Overview
In
this Annual Report, references to the “Company” and to “we,”
“us,” and “our” refer to Science Strategic Acquisition Corp. Alpha. Share and per share information in the financial statements as of
December 31, 2020 and for the period of October 22, 2020 (inception) through December 31, 2020 included in this Annual Report have been
retrospectively adjusted for the effect of Class B common stock dividend issuance on January 25, 2021.
We are a blank check company incorporated on October 22, 2020 as a
Delaware corporation for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or other
similar business combination with one or more businesses or entities, which we refer to as our initial business combination. While we
may pursue a business combination target in any business or industry, we intend to focus our search for a target business operating in
the direct-to-consumer (“D2C”) brands, D2C services and mobile and social entertainment sectors.
We are mission-driven to create value for innovative companies that
are redefining the consumer technology landscape. We are led by the founders of Science Partners Management, LLC (“Science Partners
Management” or “Science”), a data-driven investment firm focused on investment opportunities driven by shifting consumer
behaviors and the technologies that enable them. We believe our founders’ operational experience and entrepreneurial instincts will
allow us to spot emerging trends, inflection points, and societal shifts that lay the groundwork for disruptive themes across our sectors
of focus, which include:
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D2C Brands;
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D2C Services & Marketplaces;
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Mobile & Social Entertainment
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With
decades of experience investing, developing and scaling disruptive companies, Science has forged deep networks and a best-in-class reputation
across our areas of focus. We believe our founders’ extensive network of relationships within the ecosystem of our target
sectors will provide us with a competitive advantage in sourcing a compelling initial business combination target. In addition, we believe
our founders’ and our board of directors’ expertise across our target sectors, as well as our founders’ experience in
helping to build and accelerate the growth of other companies, will make us an attractive partner for potential business combination targets.
Underpinning this deep sector expertise
and network is a data-focused philosophy that is at the core of Science’s success. Holding true to its name, the firm is maniacally
focused on data and executes a disciplined, scientific framework focused on key metrics that drive growth and long-term value. Collectively
our founders have executed more than $5 billion in exits, which we believe underscores the depth of our founders’ expertise and
the value of our data-driven investment philosophy. Our founders will bring that rigor to us, creating a distinct advantage as we evaluate
potential business combination opportunities and focus on value-enhancing initiatives post-combination to drive the combined company to
its next stage of growth.
Science
Founded in 2011, Science is a venture
fund poised to fuel the next generation of disruptive consumer technology companies. Science identifies entrenched markets and societal
shifts, and invests in disruptive companies with new ideas and highly focused teams in distinct industries: Consumer Brands, Marketplace
Services, and Entertainment. With decades of combined experience and nine years of work together, the Science team includes operators
and investors who have helped build and scale successful companies. Our founders have collectively, including through Science, executed
over $5 billion in exits. A few notable exits include the following:
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Dollar Shave Club: Dollar Shave Club is a subscription-based D2C company focused on providing personal grooming products. The Company was acquired by Unilever in 2016, making it the first D2C company to be acquired for over $1 billion.
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Ring: Ring is a provider of smart-home solutions including connected security devices. Ring was acquired by Amazon for over $1 billion in 2018.
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Maker Studios: Acquired by Disney in 2014 for over $500 million, Maker Studios is a multi-channel network delivering short-form, digital content on YouTube.
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PlutoTV:
Acquired by Viacom for $340 million in 2019, PlutoTV is an ad-supported video streaming service that offers diverse programming
for free.
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DogVacay: DogVacay is an online services marketplace that connects dog owners with providers of dog-boarding services. DogVacay was acquired by Rover in 2017.
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Today, Science’s portfolio includes interests
in notable D2C companies such as Grove Collaborative, Liquid Death, MeUndies, Empirical Spirits, Arrive Outdoors, Wealthfront and Medium,
along with high-growth mobile and social entertainment platforms such as PlayVS, Mammoth Media, Pray and more.
Science is driven by data above all else, a philosophy
which has led to its successful track record. Science’s funds are paired with its Startup Studio, which provides the Science team
with unprecedented data access to underwrite each dollar deployed. Science is uncompromising in its data-driven and unbiased approach
to identifying the next generation of disruptive companies, regardless of founder pedigree or network. As a testament to this distinct
investment philosophy, Science has backed numerous founders of diverse backgrounds. Science’s 2017 fund has deployed 65% of its
capital to minority and under-represented founders, with nearly a quarter of the fund invested in black founders.
Science was founded by Michael Jones, Peter Pham,
Tom Dare and Greg Gilman. Michael Jones is a long-time entrepreneur who founded his first successful Internet company in college and,
since then, has founded, built and sold numerous online, consumer and mobile businesses. Peter Pham has an extensive network in Silicon
Valley with relationships ranging from the largest global conglomerates to the smallest startups. Drawing on the experience and networks
of Michael and Peter, and a dynamic leadership team with complementary abilities, the firm has created a platform that leverages data
to identify investment opportunities, drive growth and improve portfolio company operational performance.
On October 29, 2020, we issued an
aggregate of 6,468,750 shares of our Class B common stock (“founder shares”) for an aggregate purchase price of $25,000,
or approximately $0.004 per share, to SSAC Alpha Sponsor, LLC (“sponsor”), an entity controlled by Science. On January 25,
2021, we effected a stock dividend with respect to our founder shares, of 1,293,750 shares thereof, resulting in our initial stockholders
holding an aggregate of 7,762,500 shares of Class B common stock.
On January 28,
2021, we consummated our IPO of 31,050,000 units (the “Units”), including the issuance of 4,050,000 Units as a result of
the underwriter’s full exercise of its over-allotment option. Each Unit consists of one share of Class A common stock, par value
$0.0001 per share (the “Class A common stock”) and one-third of one redeemable warrant (“warrant”), with each
whole warrant entitling the holder to purchase one share of common stock at a price of $11.50 per share. The Units were sold at an offering
price of $10.00 per Unit, generating gross proceeds of $310,500,000.
Simultaneously
with the closing of the IPO, we completed the private sale of an aggregate of 5,473,333 warrants (the “private placement warrants”)
at a purchase price of $1.50 per private placement warrant, to our sponsor, generating gross proceeds to us of $8,210,000. The private
placement warrants are identical to the warrants sold as part of the Units in the IPO, except that so long as they are held by the sponsor
or its permitted transferees: (1) they will not be redeemable by us (except in certain redemption scenarios when the price per share
of Class A common stock equals or exceeds $10.00 (as adjusted)); (2) they (including the shares of Class A common stock issuable upon
exercise of private placement warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the sponsor
until 30 days after the completion of our initial business combination; (3) they may be exercised by the holders on a cashless basis;
and (4) they (including the shares of Class A common stock issuable upon exercise of the private placement warrants) are entitled to
registration rights.
A total of $310,500,000, comprised of the net proceeds of the IPO and
the sale of the private placement warrants, was placed in a U.S.-based trust account at JP Morgan Chase Bank, N.A., maintained by Continental
Stock Transfer & Trust Company, acting as trustee. Except with respect to interest earned on the funds held in the trust account that
may be released to us to pay our taxes, if any, the funds held in the trust account will not be released from the trust account until
the earliest to occur of: (1) the completion of our initial business combination; (2) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing
of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public shares if we
do not complete our initial business combination within 24 months from the closing of the IPO or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity; and (3) the redemption of our public shares if we
have not completed our initial business combination within 24 months from the closing of the IPO, subject to applicable law.
Our
Market Opportunity
D2C
Brands
We
are focused on identifying businesses within the D2C sector, which we believe is the future of commerce. Digital ubiquity, driven
by the proliferation of mobile devices, has changed the way consumers discover, compare and engage with brands. As consumers become
more discerning and have more information at their fingertips than ever before, they no longer simply default to legacy consumer
brands found in the aisles of brick-and-mortar retail chains. Instead, we believe consumers increasingly look for companies with
which they can have a direct connection, that speak to them and reflect their values. We believe the convergence of these secular
trends will unlock massive opportunities for innovative, nimble D2C brands. We believe companies that capitalize on emerging trends,
create authentic connections with their customers, and provide value-driven offerings are poised to disrupt massive legacy players.
Shifting
drivers of value creation have been demonstrated by companies such as Dollar Shave Club, Bonobos, Everlane, Glossier, Warby Parker
and The Honest Company, among others, that have embraced and prioritized disruptive technology and consumer engagement. Additionally,
we expect that leading emerging consumer brands will take hold of a strategy for omni-channel distribution and growth over time.
D2C
Services & Marketplaces
D2C
services and marketplaces continue to be on the rise, allowing more individuals to provide services to their consumers, from those
in local communities to across the globe. These marketplaces create central, trusted destinations and provide value-added services,
making it easier than ever to complete service transactions, many with increasing value and complexity.
Talent
and skill marketplaces have fueled the gig economy allowing millions to generate or supplement their primary income. Fiverr, the
online marketplace for freelance services, is an example of the sector’s overall success. Post-COVID, we believe these marketplaces
will become more relevant than ever as at-home education and remotely provided health services will become increasingly prevalent
and widely adopted.
Mobile
& Social Entertainment
Mobile
devices have redefined the digital ecosystem and we believe “connected time” will only continue to grow. Ubiquitous
connectivity and increasingly powerful smartphones have changed how we consume content and have changed the way we relate to technology
and, importantly, with each other. We believe companies that tap into the following disruptive trends will become leaders in mobile
and social entertainment in the next decade:
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Micro-community
and social platforms that allow more genuine connections between like-minded individuals;
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Entertainment
and content experiences that grab minutes instead of hours;
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Products
that can satiate micro-entertainment needs with satisfying content and new formats;
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Premium
online services aggregating curated content for specific audiences; and
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Platforms
that utilize mobile devices to increase user happiness and social connection.
