. For example, the COVID-19 pandemic continues to grow both in the United States. and globally and, while the extent
of the impact of the pandemic on us will depend on future developments, it could limit our ability to complete our initial business combination,
including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms
acceptable to us or at all. Additionally, the COVID-19 pandemic may negatively impact businesses we may seek to acquire. Our ability to
complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt
markets and the other risks described herein. If we have not completed our initial business combination within such time period, we will:
(i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business
days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest (less amounts released to us to pay our taxes and up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), 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.
If we seek stockholder approval of our initial
business combination, our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates may elect to purchase
shares or public warrants from public stockholders, which may influence a vote on a proposed business combination and reduce the public
“float” of our Class A common stock.
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our sponsor, initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares
or public warrants 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. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq
rules. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase
shares or public warrants in such transactions. Such purchases may include a contractual acknowledgment 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,
initial stockholders, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to
revoke their prior elections to redeem their shares. The purpose of any such purchases of shares 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. The purpose of any such purchases
of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the
warrantholders for approval in connection with our initial business combination. Any such purchases of our securities may result in the
completion of our initial business combination that may not otherwise have been possible. We expect any such purchases will be reported
pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
In addition, if such purchases
are made, the public “float” of our Class A common stock or public warrants and the number of beneficial holders of our securities
may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities
exchange.
If a stockholder fails to receive notice of
our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for
tendering its shares, such shares may not be redeemed.
We will comply with the proxy
rules or tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our
compliance with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable, such stockholder
may not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that
we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly tender or submit public shares for redemption. For example, we intend to require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to, at the holder’s option, either deliver their stock certificates to our transfer agent, or to deliver their shares to our transfer
agent electronically prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy
materials, this date may be up to two business days prior to the vote on the proposal to approve the initial business combination. In
addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption
of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which
the name of the beneficial owner of such shares is included. In the event that a stockholder fails to comply with these or any other procedures
disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed.
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 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 Class A common stock that such stockholder properly elected to redeem, subject to the
limitations described herein, (ii) the redemption of any public shares properly 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 24 months from the closing of the Initial Public Offering, or with
respect to any other material provisions relating to stockholders’ rights or pre-initial business combination activity, and (iii)
the redemption of our public shares if we do not complete an initial business combination within 24 months from the closing of the Initial
Public Offering, subject to applicable law and as further described herein. In addition, if our plan to redeem our public shares if we
do not complete an initial business combination within 24 months from the closing of the Initial Public Offering, or February 26, 2023,
is not completed for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then- existing stockholders
for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait
beyond 24 months from the closing of the Initial Public Offering before they receive funds from our trust account. In no other circumstances
will a public stockholder have any right or interest of any kind in the trust account. Holders of warrants will not have any right to
the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to sell
your public shares or warrants, potentially at a loss.
Nasdaq may delist our securities from trading
on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading
restrictions.
Our units, Class A common
stock and warrants, are listed on Nasdaq. We cannot assure you that our securities will continue to be listed on Nasdaq in the future
or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our initial business combination,
we must maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum amount in stockholders’
equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300 public holders). Additionally, in connection
with our initial business combination, we will be required to demonstrate compliance with Nasdaq’s initial listing requirements,
which are more rigorous than Nasdaq’s continued listing requirements, in order to continue to maintain the listing of our securities
on Nasdaq. For instance, our share price would generally be required to be at least $4.00 per share and our stockholder’s equity
would generally be required to be at least $5,000,000. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If Nasdaq delists our securities
from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities
could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities; |
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reduced liquidity for our securities; |
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a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
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a limited amount of news and analyst coverage; and |
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a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets
Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as “covered securities.” Our units, Class A common stock and warrants, are listed on Nasdaq, and qualify as
covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal statute
does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then
the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these
powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered
securities under the statute and we would be subject to regulation in each state in which we offer our securities.
You will not be entitled to protections normally
afforded to investors of many other blank check companies.
Since the net proceeds of
the Initial Public Offering and the sale of the private placement warrants are intended to be used to complete an initial business combination
with a target business that has not been selected, we may be deemed to be a “blank check” company under the United States
securities laws. However, because we have net tangible assets in excess of $5,000,000 and have 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 that we will have a longer period of time to complete our initial business combination than do companies subject to Rule 419.
Moreover, if the Initial Public Offering had been subject to Rule 419, that rule would have prohibited the release of any interest earned
on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with our completion
of an initial business combination.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders
are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15%
of our Class A common stock.
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to the Excess Shares. However, we would
not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business
combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination
and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you
will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. 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.
Because of our limited resources and the significant
competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we
do not complete our initial business combination, our public stockholders may receive only their pro rata portion of the funds in the
trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We expect to encounter competition
from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships),
other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire.
Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various industries. Many of these competitors possess similar or greater
technical, human and other resources to ours or more local industry knowledge than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially
acquire with the net proceeds of the Initial Public Offering and the sale of the private placement warrants, our ability to compete with
respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated
to offer holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction
with a stockholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our
initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business
combination. If we do not complete our initial business combination, our public stockholders may receive only their pro rata portion of
the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
If the net proceeds of the Initial Public Offering
and the sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate for at least
the 24 months following the closing of the offering, it could limit the amount available to fund our search for a target business or businesses
and complete our initial business combination, and we will depend on loans from our sponsor or management team to fund our search and
to complete our initial business combination.
Of the net proceeds of the
Initial Public Offering, $2.2 million was made available to us initially outside the trust account to fund our working capital requirements.