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Our
Mission
We
believe the future success of the capital markets for companies in our sectors of focus is dependent on new company formation,
the sustainability of robust private market funding and an increased willingness of private consumer technology companies to become
publicly traded and, therefore, become accessible to a broader universe of investors who can benefit from their disruptive technology,
consumer engagement strategies and growth. Our mission is to create an alternative path to a traditional initial public offering
for disruptive and agile companies to achieve their long-term objectives and overcome key deterrents to becoming public. By leveraging
our extensive operational experience and network, we believe we can provide a number of significant benefits to potential targets
and public market investors that can potentially lead to attractive long-term risk-adjusted returns in the public markets. These
benefits include, but are not limited to, the following:
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Knowledgeable
Investment Partners: With over 50 years of combined experience with large corporations
and investing in and developing high-growth companies, the Science team identifies areas
of opportunistic market expansion in legacy industries that we believe are ripe for disruptive
technologies and the value-added, data-driven approach that our founders have developed.
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Data-Driven
Playbook: Our team is focused on rapidly and thoroughly identifying resilient business
models through the rigorous use of data. The Science team extensively tests its investment
thesis before making any investment with internally-built tools. These tools are applied
to understand and measure key performance indicators and uncover hidden value. We believe
our business acumen combined with our data-driven approach leads us to invest earlier
and smarter.
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Uncovering
Founder Talent and Matching Investment Themes with Our Expertise: Through our reputation
and network, we believe we can attract the next set of disruptive companies and CEOs.
Furthermore, our uncompromising approach towards data-driven, unbiased investing has
led us to uncover talent from all backgrounds. Across Science’s current funds,
we have brought in founders from Detroit, Atlanta, Philadelphia, Nashville, Brazil, France
and beyond, and we invested 65% of our last fund into minority and under-represented
founders.
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Our
Acquisition and Value Creation Strategy
We
intend to source and pursue potential targets that we believe will benefit from our management team’s unique expertise,
which we intend to leverage to augment the value of the business following the completion of the initial business combination.
Science
sources, indexes and tracks over 500 private deals a year in the consumer space across all stages of business evolution, which
we believe will provide us with specialized insight into value creation in the D2C market:
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Science
Studio Intelligence: Our management team has significant hands-on experience helping
D2C companies build, scale and optimize their existing and new growth initiatives by
exploiting insights from high-fidelity data that generally does not exist at the earliest
stages of companies. Science’s internally-built tools are used to understand concept
validation and measured key performance indicators through the lifecycle of a company.
Further, we intend to share best practices and key learnings, gathered from Science’s
operating and investment experience, as well as strong relationships in the consumer
sector, to help shape corporate strategies as consumers shift.
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Network,
Pipeline and Proactive Outreach: Having operated and invested in leading global consumer
companies across their corporate life cycles, our management team has developed deep
relationships with key large multi-national organizations and investors. These relationships,
together with our management team’s expertise, present a significant opportunity
to help drive strategic dialogue, access new customer relationships and achieve success
at all stages of business evolution.
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The
selection and underwriting process for our initial business combination will leverage our team’s relationships with leading
seasoned serial founders, executives of private and public companies, investors and universities, in addition to the extensive
industry and geographical reach of Science’s platforms, which we believe will provide us with a key competitive advantage
in sourcing potential business combination targets. Given our profile and Science’s thematic approach, we anticipate that
target business candidates may be brought to our attention from various unaffiliated sources, in particular founders of, and investors
in, other private and public consumer companies in our networks from more than 25 years of relationships with major consumer digital
and commerce companies.
We
also believe that Science’s reputation, experience and track record of making investments in the consumer industry will
make us a preferred partner for these potential targets.
Consistent
with our strategy, we have identified the following criteria to evaluate prospective target businesses. We believe Science’s
search for a target will be differentiated and targeted on the areas in which our team has expertise in driving business transformations
and creating value for investors: D2C Brands, D2C Services & Marketplaces and Mobile & Social Entertainment. We may, however,
decide to enter into our initial business combination with a target business that does not meet these criteria if we believe such
business presents a compelling investment opportunity and can benefit from our value-add strategy. We intend to seek to acquire
companies that we believe will have the following target entry characteristics:
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Fundamentally
good business in need of transformation;
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Competitive
moat with a strategic reason to exist;
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Opportunity
to drive profitable growth;
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Revenue
visibility, with current or potential for strong free cash flow generation; and
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Opportunity
for strong leadership team to unlock value through operational and/or strategic changes.
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Science
will employ its approach guided by mission-driven founders, strong data metrics, disruptive sectors, shift in consumer behaviors,
location and yield expectations, which may include opportunities for any of the following:
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Organic
and inorganic growth;
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Portfolio
optimization;
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Improved
management discipline and oversight; and
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Focus
on shareholder value.
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We
may use other criteria as well. Any evaluation relating to the merits of a particular initial business combination may be based
on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the
event that we decide to enter into an initial business combination with a target business that does not meet the above criteria,
we will disclose that fact in our shareholder communications related to the acquisition. As discussed elsewhere in this Annual
Report, this would be in the form of proxy solicitation materials that we would file with the SEC or tender offer documents.
Our
Acquisition Process
We have not selected any business combination target. Certain members
of our management team are employed by either Science Partners Management or one of its affiliates. Science Partners Management is continuously
made aware of potential business opportunities, one or more of which we may desire to pursue, for a business combination.
Our search for a business combination,
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 by the recent coronavirus (“COVID-19”) pandemic. See “Item 1A. Risk Factors—Risks
Relating to Our Business and Strategy—Our search for a business combination, and any target business with which we ultimately consummate
a business combination, may be materially adversely affected by the COVID-19 pandemic and other events and the status of debt and
equity markets.”
All of our officers and certain of our directors have fiduciary and
contractual duties to Science Partners Management and to certain companies in which it has invested. These entities may compete with us
for acquisition opportunities. If these entities decide to pursue any such opportunity, we may be precluded from pursuing such opportunities.
Subject to his or her fiduciary duties under Delaware law, none of the members of our management team who are also employed by our sponsor
or its affiliates have any obligation to present us with any opportunity for a potential business combination of which they become aware.
Our management team, in their capacities as directors, officers or employees of our sponsor or its affiliates or in their other endeavors,
may choose to present potential business combinations to the related entities described above, current or future entities affiliated with
or managed by our sponsor, or third parties, before they present such opportunities to us, subject to his or her fiduciary duties under
Delaware law and any other applicable fiduciary duties. Our amended and restated certificate of incorporation provides that we renounce
our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person
solely in his or her capacity as a director or officer of the Company and it is an opportunity that we are able to complete on a reasonable
basis. For more information, see the section entitled “Item 10. Directors, Executive Officers and Corporate Governance—Conflicts
of Interest.”
Our directors and officers presently
have, 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. Accordingly, if any of our directors
or officers becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations, he or she may need to honor these fiduciary or contractual obligations to present such business combination
opportunity to such entity, subject to his or her fiduciary duties under Delaware law. Our directors and officers are also not required
to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management time
among various business activities, including identifying potential business combinations and monitoring the related due diligence. See
“Item 1A. Risk Factors—Risks Related to Our Organization and Structure—Certain of our directors and officers are now,
and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted
by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.”
We
do not believe, however, that the fiduciary duties or contractual obligations of our directors or officers will materially adversely
affect our ability to identify and pursue business combination opportunities or complete our initial business combination.
You should not rely on the historical record of our founders’
and management’s performance as indicative of our future performance. See “Item 1A. Risk Factors—Risks Relating to Our
Business and Strategy—Past performance by our management team and their respective affiliates may not be indicative of future performance
of an investment in the company.”
Initial Business Combination
Nasdaq rules require that
our initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80%
of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding
the amount of any deferred underwriting discount held in trust). We refer to this as the 80% of net assets test. If our board of directors
is not able independently to determine the fair market value of the target business or businesses, we will obtain an opinion from an independent
investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such
criteria. Although we may purchase multiple businesses in related industries in connection with our initial business combination, we do
not currently intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although
there is no assurance that will be the case.
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 issued and outstanding equity interests or assets of the target business or businesses. We may, however, structure our initial
business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target
business in order to meet certain objectives of the target management team or stockholders or for other reasons, but we will only complete
such business combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities
of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as
an investment company under the Investment Company Act of 1940, as amended (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 our initial business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in our
initial business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares
in exchange for all of the issued and outstanding capital stock, shares or other equity securities of a target, or issue a substantial
number of new shares to third-parties in connection with financing our initial business combination. 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 issued and outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued
for purposes of the 80% of net assets test. If our initial business combination involves more than one target business, the 80% of net
assets test will be based on the aggregate value of all of the target businesses. Notwithstanding the foregoing, if we are not then listed
on Nasdaq for whatever reason, we would no longer be required to meet the foregoing 80% of net assets test.
Sourcing
of Potential Business Combination Targets
We
believe our management team’s significant operating and transaction experience and relationships with companies will provide
us with a substantial number of potential business combination targets. Over the course of their careers, the members of our management
team have developed a broad network of contacts and corporate relationships around the world. This network has grown through the
activities of our management team sourcing, acquiring, financing and selling businesses, our management team’s relationships
with sellers, financing sources and target management teams and the experience of our management team in executing transactions
under varying economic and financial market conditions.