We believe that the funds available to us outside of the trust account will be sufficient to allow us to operate for at least the 24 months
following the Initial Public Offering; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could
use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also
use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger
agreements designed to keep target businesses from “shopping” around for transactions with other companies or investors on
terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any
current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
In the event that our offering
expenses exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the trust account. In such case, the
amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that
the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the trust account would
increase by a corresponding amount. The amount held in the trust account will not be impacted as a result of such increase or decrease.
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 initial business combination. Up to $1,500,000 of such loans may be convertible into
warrants of the post-business combination entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical
to the private placement warrants. Prior to the completion of our initial business combination, we do not expect to seek loans from parties
other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide
a waiver against any and all rights to seek access to funds in our trust account. If we do not complete our initial business combination
because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently,
our public stockholders may only receive an estimated $10.00 per share, or possibly less, on our redemption of our public shares, and
our warrants will expire worthless.
Subsequent to our completion of our initial
business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have
a significant negative effect on our financial condition, results of operations and the price of our securities, which could cause you
to lose some or all of your investment.
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that
may be present with a particular target business, that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these
factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that
could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and
previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be
non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative
market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants
to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing
to partially finance the initial business combination or thereafter. Accordingly, any stockholders or warrantholders who choose to remain
stockholders or warrantholders following the business combination could suffer a reduction in the value of their securities. Such stockholders
or warrantholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction
was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the proxy materials or tender offer documents, as applicable, relating to the business
combination contained an actionable material misstatement or material omission.
If third parties bring claims against us, the
proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00
per share.
Our placing of funds in the
trust account may not protect those funds from third party claims against us. Although we will seek to have all vendors, service providers
(except our independent registered public accounting firm), prospective target businesses and other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the
benefit of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not
be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain
advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute
an agreement waiving such claims to the monies held in the trust account, our management will consider whether competitive alternatives
are reasonably available to us and will only enter into an agreement with such third party if management believes that such third party’s
engagement would be in the best interests of the company under the circumstances. The underwriters of the Initial Public Offering will
not execute agreements with us waiving such claims to the monies held in the trust account.
Examples of possible instances
where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute
a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee
that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts
or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we
do not complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection
with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may
be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders
could be less than the $10.00 per public share initially held in the trust account, due to claims of such creditors. Pursuant to the letter
agreement the form of which is filed as an exhibit to this Form 10-K, our sponsor has agreed that it will be liable to us if and to the
extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered
into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce the amount of funds
in the trust account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust
account as of the date of the liquidation of the trust account, if less than $10.00 per public share due to reductions in the value of
the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target
business who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable)
nor will it apply to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including
liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have
we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe that our sponsor’s
only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
As a result, if any such claims were successfully made against the trust account, the funds available for our initial business combination
and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business
combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None of our officers
or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the
indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution
to our public stockholders.
In the event that the proceeds
in the trust account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per public share held in the trust
account as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions in the value of
the trust assets, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its obligations or that it has
no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against
our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action
on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising
their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors
choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public
stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds in the
trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that
is not dismissed, a bankruptcy court may seek to recover such proceeds, and 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 some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its
fiduciary duty to our creditors and/or having acted in bad faith, by paying public stockholders from the trust account prior to addressing
the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If, before distributing the proceeds in the
trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that
is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount
that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the
proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included
in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any
bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If we are deemed to be an investment company
under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial business combination.
If we are deemed to be an
investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and |
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restrictions on the issuance of securities, |
each of which may make it difficult for us to
complete our initial business combination. In addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company with the SEC; |
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adoption of a specific form of corporate structure; and |
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are not subject to. |
In order not to be regulated
as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged
primarily in a business other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government
securities and cash items) on an unconsolidated basis. Our business is to identify and complete a business combination and thereafter
to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale
or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our
principal activities subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested
in United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity
of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which
invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in
other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted
at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or
private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company
Act.
The Initial Public Offering
is not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account
is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial business combination;
(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 24 months from the closing of the Initial Public Offering; and (iii) absent an initial business combination
within 24 months from the closing of the Initial Public Offering or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity, our return of the funds held in the trust account to our public stockholders as part
of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment
Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would
require additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we
do not complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the
trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
Changes in laws or regulations, or a failure
to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial
business combination, and results of operations.
We are subject to laws and
regulations enacted by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal
requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws
and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse
effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as
interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial
business combination, and results of operations.
Our stockholders may be held liable for claims
by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the 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 24 months from the closing of the Initial Public Offering may be considered a liquidating distribution under
Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes
reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period
before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our
public shares as soon as reasonably possible following the 24th month from the closing of the Initial Public Offering in the event we
do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we are not complying
with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for
our payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our
dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers,
etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution.
We cannot assure you that
we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for
any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third
anniversary of such date.
Furthermore, if the
pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we
do not complete our initial business combination within 24 months from the closing of the Initial Public Offering is not considered a
liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition
of legal proceedings that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of
the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead
of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders
until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
In accordance with Nasdaq
corporate governance requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year
end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders
for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a
meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination,
and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders
want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold
one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We are not registering the
shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time,
and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able
to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless. If the issuance of the
Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration or qualification under the
Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise such warrants and such warrants
may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid
the full unit purchase price solely for the Class A common stock included in the units.
However, under the terms of
the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days, after the closing of
our initial business combination, we will use our commercially reasonable efforts to file with the SEC a registration statement covering
the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants and thereafter will use our
commercially reasonable efforts to cause the same to become effective within 60 business days following our initial business combination
and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants until the expiration
of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for
example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or
prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop
order.
If the shares of Class A common
stock issuable upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant agreement, holders
of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be required to do so on a cashless
basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. If holders exercise their warrants on a cashless
basis, the number of shares of Class A common stock that you will receive upon such cashless exercise will be based on a formula subject
to a maximum amount of shares of 0.361 shares of Class A common stock per warrant (subject to adjustment).
In no event will warrants
be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their
warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the
exercising holder, or an exemption from registration or qualification is available.
If our shares of Class A common
stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition
of “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of warrants
who seek to exercise their warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section
3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file or maintain in effect a registration statement
or register or qualify the shares underlying the warrants under applicable state securities laws, and in the event we do not so elect,
we will use our commercially reasonable efforts to register or qualify the shares underlying the warrants under applicable state securities
laws to the extent an exemption is not available. Exercising the warrants on a cashless basis could have the effect of reducing the potential
“upside” of the holder’s investment in our company because the warrant holder will hold a smaller number of shares of
Class A common stock upon a cashless exercise of the warrants they hold than they would have upon a cash exercise.
In no event will we be required
to net cash settle any warrant, or issue securities (other than upon a cashless exercise as described above) or other compensation in
exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under the Securities
Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified
or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant
may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid
the full unit purchase price solely for the shares of Class A common stock included in the units. There may be a circumstance where an
exemption from registration exists for holders of our private placement warrants to exercise their warrants while a corresponding exemption
does not exist for holders of the public warrants included as part of units sold in the Initial Public Offering. In such an instance,
our sponsor and its permitted transferees (which may include our directors and executive officers) would be able to exercise their warrants
and sell the shares of common stock underlying their warrants while holders of our public warrants would not be able to exercise their
warrants and sell the underlying shares of common stock. If and when the warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying shares of Class A common stock for sale under all applicable state securities
laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise their warrants.
The warrants may become exercisable and redeemable
for a security other than shares of Class A common stock, and you will not have any information regarding such other security at this
time.
In certain situations, including
if we are not the surviving entity in our initial business combination, the warrants may become exercisable for a security other than
the shares of Class A common stock. As a result, if the surviving company redeems your warrants for securities pursuant to the warrant
agreement, you may receive a security in a company of which you do not have information at this time. Pursuant to the warrant agreement,
the surviving company will be required to use its commercially reasonable efforts to register the issuance of the security underlying
the warrants within fifteen business days of the closing of an initial business combination.
The grant of registration rights to our initial
stockholders and holders of our private placement warrants may make it more difficult to complete our initial business combination, and
the future exercise of such rights may adversely affect the market price of our shares of Class A common stock.
Pursuant to an agreement entered
into concurrently with the Initial Public Offering, our initial stockholders and their permitted transferees can demand that we register
the shares of Class A common stock into which founder shares are convertible, holders of our private placement warrants and their permitted
transferees can demand that we register the private placement warrants and the Class A common stock issuable upon exercise of the private
placement warrants and holders of warrants that may be issued upon conversion of working capital loans may demand that we register such
warrants or the Class A common stock issuable upon conversion of such warrants. The registration rights will be exercisable with respect
to the founder shares and the private placement warrants and the Class A common stock issuable upon exercise of such private placement
warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities
for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition, the existence
of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the stockholders
of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the
negative impact on the market price of our Class A common stock that is expected when the shares of common stock owned by our initial
stockholders, holders of our private placement warrants or holders of our working capital loans or its permitted transferees are registered.
Because we are neither limited to evaluating
a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial
business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Our efforts to identify a
prospective initial business combination target will not be limited to a particular industry, sector or geographic region. While we may
pursue an initial business combination opportunity in any industry or sector, we intend to capitalize on the ability of our management
team to identify, acquire and operate a business or businesses that can benefit from our management team’s established global relationships
and operating experience. Our management team has extensive experience in identifying and executing strategic investments globally and
has done so successfully in a number of sectors. Our amended and restated certificate of incorporation prohibits us from effectuating
a business combination with another blank check company or similar company with nominal operations. Because we have not yet selected or
approached any specific target business with respect to a business combination, there is no basis to evaluate the possible merits or risks
of any particular target business’s operations, results of operations, cash flows, liquidity, financial condition or prospects.
To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with
which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage
entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure
you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those
risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more
favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any
stockholders or warrantholders who choose to remain stockholders or warrantholders following the business combination could suffer a reduction
in the value of their securities. Such stockholders or warrantholders are unlikely to have a remedy for such reduction in value unless
they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary
duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy materials or tender
offer documents, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
We may face risks related to businesses in
the TMT industries.