In
addition, members of our management team have developed contacts from serving on the boards of directors of several companies,
including Blip Technologies, Biite, Coozie Outdoors, Inc., DogDrop, Inc., Springrole, Inc., Hello Me, ICO Watchdog, Inc. and Zen
App, Inc.
We
believe this network provides our management team with a robust and consistent flow of acquisition opportunities which were proprietary
or where a limited group of investors were invited to participate in the sale process. We believe that the network of contacts
and relationships of our management team will provide us with important sources 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 funds and large business enterprises seeking to divest non-core assets or divisions.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, directors
or officers, or making the acquisition through a joint venture or other form of shared ownership with our sponsor, directors or
officers. In the event we seek to complete an initial business combination with a target that is affiliated with our sponsor,
directors or officers, we, or a committee of independent and disinterested directors, would obtain an opinion from an independent
investment banking firm or another valuation or appraisal firm that regularly renders fairness opinions on the type of target
business we are seeking to acquire 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.
As more fully discussed in “Item 10. Directors, Executive Officers
and Corporate Governance—Conflicts of Interest,” if any of our directors or 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,
including Science Partners Management, he or she may be required to present such business combination opportunity to such entity prior
to presenting such business combination opportunity to us. Our directors and officers currently have fiduciary duties or contractual obligations
that may take priority over their duties to us.
Financial Position
With funds available for a business combination initially in the amount
of $299,632,500 assuming no redemptions and after payment of up to $10,867,500 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.
Effecting
Our Initial Business Combination
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 our IPO and the sale of the private placement
warrants, our shares, debt or a combination of these as the consideration to be paid in our initial business combination. 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, 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 the redemptions of our public shares,
we may apply the balance of the cash released to us from the trust account for general corporate purposes, including for maintenance
or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness incurred
in completing our initial business combination, to fund the purchase of other companies or for working capital.
We have not selected any business combination target.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account.
In
the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents
or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by law
or we decide to do so for business or other reasons, we would seek stockholder approval of such financing. There are no prohibitions
on our ability to raise funds privately or through loans in connection with our initial business combination. At this time, we
are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through
the sale of securities or otherwise.
Selection of a target business and structuring
of our initial business combination.
Nasdaq rules require that
our initial business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80%
of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding
the amount of any deferred underwriting discount held in trust). We refer to this as the 80% of net assets test. The fair market value
of the target or targets will be determined by our board of directors based upon one or more standards generally accepted by the financial
community, such as discounted cash flow valuation or value of comparable businesses. If our board of directors is not able independently
to determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking
firm, or another independent entity that commonly renders valuation opinions, with respect to the satisfaction of such criteria. Although
we may purchase multiple businesses in related industries in connection with our initial business combination, we do not currently intend
to purchase multiple businesses in unrelated industries in conjunction with our initial business combination, although there is no assurance
that will be the case. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting
one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination solely with
another blank check company or a similar company with nominal operations.
In any case, we will only
complete an initial business combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting
securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register
as an investment company under the Investment Company Act. If less than 100% of the equity interests or assets of a target business or
businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired
is what will be valued for purposes of the 80% of net assets test. There is no basis for investors to evaluate the possible merits or
risks of any target business with which we may ultimately complete our initial business combination.
To the extent we effect
our initial business combination with a company or business that may be financially unstable or in its early stages of development or
growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the
risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective
target business, we expect to conduct a thorough due diligence review which may encompass, among other things, meetings with incumbent
management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information,
which will be made available to us.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses
and will reduce the funds we can use to complete another business combination.
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 subject us to numerous economic,
competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading
of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations
in different industries or different areas of a single industry.
Accordingly,
the prospects of our success may be:
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solely
dependent upon the performance of a single business, property or asset; or
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dependent
upon the development or market acceptance of a single or limited number of products,
processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
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. 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
our initial 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. However, we will seek stockholder
approval if it is required by applicable law or stock exchange rule, or we may decide to seek stockholder approval for business
or other 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
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Whether
Stockholder
Approval is
Required
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Purchase
of assets
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No
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Purchase
of stock of target not involving a merger with the company
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No
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Merger
of target into a subsidiary of the company
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No
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Merger
of the company with a target
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Yes
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Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue (other than in a public offering for cash) shares of common stock that will either
(a) be equal to or in excess of 20% of the number of shares of our Class A common stock
then issued and outstanding (other than in a public offering);
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any
of our directors, officers or substantial security holders (as defined by the rules of
Nasdaq) has a 5% or greater interest, directly or indirectly, in the target business
or assets to be acquired and if the number of shares of common stock to be issued, or
if the number of shares of common stock into which the securities may be convertible
or exercisable, exceeds either (a) 1% of the number of shares of common stock or 1% of
the voting power outstanding before the issuance in the case of any of our directors
and officers or (b) 5% of the number of shares of common stock or 5% of the voting power
issued and outstanding before the issuance in the case of any substantial security holders;
or
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the
issuance or potential issuance of shares of common stock will result in our undergoing
a change of control.
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The
decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder
approval is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons,
which include a variety of factors, including, but not limited to:
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the
timing of the transaction, including in the event we determine stockholder approval would
require additional time and there is either not enough time to seek stockholder approval
or doing so would place the company at a disadvantage in the transaction or result in
other additional burdens on the company;
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the
expected cost of holding a stockholder vote;
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the
risk that the stockholders would fail to approve the proposed business combination;
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other
time and budget constraints of the company; and
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additional
legal complexities of a proposed business combination that would be time-consuming and
burdensome to present to stockholders.
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Permitted
Purchases and Other Transactions with Respect to Our Securities
In the event we seek stockholder approval of our initial business combination
and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, our sponsor,
directors, officers, advisors or any of their respective affiliates may purchase public shares or 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 securities such persons may purchase. Additionally, at any time at or prior to our initial business combination, subject to applicable
securities laws (including with respect to material nonpublic information), our sponsor, directors, officers, advisors or any of their
respective affiliates may enter into transactions with investors and others to provide them with incentives to acquire public shares,
vote their public shares in favor of our initial business combination or not redeem their public shares. 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 held in the trust account will be used to purchase public shares or warrants in such transactions. Such persons will
be subject to restrictions in making any such purchases when they are in possession of any material non-public information or if such
purchases are prohibited by Regulation M under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such
a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares, is no longer
the beneficial owner thereof and therefore agrees not to exercise its redemption rights. We have adopted an insider trading policy which
requires insiders to (1) refrain from purchasing securities during certain blackout periods and when they are in possession of any material
non-public information and (2) clear certain trades prior to execution. We cannot currently determine whether our insiders will make such
purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon several factors, including but not limited to, the timing and size
of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine
that such a plan is not necessary.
In
the event that our sponsor, directors, officers, advisors or any of their respective affiliates purchase shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote
against our initial business combination, such selling stockholders would be required to revoke their prior elections to redeem
their shares and any proxy to vote against our initial business combination. 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 be required to comply with such rules.
The
purpose of such transaction could be to (1) vote in favor of our initial business combination and thereby increase the likelihood
of obtaining stockholder approval of our initial business combination, (2) reduce the number of public warrants outstanding or
vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination
or (3) satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount
of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met.
This may result in the completion of our initial business combination that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our securities and the number of beneficial holders of
our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities
on a national securities exchange.
Our
sponsor, directors, officers, advisors and/or any of their respective affiliates anticipate that they may identify the stockholders
with whom our sponsor, directors, officers, advisors or any of their respective affiliates may pursue privately negotiated transactions
by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders (in the case
of public shares) following our mailing of tender offer or proxy materials in connection with our initial business combination.
To the extent that our sponsor, directors, officers, advisors or any of their respective affiliates enter into private transactions,
they would identify and contact only potential selling or redeeming 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. Such persons would select the
stockholders from whom to acquire shares based on the number of shares available, the negotiated price per share and such other
factors as any such person may deem relevant at the time of purchase. The price per share paid in any such transaction may be
different than the amount per share a public stockholder would receive if it elected to redeem its shares in connection with our
initial business combination. Our sponsor, directors, officers, advisors or any of their respective affiliates are restricted
from purchasing shares if such purchases do not comply with Regulation M under the Exchange Act and the other federal securities
laws.
Any purchases by our sponsor, directors, officers and/or any of their
respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act are restricted unless such purchases are
made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the
Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order for the safe harbor to be available to
the purchaser. Our sponsor, directors, officers and/or any of their respective affiliates are restricted from making purchases of shares
of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
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 public shares 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
(which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, subject to
the limitations described herein. At the completion of our initial business combination, we will be required to purchase any shares
of common stock properly delivered for redemption and not withdrawn. 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 underwriter. The redemption rights will include the requirement
that a beneficial holder must identify itself in order to validly redeem its shares. There will be no redemption rights upon the
completion of our initial business combination with respect to our warrants. Our initial stockholders, directors and officers
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 held by them in connection with the completion of our initial business combination.
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination
either (1) in connection with a general meeting called to approve the business combination or (2) by means of a tender offer. The decision
as to whether we will seek stockholder approval of a proposed 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 requirement. 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 issued and outstanding shares of common stock or seek to amend our amended and restated certificate
of incorporation would typically require stockholder approval. We intend to conduct redemptions without a stockholder vote pursuant to
the tender offer rules of the SEC unless stockholder approval is required by applicable law or stock exchange listing requirement or we
choose to seek stockholder approval for business or other reasons.