Business combinations with
businesses in the TMT industries entail special considerations and risks. If we are successful in completing a business combination with
such a target business, we may be subject to, and possibly adversely affected by, the following risks:
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if we do not develop successful new products or improve existing ones, our business will suffer; |
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we may invest in new lines of business that could fail to attract or retain users or generate revenue; |
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we face significant competition and if we are not able to maintain or improve our market share, our business could suffer; |
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the loss of one or more members of our management team, or our failure to attract and retain other highly qualified personnel in the future, could seriously harm our business; |
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if our security is compromised or if our platform is subjected to attacks that frustrate or thwart our users’ ability to access our products and services, our users, advertisers, and partners may cut back on or stop using our products and services altogether, which could seriously harm our business; |
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mobile malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of our products could seriously harm our business and reputation; |
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if we are unable to successfully grow our user base and further monetize our products, our business will suffer; |
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if we are unable to protect our intellectual property, the value of our brand and other intangible assets may be diminished, and our business may be seriously harmed; |
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we may be subject to regulatory investigations and proceedings in the future, which could cause us to incur substantial costs or require us to change our business practices in a way that could seriously harm our business; |
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components used in our products may fail as a result of a manufacturing, design, or other defect over which we have no control, and render our devices inoperable; |
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an inability to manage rapid change, increasing consumer expectations and growth; |
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an inability to build strong brand identity and improve subscriber or customer satisfaction and loyalty; |
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an inability to deal with our subscribers’ or customers’ privacy concerns; |
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an inability to license or enforce intellectual property rights on which our business may depend; |
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an inability by us, or a refusal by third parties, to license content to us upon acceptable terms; |
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potential liability for negligence, copyright, or trademark infringement or other claims based on the nature and content of materials that we may distribute; |
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competition for the leisure and entertainment time and discretionary spending of subscribers or customers, which may intensify in part due to advances in technology and changes in consumer expectations and behavior; and |
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disruption or failure of our networks, systems or technology as a result of misappropriation of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or similar events. |
Any of the foregoing could
have an adverse impact on our operations following a business combination. However, our efforts in identifying prospective target businesses
are not limited to the TMT industries. Accordingly, if we acquire a target business in another industry, we will be subject to risks attendant
with the specific industry in which we operate or target business which we acquire, which may or may not be different than those risks
listed above.
Past performance by our management team or
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 us.
Information regarding performance
by, or businesses associated with, our management team and their affiliates, or businesses associated with them, is presented for informational
purposes only. Past performance by such individuals and entities is not a guarantee either (i) of success with respect to any business
combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should
not rely on the historical record of the performance of our management team or their affiliates or businesses associated with them as
indicative of our future performance of an investment in us or the returns we will, or is likely to, generate going forward.
We may seek business combination opportunities
in industries outside of the TMT industries (which industries may or may not be outside of our management’s area of expertise).
Although we intend to focus
on identifying business combination candidates in the TMT industries in the United States (including candidates based in the United States
which may have operations or opportunities outside the United States) or other developed countries, and we will not initially actively
seek to identify business combination candidates in other industries (which industries may be outside our management’s area of expertise),
we will consider a business combination outside of the TMT industries if a business combination candidate is presented to us and we determine
that such candidate offers an attractive acquisition opportunity for our company or we are unable to identify a suitable candidate in
the TMT industries after having expended a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor
to evaluate the risks inherent in any particular business combination candidate, we may not adequately ascertain or assess all of the
risks. An investment in our units may ultimately prove to be less favorable to investors in our securities than a direct investment, if
an opportunity were available, in a business combination candidate.
In the event we elect to pursue
a business combination outside of the TMT industries, our management’s expertise may not be directly applicable to its evaluation
or operation, and the information contained in this Form 10-K regarding the TMT industries would not be relevant to an understanding of
the business that we elect to acquire.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified
general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter
into our initial business combination will not have all of these positive attributes. If we complete our initial business combination
with a target that does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business
that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target
that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may
make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain
amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval
for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial business combination
if the target business does not meet our general criteria and guidelines. If we do not complete our initial business combination, our
public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution to public
stockholders, and our warrants will expire worthless.
We may seek acquisition opportunities with
an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings, which could
subject us to volatile revenues or earnings or difficulty in retaining key personnel.
To the extent we complete
our initial business combination with an early stage company, a financially unstable business or an entity lacking an established record
of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These
risks include investing in a business without a proven business model and with limited historical financial data, volatile revenues or
earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the
risks inherent in a particular target business, we may not be able to properly ascertain or assess all the significant risk factors and
we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with
no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain an opinion from
an independent investment banking firm or from 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.
Unless we complete our initial
business combination with an affiliated entity or our board of directors cannot independently determine the fair market value of the target
business or businesses (including with the assistance of financial advisors), we are not required to obtain an opinion from an independent
investment banking firm which is a member of FINRA or from a valuation or appraisal firm that the price we are paying is fair to our stockholders
from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
We may issue additional shares of Class A common
stock or shares of preferred stock to complete our initial business combination or under an employee incentive plan after completion of
our initial business combination. We may also issue shares of Class A common stock upon the conversion of the founder shares at a ratio
greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended
and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate
of incorporation authorizes the issuance of up to 200,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000
shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share.
After the Initial Public Offering,
there were 165,500,000 and 11,375,000 authorized but unissued shares of Class A common stock and Class B common stock, respectively, available
for issuance which amount does not take into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable
upon conversion of the Class B common stock. The Class B common stock is automatically convertible into Class A common stock at the time
of the consummation of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth herein
and in our amended and restated certificate of incorporation. There are no shares of preferred stock issued and outstanding.
We may issue a substantial
number of additional shares of Class A common stock or shares of preferred stock to complete our initial business combination or under
an employee incentive plan after completion of our initial business combination. We may also issue shares in connection with the redemption
of our warrants or shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one at the
time of our initial business combination as a result of the anti-dilution provisions as set forth therein.
However, our amended and restated
certificate of incorporation provide, among other things, that prior to our initial business combination, we may not issue additional
shares that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares
(a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x)
extend the time we have to consummate a business combination beyond 24 months from the closing of the Initial Public Offering or (y) amend
the foregoing provisions. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended
and restated certificate of incorporation, may be amended with a stockholder vote. The issuance of additional shares of common stock or
shares of preferred stock:
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may significantly dilute the equity interest of investors in our securities; |
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may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock; |
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could cause a change in control if a substantial number of shares of Class A common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and |
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may adversely affect prevailing market prices for our units, Class A common stock and/or warrants. |
Unlike some other similarly structured special
purpose acquisition companies, our initial stockholders will receive additional shares of Class A common stock if we issue certain shares
to consummate an initial business combination.