If a stockholder vote
is not required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated
certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement
of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, we and our sponsor will terminate
any plan established in accordance with Rule 10b5-1 to purchase our shares of common stock in the open market, in order to comply with
Rule 14 e-5 under the Exchange Act.
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 following such redemptions, or any greater net tangible asset or cash requirement that
may be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have
offered to purchase, we will withdraw the tender offer and not complete such initial business combination.
If, however, stockholder
approval of the transaction is required by applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval
for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and
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file proxy materials with the SEC.
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We expect that a final
proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft
proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if
we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply
with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able to
maintain our Nasdaq listing or Exchange Act registration.
In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public stockholders with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder
approval, unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial business combination
only if a majority of the shares of our common stock voted are voted in favor of our 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. Shares held by our initial
stockholders, officers and directors will be included in determining the presence of a quorum and have agreed to vote any founder shares
and any public shares held by them in favor of our initial business combination. These quorum and voting thresholds and agreements, may
make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares
without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. In addition, our sponsor,
officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights
with respect to any founder shares and any public shares held by them in connection with the completion of a business combination.
Our amended and restated
certificate of incorporation provides 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 following such redemptions. Redemptions of our public shares may also be subject to a higher net tangible
asset test or cash requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business
combination may require: (1) cash consideration to be paid to the target or its owners; (2) cash to be transferred to the target for working
capital or other general corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with the terms of
the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all public shares 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, and
all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate
business combination.
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 redeeming its shares with respect to more than an aggregate of 15% of the shares sold in our IPO, which we refer to as the “Excess
Shares,” without our prior consent. 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 sponsor or its affiliates to purchase their shares at a significant premium to the then-current market price
or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in
our IPO could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our sponsor or its affiliates
at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no
more than 15% of the shares sold in our IPO, 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.
Tendering stock certificates in connection with a tender offer or
redemption rights
We may require our public stockholders seeking
to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender
their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such holders,
or up to two business days prior to the scheduled vote on the proposal to approve the business combination in the event we distribute
proxy materials, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, rather than simply voting against the initial business combination. The tender offer or proxy materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are
requiring public stockholders to satisfy such delivery requirements, which will include the requirement that a beneficial holder must
identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the time we send out our tender
offer materials until the close of the tender offer period, or up to two business days prior to the scheduled vote on the business combination
if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Pursuant
to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case of a stockholder vote, a final
proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft
proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if
we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise period, it is advisable for stockholders
to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced
tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically
charge the tendering broker 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 tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such
delivery must be effectuated.
The foregoing is different from the procedures
used by some blank check companies. In order to perfect redemption rights in connection with their business combinations, some blank check
companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply
vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her
redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him or her to
deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion
of the business combination during which he or she could monitor the price of the company’s shares in the market. If the price rose
above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to
the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the general
meeting, would become “option” rights surviving past the completion of the business combination until the redeeming holder
delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any request to redeem such shares, once made, may
be withdrawn at any time up to the date set forth in the tender offer materials or two business days prior to the scheduled date of the
general meeting set forth in our proxy materials, as applicable (unless we elect to allow additional withdrawal rights). Furthermore,
if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior
to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate
(physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem
their shares will be distributed promptly after the completion of our initial business combination.
If our initial 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.
If our initial proposed business combination is
not completed, we may continue to try to complete a business combination with a different target until 24 months from the closing of our
IPO or during any extended time that we have to consummate a business combination beyond 24 months as a result of a stockholder vote to
amend our certificate of incorporation (an “Extension Period”).
Redemption
of Public Shares and Liquidation if No Initial Business Combination
Our sponsor, directors
and officers have agreed that we will have only 24 months from the closing of the IPO to complete our initial business combination. If
we have not completed our initial business combination within such 24-month period or during any Extension Period, we will: (1) cease
all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the
number of then issued and outstanding public shares, which redemption will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidating distributions, if any); and (3) 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 or during any Extension Period.
Our
initial stockholders 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 their founder shares if we fail to complete our initial business combination
within 24 months from the closing of the IPO or during any Extension Period. However, if our initial stockholders acquire public
shares, 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
sponsor, directors and officers have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination within 24 months from the closing of the IPO or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem
their shares of our 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 (which interest shall be net of taxes payable), divided
by the number of then issued and 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 following such redemptions.
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 $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 IPO 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, 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. 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 (other than our independent auditors), 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 perform an analysis of the alternatives available to it and will enter into an
agreement with a third party that has not executed a waiver only if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third
party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or
in cases where we are 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 have not completed our initial business combination within the required time period, 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. Our sponsor has agreed that it will be
liable to us if and to the extent any claims by a third party (other than our independent auditors) for services rendered or products
sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount
of funds in the trust account to below (1) $10.00 per public share or (2) 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 which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver
of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriter of
the IPO against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). In the event that an executed waiver is deemed
to be unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third-party
claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe
that our sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those
obligations. None of our other officers 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 (1) $10.00 per public share or (2) 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 which may be withdrawn to pay taxes, 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 substantially 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 (other than our independent auditors), 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 monies held
in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriter of the IPO against
certain liabilities, including liabilities under the Securities Act. We will have access to up to $1,000,000 from the proceeds
of the IPO and the sale of the private placement warrants, 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 Delaware General Corporation Law (the “DGCL”), stockholders may be held liable for claims by third parties against
a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed
to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination
within 24 months of the closing of our IPO 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 of the closing of our IPO, is not considered a
liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section
174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution,
instead of three years, as in the case of a liquidating distribution. If we are unable to complete our initial business combination
within 24 months of the closing of our IPO, we will: (1) cease all operations except for the purpose of winding up; (2) 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 (net of permitted withdrawals
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), subject to applicable law; and (3) 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 will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent ten years. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained
in our underwriting agreement, we will seek to have all vendors, service providers (other than our independent registered public
accounting firm), 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:
(1) $10.00 per public share; or (2) 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 value of the trust assets, in each case net of permitted
withdrawals and will not be liable as to any claims under our indemnity of the underwriters of our IPO against certain liabilities,
including liabilities under the Securities Act.
If
we file a winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against us that is not
dismissed, the proceeds held in the trust account could be subject to applicable insolvency law, and may be included in our insolvency
estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any insolvency
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 winding-up or bankruptcy petition or an involuntary winding-up or bankruptcy petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or insolvency
laws as a voidable performance. 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 upon the earliest to occur of: (1) our completion
of an initial business combination, and then only in connection with those shares of our Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein; (2) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public
shares if we do not complete our initial business combination within 24 months from the closing of our IPO or (B) with respect
to any other provision relating to stockholders’ rights or pre-initial business combination activity; and (3) the redemption
of our public shares if we have not completed an initial business combination within 24 months from the closing of our IPO, subject
to applicable law. In no other circumstances will a stockholder have any right or interest of any kind to or 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.
Amended and Restated Certificate of Incorporation
Our amended and restated
certificate of incorporation contains certain requirements and restrictions relating to our IPO that apply to us until the consummation
of our initial business combination. Our amended and restated certificate of incorporation contains a provision which provides that, if
we seek to amend our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow
redemption in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial
business combination within 24 months from the closing our IPO or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, we will provide public stockholders with the opportunity to redeem their public shares
in connection with any such amendment. Specifically, our amended and restated certificate of incorporation provides, among other things,
that:
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prior to the consummation of our initial business combination, we shall either: (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against, or abstain from voting on, the proposed business combination, into their pro rata share of the aggregate amount on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (net of permitted withdrawals); or (2) provide our public stockholders with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount on deposit in the trust account as of two business days prior to the consummation of our initial business combination, including interest (net of permitted withdrawals), in each case subject to the limitations described herein;
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we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority of the shares of common stock voted are voted in favor of our initial business combination at a duly held stockholders meeting;
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if our initial business combination is not consummated within 24 months from the closing of our IPO, then our existence will terminate and we will distribute all amounts in the trust account; and
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prior to our initial business combination, we may not issue additional shares of common stock that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote as a class with our public shares on any initial business combination.
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These provisions cannot
be amended without the approval of holders of at least two-thirds of our shares of common stock who attend and vote in a general meeting.
In the event we seek stockholder approval in connection with our initial business combination, our amended and restated certificate of
incorporation provides that we may consummate our initial business combination only if approved by a majority of the shares of common
stock voted by our stockholders at a duly held general meeting.
Additionally, our amended
and restated certificate of incorporation provides that, prior to our initial business combination, only holders of our founder shares
will have the right to vote on the appointment of directors and that holders of a majority of our founder shares may remove a member of
the board of directors for any reason. These provisions of our amended and restated certificate of incorporation may only be amended by
a majority of at least 90% of our shares of common stock attending and voting in a general meeting. With respect to any other matter submitted
to a vote of our stockholders, including any vote in connection with our initial business combination, except as required by applicable
law or stock exchange rule, holders of our founder shares and holders of our public shares will vote together as a single class, with
each share entitling the holder to one vote.
Competition
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international,
competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have
extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess greater technical, human and other resources or more industry
knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors.
While we believe there are numerous target businesses we could potentially acquire with the net proceeds of our IPO and the sale
of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are
sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in
pursuing the acquisition of certain target businesses. Furthermore, in the event we seek stockholder approval of our initial business
combination and we are obligated to pay cash for shares of our Class A common stock, it will potentially 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 have not completed our initial business combination within the required time period,
our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation
of our trust account and our warrants will expire worthless.