The founder shares automatically
convert into shares of Class A common stock at the time of the consummation of our initial business combination on a one-for-one basis,
subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment
as provided herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued
in connection with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all founder
shares will equal, in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after
such conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total
number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities
or rights issued or deemed issued, by the company in connection with or in relation to the consummation of the initial business combination,
excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class
A common stock issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to
our sponsor, officers or directors upon conversion of working capital loans, provided that such conversion of founder shares will never
occur on a less than one-for-one basis. This is different than some other similarly structured special purpose acquisition companies in
which the initial stockholders will only be issued an aggregate of 20% of the total number of shares to be outstanding prior to our initial
business combination.
Resources could be wasted in researching business
combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business. If we have not completed our initial business combination within the required time period, our public stockholders may only
receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants
will expire worthless.
We anticipate that the investigation
of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to
complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be
recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business
combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs
incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we have
not completed our initial business combination within the required time period, our public stockholders may only receive their pro rata
portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We are dependent upon our executive officers
and directors and their loss could adversely affect our ability to operate.
Our operations are dependent
upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends
on the continued service of our officers and directors, at least until we have completed our initial business combination. In addition,
our executive 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 their 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 executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have
a detrimental effect on us.
Our 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.
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target
business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management
or advisory positions following our initial business combination, it is likely that some or all of the management of the target business
will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot
assure you that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar
with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them
become familiar with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business combination
may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation
following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular
business combination is the most advantageous.
Our key personnel may be able
to remain with our company after the completion of our initial 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. Such negotiations also could make such key personnel’s
retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their
motivation in identifying and selecting a target business, subject to their fiduciary duties under Delaware law.
We may have a limited ability to assess the
management of a prospective target business and, as a result, may affect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability
of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target business’s management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target
business’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 or warrantholders who choose
to remain stockholders or warrantholders following the business combination could suffer a reduction in the value of their securities.
Such stockholders or warrantholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim
that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable,
relating to the business combination contained an actionable material misstatement or material omission.
The officers and directors of an acquisition
candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel
could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition
candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we
contemplate that certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate
following our initial business combination, it is possible that members of the management of an acquisition candidate will not wish to
remain in place.
Our executive officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive 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 initial business combination. Each of our executive officers is engaged in several other business
endeavors for which he may be entitled to substantial compensation, and our executive 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
executive officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs
in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact
on our ability to complete our initial business combination.
Our officers and directors presently have,
and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly, may have conflicts
of interest in determining to which entity a particular business opportunity should be presented.
Until we consummate our initial
business combination, we intend to engage in the business of identifying and combining with one or more businesses. Each of our officers
and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities,
pursuant to which such officer or director is or will be required to present a business combination opportunity to such entity. Our amended
and restated 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 the company
and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue,
and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation. In
addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or
may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such companies,
businesses or ventures may present additional conflicts of interest in pursuing an initial business combination. However, we do not believe
that any such potential conflicts would materially affect our ability to complete our initial business combination.
Our executive 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, executive 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 executive
officers, although we do not intend to do so or we may acquire a target business through an Affiliated Joint Acquisition. 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.
The personal and financial
interests of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing
a business combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target
business may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination
are appropriate and in our stockholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to
us as a matter of Delaware law and we or our stockholders might have a claim against such individuals for infringing on our stockholders’
rights. However, we might not ultimately be successful in any claim we may make against them for such reason.
We may engage in a business combination with
one or more target businesses that have relationships with entities that may be affiliated with our sponsor and its executive officers,
directors or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our sponsor, and its executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated
with our sponsor or its executive officers, directors or existing holders. Our directors also serve as officers and board members for
other entities, including, without limitation, those described under “Management—Conflicts of Interest.” Such entities
may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific
opportunities for us to complete our initial business combination with any entities with which they are affiliated, and there have been
no 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 as set forth in “Proposed Business—Effecting our initial business combination—Selection
of a target business and structuring of our initial business combination” and such transaction was approved by a majority of our
independent directors. Despite our agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA
or a valuation or appraisal 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 sponsor, executive officers, directors or existing holders, potential
conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our public
stockholders as they would be absent any conflicts of interest.
Since our sponsor, executive 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.
On October 20, 2020, our sponsor
purchased an aggregate of 7,187,500 founder shares in exchange for payment of company offering costs of $25,000, or approximately $0.003
per share. On February 3, 2021, we effected a 312,500 share stock dividend, on February 8, 2021, we effected a 1.0541667-for-1 common
stock split and on February 23, 2021, we effected a 1.0909091-for-1 common stock split, resulting in an aggregate of 8,625,000 shares
of Class B common stock outstanding. In February 2021, our sponsor agreed to transfer 40,250 founder shares to each of Wayne Perry, Dennis
Weibling and Cathleen A. Massey, our independent director nominees, 195,500 founder shares to Craig O. McCaw, 115,000 founder shares to
Randy Russell, 97,750 founder shares to R. Gerard Salemme, 57,500 founder shares to Steve Ednie and 329,648 founder shares to other directors,
officers, employees, consultants and affiliates of Pendrell, in each case for approximately the same per-share price initially paid by
our sponsor, resulting in our sponsor holding 7,708,852 founder shares. Prior to the initial investment in the company of $25,000 by our
sponsor, the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount
of cash contributed to the company by the number of founder shares issued. The number of founder shares outstanding was determined based
on the expectation that the total size of the Initial Public Offering would be a maximum of 34,500,000 units assuming the underwriters’
over-allotment option was exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after
this offering. The founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor purchased
5,933,333 private placement warrants, each exercisable for one share of Class A common stock at $11.50 per share, for an aggregate
purchase price of $8,900,000, or $1.50 per warrant, that will also be worthless if we do not complete our initial business combination.
The personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting
a target business combination, completing an initial business combination and influencing the operation of the business following the
initial business combination. This risk may become more acute as the 24-month anniversary of the closing of this offering nears, which
is the deadline for our completion of an initial business combination.
Involvement of members of our management team
and companies with which they are affiliated in civil disputes and litigation, governmental investigations or negative publicity unrelated
to our business affairs could materially impact our ability to consummate an initial business combination.
Our directors and officers
and companies with which they are affiliated have been, and in the future will continue to be, involved in a wide variety of business
affairs, including transactions, such as sales and purchases of businesses, and ongoing operations. As a result of such involvement, members
of our management and companies with which they are affiliated have been, and may in the future be, involved in civil disputes, litigation,
governmental investigations and negative publicity relating to their business affairs. Any such claims, investigations, lawsuits or negative
publicity may be detrimental to our reputation and could negatively affect our ability to identify and complete an initial business combination
in a material manner and may have an adverse effect on the price of our securities.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments
as of the date of this Form 10-K to issue any notes or other debt securities, or to otherwise incur outstanding debt following the Initial
Public Offering, we may choose to incur substantial debt to complete our initial business combination. We and our officers have agreed
that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any
kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount available for redemption
from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
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our inability to pay dividends on our Class A common stock; |
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
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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 the Initial Public Offering and the sale of the private placement warrants, which will cause us to be
solely dependent on a single business which may have a limited number of products or services. This lack of diversification may negatively
impact our operations and profitability.
The net proceeds from the
Initial Public Offering and the private placement of warrants provided us with $333,246,125 that we may use to complete our initial business
combination (after taking into account the $11,753,875 of deferred underwriting commissions being held in the trust account).
We may effectuate our initial
business combination with a single target business or multiple target businesses simultaneously or within a short period of time.
However, we may not be able
to effectuate our initial business combination with more than one target business because of various factors, including the existence
of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating
results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial
business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive and regulatory
developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting
of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different
areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset, or |
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dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business
combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise
to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay
our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks, including
additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers)
and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies
in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results
of operations.
We may attempt to complete our initial business
combination with a private company about which little information is available, which may result in a business combination with a company
that is not as profitable as we suspected, if at all.
In pursuing our business combination
strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information generally
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination
on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected,
if at all.
Our management may not be able to maintain
our control of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure 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 business,
our stockholders prior to the business combination may collectively own a minority interest in the post business combination company,
depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction in which
we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a target.
In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares
of Class A common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding Class
A 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 our 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 or warrantholders do not agree.
Our amended and restated certificate
of incorporation does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in
an amount that would cause our net tangible assets to be less than $5,000,001. In addition, our proposed initial business combination
may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital
or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. As a result, we may be able to complete
our initial business combination even though a substantial majority of our public stockholders do not agree with the transaction and have
redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection
with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their
shares to our sponsor, officers, directors, advisors or any of their affiliates. In the event the aggregate cash consideration we would
be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy
cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will
not complete the business combination or redeem any shares in connection with such initial business combination, all shares of Class A
common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business
combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other governing
instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate
of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination that
our stockholders may not support.
In order to effectuate a business
combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and governing
instruments, including their warrant agreements. For example, special purpose acquisition companies have amended the definition of business
combination, increased redemption thresholds and extended the time to consummate an initial business combination and, with respect to
their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our
amended and restated certificate of incorporation will require the approval of holders of 65% of our common stock, and amending our warrant
agreement will require a vote of holders of at least 50% of the public warrants and, solely with respect to any amendment to the terms
of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50% of the
number of the then outstanding private placement warrants. In addition, our amended and restated certificate of incorporation will require
us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended
and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we
do not complete an initial business combination within 24 months of the closing of the Initial Public Offering or with respect to any
other material provisions relating to stockholders’ rights or pre-initial business combination activity. To the extent any of such
amendments would be deemed to fundamentally change the nature of the securities offered through the Initial Public Offering, we would
register, or seek an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our
charter or governing instruments or extend the time to consummate an initial business combination in order to effectuate our initial business
combination.
A provision of our warrant agreement may make
it more difficult for us to consummate an initial business combination.
Unlike most blank check companies,
if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with
the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common
stock (with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any
such issuance to our initial stockholders or their affiliates, without taking into account any founder shares held by our initial stockholders
or such affiliates, as applicable, prior to such issuance including any transfer or reissuance of such shares), (y) the aggregate gross
proceeds from such issuances represent more than 50% 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 (z) the
volume weighted average trading price of our Class A common stock during the 10 trading day period starting on the trading day prior to
the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share,
then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and
the Newly Issued Price, the $18.00 per share redemption trigger price of the warrants will be adjusted (to the nearest cent) to be equal
to 180% of the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial
business combination with a target business.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing
the release of funds from our trust account) may be amended with the approval of holders of 65% of our common stock, which is a lower
amendment threshold than that of some other special purpose acquisition companies. It may be easier for us, therefore, to amend our amended
and restated certificate of incorporation to facilitate the completion of an initial business combination that some of our stockholders
may not support.
Our amended and restated certificate
of incorporation provide that any of its provisions related to pre-business combination activity (including the requirement to deposit
proceeds of the Initial Public Offering and the private placement of warrants into the trust account and not release such amounts except
in specified circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by
holders of 65% of our common stock entitled to vote thereon and corresponding provisions of the trust agreement governing the release
of funds from our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other
instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock
entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who
collectively beneficially own 20% of our common stock, may participate in any vote to amend our amended and restated certificate of incorporation
and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions
of our amended and restated certificate of incorporation which govern our pre- business combination behavior more easily than some other
special purpose acquisition companies, and this may increase our ability to complete a business combination with which you do not agree.
Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our sponsor, executive officers
and directors have agreed, pursuant to written agreements with us, that they will not propose any amendment to our amended and restated
certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination within 24 months from the closing of the Initial Public Offering or with respect to any other material
provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders
with the opportunity to redeem their Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the trust account, including interest (less amounts released to us to pay our taxes), divided
by the number of then outstanding public shares. Our stockholders are not parties to, or third-party beneficiaries of, these agreements
and, as a result, will not have the ability to pursue remedies against our sponsor, executive officers or directors for any breach of
these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject
to applicable law.
Certain agreements related to the Initial Public
Offering may be amended without stockholder approval.
Each of the agreements related
to the Initial Public Offering to which we are a party, other than the warrant agreement and the investment management trust agreement,
may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement among us and our initial
stockholders, sponsor, officers and directors; the registration rights agreement among us and our initial stockholders; the private placement
warrants purchase agreement between us and our sponsor; and the administrative services agreement among us, our sponsor and an affiliate
of our sponsor. These agreements contain various provisions that our public stockholders might deem to be material. For example, our letter
agreement and the underwriting agreement contain certain lock-up provisions with respect to the founder shares, private placement warrants
and other securities held by our initial stockholders, sponsor, officers and directors. Amendments to such agreements would require the
consent of the applicable parties thereto and would need to be approved by our board of directors, which may do so for a variety of reasons,
including to facilitate our initial business combination. 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. Any amendment entered into
in connection with the consummation of our initial business combination will be disclosed in our proxy materials or tender offer documents,
as applicable, related to such initial business combination, and any other material amendment to any of our material agreements will be
disclosed in a filing with the SEC. 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. For example, amendments to the lock-up provision discussed above may result in our initial stockholders selling their
securities earlier than they would otherwise be permitted, which may have an adverse effect on the price of our securities.
We may be unable to obtain additional financing
to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination.
We have not selected any specific
business combination target but intend to target businesses with enterprise values that are greater than we could acquire with the net
proceeds of the Initial Public Offering and the sale of the private placement warrants. As a result, if the cash portion of the purchase
price exceeds the amount available from the trust account, net of amounts needed to satisfy any redemption by public stockholders, we
may be required to seek additional financing to complete such proposed initial business combination. Such financing may not be available
on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial business
combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative
target business candidate. Further, we may be required to obtain additional financing in connection with the closing of our initial business
combination for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the
payment of principal or interest due on indebtedness incurred in completing our initial business combination, or to fund the purchase
of other companies. If we do not complete our initial business combination, our public stockholders may only receive their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to
fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect
on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide
any financing to us in connection with or after our initial business combination.
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.
Our initial stockholders own
20% of our issued and outstanding common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation.
If our initial stockholders purchase any additional Class A common stock in the aftermarket or in privately negotiated transactions, this
would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers or directors, have any current
intention to purchase additional securities, other than as disclosed in this Form 10-K. Factors that would be considered in making such
additional purchases would include consideration of the current trading price of our Class A common stock. We may not hold an annual meeting
of stockholders to elect new directors prior to the completion of our initial business combination, in which case all of the current directors
will continue in office until at least the completion of the business combination. Accordingly, our initial stockholders will continue
to exert control at least until the completion of our initial business combination.
We may amend the terms of the warrants in a
manner that may be adverse to holders of public warrants with the approval by the holders of at least 50% of the then outstanding public
warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of
shares of Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants will be issued
in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant
agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any
defective provision, but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change
that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants
in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment. Although
our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited,
examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants
into cash or stock (at a ratio different than initially provided), shorten the exercise period or decrease the number of shares of Class
A common stock purchasable upon exercise of a warrant.
Our warrant agreement designates the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders
to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides
that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement,
including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District
Court for the Southern District of New York, and (ii) we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive
forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum.
Notwithstanding the foregoing,
these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act
or any other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person
or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented
to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions
of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District Court for the
Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed
to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with
any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of
process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign
action as agent for such warrant holder.
This choice-of-forum provision
may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company,
which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations
and result in a diversion of the time and resources of our management and board of directors.
We may redeem your unexpired warrants prior
to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem
outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided
that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations,
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 give notice of redemption to the warrant holders and provided certain other conditions are met. If and when the
warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities
for sale under all applicable state securities laws. As a result, we may redeem the 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 (i) exercise your warrants and pay
the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market
price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding
warrants are called for redemption, is likely to be substantially less than the market value of your warrants.
In addition, we have the
ability to redeem the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10
per warrant upon a minimum of 30 days’ prior written notice of redemption provided that the closing price of our shares
of Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations
and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to proper notice of such redemption
and provided that certain other conditions are met, including that holders will be able to exercise their warrants prior to redemption
for a number of shares of Class A common stock determined based on the redemption date and the fair market value of our shares of Class
A common stock. The value received upon exercise of the warrants (1) may be less than the value the holders would have received if they
had exercised their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the
value of the warrants, including because the number of shares received is capped at 0.361 shares of Class A common stock per warrant
(subject to adjustment) irrespective of the remaining life of the warrants.
None of the private
placement warrants will be redeemable by us (except as set forth in the Warrant Agreement, dated February 23, 2021, by and between Colicity
Inc. and Continental Stock Transfer & Trust Company, as warrant agent) so long as they are held by our initial stockholder or their
permitted transferees.
Our warrants may have an adverse effect on
the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business combination.