Conflicts
of Interest
All of our officers and
certain of our directors have fiduciary and contractual duties to Science Partners Management and to certain companies in which it has
invested. These entities may compete with us for acquisition opportunities. If these entities decide to pursue any such opportunity, we
may be precluded from pursuing such opportunities. Subject to his or her fiduciary duties under Delaware law, none of the members of our
management team who are also employed by our sponsor or its affiliates have any obligation to present us with any opportunity for a potential
business combination of which they become aware. Our sponsor and directors and officers are also not prohibited from sponsoring, investing
or otherwise becoming involved with, any other blank check companies, including in connection with their initial business combinations,
prior to us completing our initial business combination. In particular, each of our officers, Mr. Gilman and Ms. Taylor are actively engaged
in Science Strategic Acquisition Corp. Bravo (“SSACB”) and Science Strategic Acquisition Corp. Charlie (“SSACC”),
special purpose acquisition companies that are currently in registration with the SEC. SSACB and SSACC, like us, intend to pursue an initial
business combination with a company in the D2C brands, D2C services or mobile and social entertainment sectors, but may pursue initial
business combination targets in any businesses or industries. SSACB’s and SSACC’s timeline to do so is dependent on the successful
completion of their initial public offerings. Our management team, in their capacities as directors, officers or employees of our sponsor
or its affiliates or in their other endeavors, may choose to present potential business combinations to the related entities described
above, current or future entities affiliated with or managed by our sponsor, or third parties, before they present such opportunities
to us, subject to his or her fiduciary duties under Delaware law and any other applicable fiduciary duties. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of the company and it is an opportunity that
we are able to complete on a reasonable basis. For more information, see the section entitled “Item 10. Directors, Executive Officers
and Corporate Governance—Conflicts of Interest.”
Our directors and officers
presently have, 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. Accordingly, if any
of our directors or officers becomes aware of a business combination opportunity that is suitable for an entity to which he or she has
then-current fiduciary or contractual obligations, he or she may need to honor these fiduciary or contractual obligations to present such
business combination opportunity to such entity, subject to his or her fiduciary duties under Delaware law. See “Item 1A. Risk Factors—Risks
Related to Our Organization and Structure—Certain of our directors and officers are now, and all of them may in the future become,
affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts
of interest in determining to which entity a particular business opportunity should be presented.”
We
do not believe, however, that the fiduciary duties or contractual obligations of our directors or officers will materially adversely
affect our ability to identify and pursue business combination opportunities or complete our initial business combination.
Indemnity
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors)
for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below (1) $10.00 per public share or (2) 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 the value of
the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party
who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity
of the underwriter of our IPO against certain liabilities, including liabilities under the Securities Act. Moreover, 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. We have not independently verified whether our sponsor has sufficient funds to satisfy
their indemnity obligations and believe that our sponsor’s only assets are securities of our company and, therefore, our
sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such obligations.
Employees
We
currently have five officers and do not intend to have any full-time employees prior to the completion of our initial business
combination. Members of our management team are not obligated to devote any specific number of hours to our matters but they intend
to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination.
The amount of time that any such person will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the current stage of the business combination process.
Periodic Reporting and Financial Information
We have registered our Units, shares of our Class
A common stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly
and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements
audited and reported on by our independent registered public auditors.
We will provide stockholders with audited financial
statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders
to assist them in assessing the target business. These financial statements may be required to be prepared in accordance with, or be reconciled
to, U.S. GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance
with PCAOB standards. 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 financial statements in accordance with
federal proxy rules and complete our initial business combination within the prescribed time frame. While this may limit the pool of potential
business combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control
procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company,
will we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over
financial reporting. 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 acquisition.
Corporate
Information
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 (the “JOBS Act”).
As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are
deemed to be a large accelerated filer, which means the market value of our shares of common stock that is held by non-affiliates
exceeds $700 million as of the end of that year’s second fiscal quarter, and (2) the date on which we have issued more than
$1.00 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth
company” will have the meaning associated with it in the JOBS Act.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of
our shares of common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter,
or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our shares of common
stock held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter.
We
are a Delaware corporation incorporated on October 22, 2020. Our executive offices are located at 1447 2nd St, Santa Monica, CA
90401 and our telephone number is (310) 393-3024. Our corporate website address is www.science-inc.com/SSAA. Our website and the
information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is
not considered part of, this Annual Report. You should not rely on any such information in making your decision whether to invest
in our securities.
We are a newly incorporated company
that has conducted no operations and has generated no revenues. Until we complete our initial business combination, we will have no operations
and will generate no operating revenues.
Investing
in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below
and the other information contained in this Annual Report before deciding whether to invest in our common stock.
The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations
and prospects. As a result, the market price of our common stock could decline, and you may lose all or part of your investment.
RISKS
RELATING TO OUR BUSINESS AND STRATEGY
We
have no operating history and, accordingly you have no basis on which to evaluate our ability to achieve our business objective.
We are a recently formed company with
no operating results, and we will not commence operations until completing our initial business combination. Because we lack an operating
history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination
with one or more target businesses. We have no plans, arrangements or understandings with any prospective target business concerning a
business combination and may be unable to complete our business combination. If we fail to complete our business combination, we will
never generate any operating revenues.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete
our initial business combination even though a majority of our public stockholders do not support such a combination.
We may not hold a stockholder vote to
approve our initial business combination unless the business combination would require stockholder approval under applicable law or stock
exchange rules or if we decide to hold a stockholder vote for business or other reasons. For instance, Nasdaq rules currently allow us
to engage in a tender offer in lieu of a general meeting, but would still require us to obtain stockholder approval if we were seeking
to issue more than 20% of our issued and outstanding shares to a target business as consideration in any business combination. Therefore,
if we were structuring a business combination that required us to issue more than 20% of our issued and outstanding shares, we would seek
stockholder approval of such business combination. However, except as required by applicable law or stock exchange rules, the decision
as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to
us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the
transaction and whether the terms of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may consummate
our initial business combination even if holders of a majority of the issued and outstanding shares of common stock do not approve of
the business combination we consummate. Please see the section entitled “Item 1. Business—Effecting Our Initial Business Combination—Stockholders
may not have the ability to approve our initial business combination.”
If
we seek stockholder approval of our initial business combination, our initial stockholders, directors and officers have agreed
to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Unlike
some other blank check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority
of the votes cast by the public stockholders in connection with an initial business combination, our initial stockholders, directors
and officers have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into
with us, to vote their founder shares and any public shares held by them in favor of our initial business combination. As a result,
in addition to the founder shares, we would need 11,643,751, or 37.5% (assuming all issued and outstanding shares are voted),
or 1,940,626, or 6.25% (assuming only the minimum number of shares representing a quorum are voted), of the 31,050,000 public
shares sold in our IPO to be voted in favor of an initial business combination in order to have such initial business combination
approved. Our directors and officers have also entered into the letter agreement, imposing similar obligations on them with respect
to public shares acquired by them, if any. We expect that our initial stockholders and their permitted transferees will own at
least 20% of the issued and outstanding shares of our common stock at the time of any such stockholder vote. Accordingly, if we
seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder approval will
be received than would be the case if such persons agreed to vote their founder shares in accordance with the majority of the
votes cast by our public stockholders.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of such business combination.
You will not be provided with an opportunity
to evaluate the specific merits or risks of any target businesses. Additionally, since our board of directors may complete a business
combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the business combination,
unless we seek such stockholder approval. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the investment
decision regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which
will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our
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 a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
The amount of the deferred underwriting commissions payable to the underwriter will not be adjusted for any shares that are redeemed
in connection with a business combination and such amount of deferred underwriting discount is not available for us to use as
consideration in an initial business combination. If we are able to consummate an initial business combination, the per-share
value of shares held by non-redeeming stockholders will reflect our obligation to pay and the payment of the deferred underwriting
commissions. 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 following such redemptions, or any greater net tangible asset or cash requirement that may be contained
in the agreement relating to our initial business combination. Consequently, if accepting all properly submitted redemption requests
would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for
an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
a business combination transaction with us.
The
ability of our public 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, we will need to structure the transaction based on our expectations as to the number of
shares that will be submitted for redemption. If our 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. The above considerations
may limit our ability to complete the most desirable business combination available to us or optimize our capital structure.
The
requirement that we complete our initial business combination within the prescribed time frame 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 our IPO. 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 end of the 24-month period. 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 COVID-19 pandemic and
other events and the status of debt and equity markets.
The
COVID-19 pandemic has adversely affected, and other events (such as terrorist attacks, natural disasters or a significant outbreak
of other infectious diseases) could adversely affect, economies and financial markets worldwide, business operations and the conduct of
commerce generally, and the business of any potential target business with which we consummate a business combination could be, or may
already have been, materially and adversely affected. Furthermore, we may be unable to complete a business combination if concerns relating
to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors or limit the ability to conduct due
diligence, 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 events (such as terrorist attacks,
natural disasters or a significant outbreak of other infectious diseases) 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 (such as terrorist attacks, natural disasters or a significant outbreak of other infectious
diseases), including as a result of increased market volatility and decreased market liquidity and third-party financing being
unavailable on terms acceptable to us or at all.
Finally, the COVID-19 pandemic may also
have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related to
the market for our securities and cross-border transactions.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public
stockholders may receive only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire
worthless.
Our sponsor, directors and officers have
agreed that we must complete our initial business combination within 24 months from the closing of our IPO. We may not be able to find
a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial
business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the other
risks described herein, including as a result of terrorist attacks, natural disasters or a significant outbreak of infectious diseases.