In connection with the Initial
Public Offering, we issued warrants to purchase 6,900,000 shares of our Class A common stock as part of the units offered and we issued
in a private placement 5,933,333 private placement warrants, each exercisable to purchase one share of Class A common stock at $11.50
per share. In addition, if our sponsor or an affiliate of our sponsor or certain of our officers and directors makes any working capital
loans, such lender may convert those loans into up to an additional 1,000,000 private placement warrants, at the price of $1.50 per warrant.
To the extent we issue common stock to effectuate a business transaction, the potential for the issuance of a substantial number of additional
shares of Class A common stock upon exercise of these warrants could make us a less attractive acquisition vehicle to a target business.
Such warrants, when exercised, will increase the number of issued and outstanding shares of Class A common stock and reduce the value
of the Class A common stock issued to complete the business transaction. Therefore, our warrants may make it more difficult to effectuate
a business transaction or increase the cost of acquiring the target business.
Because each unit contains one-fifth of one
warrant and only a whole warrant may be exercised, the units may be worth less than units of other special purpose acquisition companies.
Each unit contains one-fifth
of one warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only whole
units will trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will,
upon exercise, round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrantholder.
This is different from other offerings similar to ours whose units include one common 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-fifth of the number of shares compared to units
that each contain a whole warrant to purchase one 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 it included a warrant to purchase one whole share.
Because we must furnish our stockholders with
target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with
some prospective target businesses.
The federal proxy rules require
that the proxy statement with respect to the vote on an initial business combination include historical and pro forma financial statement
disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they
are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled
to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance
with the standards of the PCAOB.
These financial statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial
statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination
within the prescribed time frame.
We are an emerging growth company and a smaller
reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies or smaller reporting companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but
not limited to, not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley
Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be
an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the
market value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case
we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities
less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance
on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading
market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period
which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as
an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This
may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging
growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equals
or exceeds $250 million as of the prior June 30th, and (2) our annual revenues equaled or exceeded $100 million during such completed
fiscal year and the market value of our common stock held by non-affiliates equals or exceeds $700 million as of the prior June 30th.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with
other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley
Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year
ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify
as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not be required
to comply with the independent registered public accounting firm attestation requirement on our internal control over financial reporting.
The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on
us as compared to other public companies because a target business with which we seek to complete our initial business combination may
not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the
internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete
any such business combination.
Provisions in our amended and restated certificate
of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the
future for our shares of Class A common stock and could entrench management.
Our amended and restated
certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to
be in their best interests. These provisions include the ability of the board of directors to designate the terms of and issue new series
of preferred stock, which may make more difficult the removal of management and may discourage transactions that otherwise could involve
payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover
provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our
securities.
Provisions in our amended and restated certificate
of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated
certificate of incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative
action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer
or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising
pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting
a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of
Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there
is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the
personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction
of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction,
or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District
of Delaware shall have concurrent jurisdiction. If an action is brought outside of Delaware, the stockholder bringing the suit will be
deemed to have consented to service of process on such stockholder’s counsel. Although we believe this provision benefits us by
providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine
that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits
against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities
laws and the rules and regulations thereunder.
Notwithstanding the foregoing,
our amended and restated certificate of incorporation provides that the exclusive forum provision will not apply to suits brought to
enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created
by the Exchange Act or the rules and regulations thereunder.
Although we believe this
provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies,
the provision may have the effect of discouraging lawsuits against our directors and officers.
Cyber incidents or attacks directed at us
could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies,
including information systems, infrastructure and cloud applications and services, including those of third parties with which we may
deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure
of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential
data. As an early stage company without significant investments in data security protection, we may not be sufficiently protected against
such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability
to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business
and lead to financial loss.
If we effect our initial business combination
with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us.
If we pursue a target company
with operations or opportunities outside of the United States for our initial business combination, 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.
If we pursue a target a company
with operations or opportunities outside of the United States for our initial business combination, we would 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:
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costs
and difficulties inherent in managing cross-border business operations; |
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● |
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; |
|
● |
challenges in managing
and staffing international operations; |
|
● |
tax issues, such as tax
law changes and variations in tax laws as compared to the United States; |
|
● |
currency fluctuations and
exchange controls; |
|
● |
challenges in collecting
accounts receivable; |
|
● |
cultural and language differences; |
|
● |
employment regulations; |
|
● |
underdeveloped or unpredictable
legal or regulatory systems; |
|
● |
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 initial business combination, our operations might suffer, either of which may adversely impact our business, financial
condition and results of operations.
An investment in our securities may result
in uncertain or adverse U.S. federal income tax consequences.
An investment in our securities
may result in uncertain U.S. federal income tax consequences. For instance, because there are no authorities that directly address instruments
similar to the units, the allocation an investor makes with respect to the purchase price of a unit between the share of Class A common
stock and the one-fifth of one redeemable warrant included in each unit could be challenged by the IRS or the courts. In addition, if
we are determined to be a personal holding company for U.S. federal income tax purposes our taxable income would be subjected to an additional
20% federal income tax, which would reduce the net after-tax amount of interest income earned on the funds placed in our trust account.
Furthermore, the U.S. federal income tax consequences of a cashless exercise of warrants included in the units and of a redemption of
warrants for Class A common stock are unclear under current law. Finally, it is unclear whether the redemption rights with respect to
our shares suspend the running of a U.S. holder’s holding period for purposes of determining whether any gain or loss realized
by such holder on the sale or exchange of Class A common stock is long-term capital gain or loss and for determining whether any dividend
we pay would be considered “qualified dividends” for federal income tax purposes.