For example, the COVID-19 pandemic continues to grow both in the U.S. 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 and other events (such as terrorist attacks, natural disasters or a significant outbreak of other
infectious diseases) may negatively impact businesses we may seek to acquire.
If we have not completed our initial
business combination within such time period or during any Extension Period, we will: (1) cease all operations except for the purpose
of winding up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of
interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number of then issued and outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any); and (3) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may receive
only $10.00 per share, or less than $10.00 per share, on the redemption of their shares, and our warrants will expire worthless. See “—If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received
by stockholders may be less than $10.00 per share” and other risk factors herein.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or any of their respective
affiliates may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed business
combination and reduce the public “float” 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, directors, officers, advisors or any of their respective affiliates may purchase public shares or warrants in
privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination.
Any such price per share may be different than the amount per share a public stockholder would receive if it elected to redeem its shares
in connection with our initial business combination. Additionally, at any time at or prior to our initial business combination, subject
to applicable securities laws (including with respect to material nonpublic information), our sponsor, directors, officers, advisors or
any of their respective affiliates may enter into transactions with investors and others to provide them with incentives to acquire public
shares, vote their public shares in favor of our initial business combination or not redeem their public shares. However, our sponsor,
directors, officers, advisors or any of their respective affiliates are under no obligation or duty to do so and 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.
See “Item 1. Business—Permitted purchases and other transactions with respect to our securities” for a description of
how our sponsor, directors, officers, advisors or any of their respective affiliates will select which stockholders to enter into private
transactions with. The purpose of such purchases could be to vote such shares in favor of our initial business combination and thereby
increase the likelihood of obtaining stockholder approval of our initial business combination or to satisfy a closing condition in an
agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business
combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could
be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval
in connection with our initial business combination. This may result in the completion of our initial business combination that may not
otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our securities and the number of beneficial holders of
our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities
on a national securities exchange.
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 have not completed our initial business combination within the required
time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on our
redemption of their shares, and our warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, 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 greater technical, human and other resources 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 our IPO and the sale
of the private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are
sizable will be limited by our available financial resources. This inherent competitive limitation gives others an advantage in
pursuing the acquisition of certain target businesses. Furthermore, in the event we seek stockholder approval of our initial business
combination and we are obligated to pay cash for shares of our Class A common stock, it will potentially 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 our initial business combination. If we have not completed our initial business combination within the required time
period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation
of our trust account and our warrants will expire worthless. See “—If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00
per share” and other risk factors herein.
As the number of special purpose acquisition companies increases,
there may be more competition to find an attractive target for an initial business combination. This could increase the costs associated
with completing our initial business combination and may result in our inability to find a suitable target for our initial business combination.
In recent years, the number of special purpose
acquisition companies that have been formed has increased substantially. Many companies have entered into business combinations with special
purpose acquisition companies, and there are still many special purpose acquisition companies seeking targets for their initial business
combination, as well as many additional special purpose acquisition companies currently in registration. As a result, at times, fewer
attractive targets may be available, and it may require more time, effort and resources to identify a suitable target for an initial business
combination.
In addition, because there are more special purpose acquisition companies
seeking to enter into an initial business combination with available targets, the competition for available targets with attractive fundamentals
or business models may increase, which could cause target companies to demand improved financial terms. Attractive deals could also become
scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions or increases in the cost of additional
capital needed to close business combinations or operate targets post-business combination. This could increase the cost of, delay or
otherwise complicate or frustrate our ability to find a suitable target for and/or complete our initial business combination.
If
the funds not being held in the trust account are insufficient to allow us to operate for at least the 24 months following the
closing of our IPO, we may be unable to complete our initial business combination.
The funds available to us outside of
the trust account may not be sufficient to allow us to operate for at least the 24 months following the closing of our IPO, assuming that
our initial business combination is not completed during that time. We expect to incur significant costs in pursuit of our acquisition
plans. Management’s plans to address this need for capital through our IPO and potential loans from certain of our affiliates are
discussed in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
However, our affiliates are not obligated to make loans to us in the future, and we may not be able to raise additional financing from
unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively impact the analysis regarding our ability
to continue as a going concern at such time.
Of the funds available to us, we could use a portion of the funds available
to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down
payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping”
around for transactions with other companies 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 where we
paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result
of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a
target business. If we have not completed our initial business combination within the required time period, our public stockholders may
receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust account and our warrants
will expire worthless. See “—If third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If
the net proceeds of our IPO and the sale of the private placement warrants not being held in the trust account are insufficient,
it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination
and we may depend on loans from our sponsor or management team to fund our search, to pay our taxes and to complete our initial
business combination.
Of
the net proceeds of our IPO and the sale of the private placement warrants, only approximately $1,000,000 are available to us
initially outside the trust account to fund our working capital requirements. If we are required to seek additional capital, we
would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate.
Neither our sponsor, members of our management team nor any of their respective affiliates is under any obligation to loan funds
to, or otherwise invest in, us in such circumstances. Any such loans may be repaid only from funds held outside the trust account
or from funds released to us upon completion of our initial business combination. If we have not completed our initial business
combination within the required time period because we do not have sufficient funds available to us, we will be forced to cease
operations and liquidate the trust account. In such case, our public stockholders may receive only $10.00 per share, or less in
certain circumstances, and our warrants will expire worthless. See “—If third parties bring claims against us, the
proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors herein.
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 post-combination debt financing. Accordingly,
any stockholder or warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business
combination could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have
a remedy for such reduction in value.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities; each of which may make it difficult for us to complete
our initial business combination.
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In
addition, we may have imposed upon us burdensome requirements, including:
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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 currently not subject to.
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We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the
trust account may be invested by the trustee only in U.S. government treasury bills with a maturity of 185 days or less or in
money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company
Act. Because the investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements
for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment
Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted
funds and may hinder our ability to complete a business combination. If we have not completed our initial business combination
within the required time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances,
on the liquidation of our trust account and our warrants 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.
Because
we are not limited to a particular industry or 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.
Although we expect to focus our search
for a target business in the D2C brands, D2C -services and mobile and social entertainment sectors, we may seek to complete a business
combination with an operating company of any size (subject to our satisfaction of the 80% of net assets test) and in any industry, sector
or geographic area. However, we will not, under our amended and restated certificate of incorporation, be permitted to effectuate our
initial business combination solely with another blank check company or similar company with nominal operations. Because we have not yet
selected 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 development stage entity.
Although our directors and officers 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 not ultimately prove to
be less favorable to our investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly,
any stockholder or warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business
combination could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy
for such reduction in value.
Past performance by our management team and their respective
affiliates may not be indicative of future performance of an investment in the company.
Information regarding performance by
our management team and their respective affiliates, including Science Partners Management, is presented for informational purposes only.
Past performance by our management team and their respective affiliates is not a guarantee either (1) that we will be able to identify
a suitable candidate for our initial business combination or (2) of success with respect to any business combination we may consummate.
You should not rely on the historical record of our management team or their affiliates or any related investment’s performance
as indicative of our future performance of an investment in the Company or the returns the Company will, or is likely to, generate going
forward.
We may seek acquisition opportunities outside our target
industries, which may be outside of our management’s areas of expertise.
We may consider a business combination outside the D2C brands, D2C-services
and mobile and social entertainment sectors, which may be outside of our management’s areas of expertise, if a business combination
candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for us. In the event we
elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s expertise may not be directly
applicable to its evaluation or operation, and the information contained in this Annual Report regarding the areas of our management’s
expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able
to adequately ascertain or assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholder or warrant
holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business combination could suffer a
reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in
value.
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 criteria and 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 applicable law or stock exchange listing requirements, or we decide to obtain stockholder approval
for business or other reasons, it may be more difficult for us to attain stockholder approval of our initial business combination
if the target business does not meet our general criteria and guidelines. If we have not completed our initial business combination
within the required time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances,
on the liquidation of our trust account and our warrants 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.
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 sales 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, intense competition and difficulties in obtaining and retaining key personnel.
Although our directors and officers will endeavor to evaluate the risks inherent in a particular target business, we may not be
able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business.
We
are not required to obtain an opinion regarding fairness. Consequently, you may have no assurance from an independent source that
the price we are paying for the business is fair to our company from a financial point of view.
Unless
we complete our initial business combination with an affiliated entity, we are not required to obtain an opinion that the price
we are paying is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying
on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial
community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable,
related to our initial business combination.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we have not completed our initial business combination within the required
time period, our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances,
on the liquidation of our trust account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys 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 receive only approximately $10.00 per share, or less in certain circumstances, on the
liquidation of our trust account and our warrants will expire worthless.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts
of our key personnel, some of whom may join us following our initial business combination. The loss of our or a target’s
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.
In
addition, the directors and officers of an acquisition candidate may resign upon completion of our initial business combination.
The departure of a business combination target’s key personnel could negatively impact the operations and profitability
of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial
business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition candidate following our initial business combination, it is possible
that members of the management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
We
may have 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’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholder or warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business
combination could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have
a remedy for such reduction in value.
The
directors and officers of an acquisition candidate may resign upon completion of our initial business combination. The departure
of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot
be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team
will remain associated with the acquisition candidate following our initial business combination, it is possible that members
of the management of an acquisition candidate will not wish to remain in place.
We
may be able to complete only one business combination with the proceeds of our IPO and the sale of the private placement warrants,
which will cause us to be solely dependent on a single business which may have a limited number of products or services. This
lack of diversification may negatively impact our operations and profitability.
The
net proceeds from the IPO and the sale of the private placement warrants provided us with $310,500,000 that we may use to complete
our initial business combination (which includes $10,867,500 of deferred underwriting commissions being held in the trust account,
and excludes estimated offering expenses of $1,000,000).
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 risks. Further, we would not
be able to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities
which may have the resources to complete several business combinations in different industries or different areas of a single
industry. Accordingly, the prospects for our success may be:
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solely
dependent upon the performance of a single business, property or asset; or
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dependent
upon the development or market acceptance of a single or limited number of products,
processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. 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 acquisition 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 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 complete such business combination
only if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target
or otherwise acquires a controlling interest in the target business sufficient for us not to be required to register as an investment
company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction
company owns 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may
collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target
and us in our initial business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares of common stock in exchange for all of the issued and outstanding capital stock, shares or other equity securities
of a target, or issue a substantial number of new shares to third-parties in connection with financing our initial business combination.
In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of
new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our issued
and outstanding shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently
combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially
acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target
business.
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.
Although
we believe that the net proceeds of our IPO and the sale of the private placement warrants will be sufficient to allow us to complete
our initial business combination, because we have not yet selected any target business we cannot ascertain the capital requirements
for any particular transaction. If the net proceeds of our IPO and the sale of the private placement warrants prove to be insufficient,
either because of the size of our initial business combination, the depletion of the available net proceeds in search of a target
business, the obligation to redeem for cash a significant number of shares from stockholders who elect redemption in connection
with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial
business combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot
assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves
to be unavailable when needed to complete our 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.
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 directors, officers or stockholders is required
to provide any financing to us in connection with or after our initial business combination. If we have not completed our initial
business combination within the required time period, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on the liquidation of our trust account, and our warrants will expire worthless.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the
tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America, or U.S. GAAP, or international financial reporting standards as
issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements
may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United States),
or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some
targets may be unable to provide such financial statements in time for us to disclose such financial statements in accordance
with federal proxy rules and complete our initial business combination within the prescribed time frame.
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 acquisition.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K for the year ending December 31, 2021. 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. 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 acquisition.
If
our management team pursues a 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 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
our management team pursues 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 market, 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 how relevant governments respond to such factors), including any
of the following:
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costs
and difficulties inherent in managing cross-border business operations and complying
with commercial and legal requirements of overseas markets;
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rules
and regulations regarding currency redemption;
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complex
corporate withholding taxes on individuals;
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laws
governing the manner in which future business combinations may be effected;
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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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tax
consequences, such as tax law changes, including termination or reduction of tax and
other incentives that the applicable government provides to domestic companies, and variations
in tax laws as compared to the United States;
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currency
fluctuations and exchange controls, including devaluations and other exchange rate movements;
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rates
of inflation, price instability and interest rate fluctuations;
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liquidity
of domestic capital and lending markets;
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challenges
in collecting accounts receivable;
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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters, wars and other
forms of social instability;
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deterioration
of political relations with the United States;
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obligatory
military service by personnel; and
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government
appropriation of assets.
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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 combination
or, if we complete such combination, our operations might suffer, either of which may adversely impact our results of operations
and financial condition.
If
our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time
and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, any or all of our management could resign from their positions as officers of the company, and
the management of the target business at the time of the business combination could remain in place. Management of the target
business may not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have
to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various
regulatory issues which may adversely affect our operations.
After
our initial business combination, our results of operations and prospects could be subject, to a significant extent, to the economic,
political, social and government policies, developments and conditions in the country in which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located
could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such
growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a
slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain
industries could materially and adversely affect our ability to find an attractive target business with which to consummate our
initial business combination and if we effect our initial business combination, the ability of that target business to become
profitable.
We
may face risks related to companies in our target industries.
Business
combinations with companies in the D2C brands, D2C -services and mobile and social entertainment
sectors 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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an
inability to compete effectively in a highly competitive environment with many incumbents
having substantially greater resources;
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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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a
reliance on proprietary technology to provide services and to manage our operations,
and the failure of this technology to operate effectively, or our failure to use such
technology effectively;
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an
inability to deal with our subscribers’ or customers’ privacy concerns;
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an
inability to attract and retain subscribers or customers;
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an
inability to license or enforce intellectual property rights on which our business may
depend;
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any
significant disruption in our computer systems or those of third parties that we would
utilize in our operations;
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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 advertising revenue;
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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;
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disruption
or failure of our networks, systems or technology as a result of computer viruses, “cyber-attacks,”
misappropriation of data or other malfeasance, as well as outages, natural disasters,
terrorist attacks, accidental releases of information or similar events;
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an
inability to obtain necessary hardware, software and operational support; and
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reliance
on third-party vendors or service providers.
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Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to the D2C brands, D2C -services and mobile and
social entertainment sectors. Accordingly, if we acquire a target business in another industry, these risks 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.
Changes in the market for directors and officers liability
insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In recent months, the market for directors
and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us and our management team.
Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies have
generally increased and the terms of such policies have generally become less favorable. These trends may continue into the future.
The increased cost and decreased availability
of directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial business
combination. In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company,
the post-business combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to
obtain adequate directors and officers liability insurance could have an adverse impact on the post-business combination’s ability
to attract and retain qualified officers and directors.
In addition, even after we were to complete
an initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct
alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post-business
combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need
for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate our ability
to consummate an initial business combination on terms favorable to our investors.
Our independent registered public accounting firm’s
report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.”
Upon completion of the IPO, we had working
capital of approximately $1.6 million. Further, we have incurred, and expect to continue to incur, significant costs in pursuit of our
acquisition plans. In order to fund working capital deficiencies or finance transaction costs in connection with a business combination,
our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may
be required. If we complete a business combination, we may repay such loaned amounts out of the proceeds of the trust account released
to us. In the event that a business combination does not close, we may use a portion of the working capital held outside the trust account
to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans
may be convertible into warrants at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the private
placement warrants. As of December 31, 2020, there were no amounts outstanding.
We may need to raise additional funds
in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business,
undertaking in-depth due diligence and negotiating our initial business combination are less than the actual amount necessary to do so,
we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain
additional financing either to complete our initial business combination or because we become obligated to redeem a significant number
of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt
in connection with such business combination. If we have not completed our initial business combination within the required time period
because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.
These factors, among others, raise substantial
doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this Annual Report do not include
any adjustments that might result from our inability to continue as a going concern. Management’s plans to address this need are
further discussed under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Our plans to raise capital and to consummate our initial business combination may not be successful.
RISKS
RELATED TO OUR ORGANIZATION AND STRUCTURE
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 (1) $10.00 per public share or (2) 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
the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that
it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we
currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment 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.
We
are dependent upon our directors and officers and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and in particular, Michael Jones, Peter Pham, Greg Gilman,
Thomas Dare, Priscilla Guevara and April Henry. We believe that our success depends on the continued service of our directors
and officers, at least until we have completed our initial business combination. In addition, our directors and officers 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. Moreover, certain of our directors and officers have time and attention requirements for investment funds of which
affiliates of our sponsor are the investment managers. We do not have an employment agreement with, or key-man insurance on the
life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could
have a detrimental effect on us.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our initial business combination and as a
result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the Company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the 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 our initial business
combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting
a target business, subject to his or her fiduciary duties under Delaware law. However, we believe the ability of such individuals
to remain with us after the completion of our initial business combination will not be the determining factor in our decision
as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our
key personnel will remain with us after the completion of our initial business combination. We cannot assure you that any of our
key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel
will remain with us will be made at the time of our initial business combination.
Our directors and officers 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
directors and officers 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 officers is engaged in several
other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any
specific number of hours per week to our affairs. In particular, all of our officers and certain of our directors have fiduciary and
contractual duties to Science Partners Management and to certain companies in which it has invested, including companies in industries
we may target for our initial business combination. Certain of our independent directors also serve as officers and/or board members
for other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of
time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs, which
may have a negative impact on our ability to complete our initial business combination. For a complete discussion of our officers’
and directors’ other business affairs, please see “Part III Item 10. Directors, Executive Officer and Corporate Governance.”
Certain
of our directors and officers are now, and all of them may in the future become, affiliated with entities engaged in business
activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to
which entity a particular business opportunity should be presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more
businesses. Our sponsor and directors and officers are, or may in the future become, affiliated with entities that are engaged
in a similar business. For example, Mr. Jones, Mr. Pham, Mr. Gilman, Mr. Dare, Ms. Guevara and Ms. Henry and each of the foregoing
owe fiduciary duties under Delaware law to Science Partners Management and other entities. Our sponsor and directors and officers are also not prohibited from sponsoring, investing or otherwise becoming
involved with, any other blank check companies, including in connection with their initial business combinations, prior to us
completing our initial business combination. In particular, each of our officers, Mr. Gilman and Ms. Taylor are actively engaged in SSACB and SSACC, special
purpose acquisition companies that are currently in registration with the SEC. SSACB and SSACC, like us, intend to pursue an initial business
combination with a company in the D2C brands, D2C services or mobile and social entertainment sectors, but may pursue initial business
combination targets in any businesses or industries. SSACB’s and SSACC’s timeline to do so is dependent on the successful
completion of their initial public offerings. Moreover, certain of our directors and officers have time and attention requirements
for investment funds of which affiliates of our sponsor are the investment managers.
Our
directors and officers also may become aware of business opportunities which may be appropriate for presentation to us and the
other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in
determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our
favor and a potential target business may be presented to other entities prior to its presentation to us, subject to his or her
fiduciary duties under Delaware law. Our amended and restated certificate of incorporation provides that we renounce our interest
in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely
in his or her capacity as a director or officer of the company and it is an opportunity that we are able to complete on a reasonable
basis.
Our
directors, officers, security holders and their respective affiliates may have competitive pecuniary interests that conflict with
our interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or their respective affiliates from
having a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction
to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is
affiliated with our sponsor, our directors or officers, although we do not intend to do so. Nor do we have a policy that expressly
prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly,
such persons or entities may have a conflict between their interests and ours. As a result, there may be substantial overlap between
companies that would be a suitable business combination for us and companies that would make an attractive target for such other
affiliates.
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, directors or officers which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, directors and officers with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, directors and officers. Certain of our directors and officers also serve as officers and board members
for other entities, including those described under the section titled “ Item 10. Directors, Executive Officers and Corporate
Governance —Conflicts of Interest.” Such entities may compete with us for business combination opportunities. Our
sponsor, directors and officers are not currently aware of any specific opportunities for us to complete our initial business
combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning 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 and
guidelines for a business combination as set forth in the section titled “Item 1. 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 and disinterested directors. Despite our agreement that we, or a committee
of independent and disinterested directors, will obtain an opinion from an independent investment banking firm or another valuation
or appraisal firm that regularly renders fairness opinions on the type of target business we are seeking to acquire, regarding the
fairness to our company from a financial point of view of a business combination with one or more businesses affiliated with our
sponsor, directors or officers, 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 initial stockholders will lose their entire investment in us if our initial business combination is not completed, a conflict
of interest may arise in determining whether a particular business combination target is appropriate for our initial business
combination.
In October 2020, our sponsor subscribed
for an aggregate of 6,468,750 founder shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. In January
2021, our sponsor transferred 46,500 founder shares to each of Jeff Kearl, Jennifer Rubio and Colette Taylor, our independent directors.
Our initial stockholders collectively owned 20% of our issued and outstanding shares after the IPO. The founder shares will be worthless
if we do not complete an initial business combination.
In
addition, our sponsor purchased an aggregate of 5,473,333 private placement warrants, each exercisable for one Class A common
stock, for a purchase price of $8,210,000 in the aggregate, or $1.50 per warrant, that will also be worthless if we do not complete
a business combination. Each private placement warrant may be exercised for one share of our Class A common stock at a price of
$11.50 per share, subject to adjustment.
The
founder shares are identical to the shares of common stock included in the Units sold in our IPO except that: (1) prior to our
initial business combination, only holders of the founder shares have the right to vote on the appointment of directors and holders
of a majority of our founder shares may remove a member of the board of directors for any reason; (2) the founder shares are subject
to certain transfer restrictions contained in a letter agreement that our initial stockholders, directors and officers have entered
into, (3) pursuant to such letter agreement, our initial stockholders, directors and officers have agreed to waive: (i) their
redemption rights with respect to any founder shares and public shares held by them, as applicable, in connection with the completion
of our initial business combination; (ii) their redemption rights with respect to any founder shares and public shares held by
them in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public
shares if we do not complete our initial business combination within 24 months from the closing of our IPO or (B) with respect
to any other provision relating to stockholders’ rights or pre-initial business combination activity; and (iii) 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 our IPO or during any Extension Period (although they will be entitled
to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial
business combination within the prescribed time frame); (4) the founder shares will automatically convert into shares of our Class
A common stock at the time of our initial business combination, or earlier at the option of the holder, on a one-for-one basis,
subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below; and (5) the founder shares
are entitled to registration rights. If we submit our initial business combination to our public stockholders for a vote, our
initial stockholders have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered
into with us, to vote their founder shares and any public shares held by them purchased during or after the IPO in favor of our
initial business combination. While we do not expect our board of directors to approve any amendment to or waiver of the letter
agreement or registration rights agreement 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 or waivers
of such agreements in connection with the consummation of our initial business combination. Any such amendments or waivers 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.
The
personal and financial interests of our sponsor, directors and officers 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 deadline following the closing of our IPO nears,
which is the deadline for the completion of our initial business combination.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete a business combination with which a substantial majority of our stockholders 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 following
such redemptions, or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our
initial business combination. As a result, we may be able to complete our initial business combination even though a substantial
majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder
approval of our initial business combination and do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, directors,
officers, advisors or any of their respective affiliates. In the event the aggregate cash consideration we would be required to
pay for all public shares 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, and all shares of common stock submitted for redemption will be returned to the holders
thereof, and we instead may search for an alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the past, amended various provisions of their
charters and modified governing instruments, including their warrant agreements. We cannot assure you that we will not seek to
amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for
us to complete our initial business combination that some of our stockholders may not support.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have
amended the definition of business combination, increased redemption thresholds, extended the time to consummate an initial business
combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for
cash and/or other securities. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation
or governing instruments, including the warrant agreement, or extend the time to consummate an initial business combination in
order to effectuate our initial business combination. To the extent any of such amendments would be deemed to fundamentally change
the nature of any of the securities offered in our IPO, we would register, or seek an exemption from registration for, the affected
securities.
Certain
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 not less than 65% of our common stock, which is a lower amendment threshold than that of some other blank check
companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement
to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate
of incorporation provides that any of its provisions (other than amendments relating to the appointment of directors, which require the
approval by a majority of at least 90% of our common stock voting at a stockholder meeting) related to pre-business combination activity
(including the requirement to fund 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 at least 65% of our common stock, 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. In all other instances, our amended and restated certificate of incorporation provides that it may be amended by holders
of a majority of our common stock, subject to applicable provisions of the DGCL, or applicable stock exchange rules. We may not issue
additional securities that can vote on amendments to our amended and restated certificate of incorporation or on our initial business
combination. Our initial stockholders, who owned 20% of our common stock upon the closing of the IPO, 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 will govern our pre-business
combination behavior more easily than some other blank check companies, and this may increase our ability to complete our initial 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, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination within 24 months from the closing of our IPO or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem
their shares of our Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares. These agreements
are contained in a letter agreement that we have entered into with our sponsor, officers and directors. Our stockholders are not
parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies against
our sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, our stockholders
would need to pursue a stockholder derivative action, subject to applicable law.
Our
initial stockholders will control the election of our board of directors until consummation of our initial business combination
and will hold a substantial interest in us. As a result, they will appoint all of our directors prior to our initial business
combination and may exert a substantial influence on actions requiring stockholder vote, potentially in a manner that you do not
support.
Upon
the closing of our IPO, our initial stockholders owned 20% of the issued and outstanding shares of our common stock. In addition,
the founder shares, all of which are held by our initial stockholders, will entitle the holders to elect all of our directors prior
to the consummation of our initial business combination. Holders of our public shares will have no right to vote on the election of
directors during such time. These provisions of our amended and restated certificate of incorporation may only be amended by a
majority of at least 90% of our common stock voting at a stockholder meeting. As a result, you will not have any influence over the
election of directors prior to our initial business combination.
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 herein. Factors that would be considered in making such additional purchases would include
consideration of the current trading price of our Class A common stock. In addition, as a result of their substantial ownership
in our company, our initial stockholders may exert a substantial influence on other actions requiring a stockholder vote, potentially
in a manner that you do not support, including amendments to our amended and restated certificate of incorporation and approval
of major corporate transactions. If our initial stockholders purchased any shares of our Class A common stock in our IPO or purchase
any shares of our Class A common stock in the aftermarket or in privately negotiated transactions, this would increase their influence
over these actions. Accordingly, our initial stockholders will exert significant influence over actions requiring a stockholder
vote 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 65% of the then outstanding public warrants.
Our warrants are issued in registered
form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that (a) the terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity
or correct any mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants
and the warrant agreement set forth in our prospectus dated January 25, 2021 or defective provision or (ii) adding or changing any provisions
with respect to matters or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or
desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants under the warrant agreement
and (b) all other modifications or amendments require the vote or written consent of at least 65% of the then outstanding public warrants,
provided that any amendment that solely affects the terms of the private placement warrants or any provision of the warrant agreement
solely with respect to the private placement warrants will also require at least 65% of the then outstanding private placement warrants.
Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at least 65% 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
65% 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, shorten the exercise period or decrease the number of shares of common stock purchasable upon exercise
of a warrant.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike
some blank check companies, if
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i.
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we
issue additional shares of common stock or equity-linked securities for capital raising
purposes in connection with the closing of our initial business combination at an issue
price or effective issue price of less than $9.20 per share of 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 sponsor or its affiliates, without taking
into account any founder shares held by our sponsor or such affiliates, as applicable,
prior to such issuance) (the “Newly Issued Price”),
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ii.
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the
aggregate gross proceeds from such issuances represent more than 60% of the total equity
proceeds, and interest thereon, available for the funding of our initial business combination
on the date of the completion of our initial business combination (net of redemptions),
and
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iii.
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the
volume weighted average trading price of shares of our Class A common stock during the
20 trading day period starting on the trading day prior to the day on which we consummate
our initial business combination (the “Market Value”) is below $9.20 per
share,
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then the exercise price of the warrants will be adjusted
to be equal to 115% of the higher of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price described
in the sections titled “Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price
per share of our Class A common stock equals or exceeds $18.00” and “Redeemable Warrants—Public Stockholders’
Warrants—Redemption of warrants when the price per share of our Class A common stock equals or exceeds $10.00” contained
in the Description of Securities exhibit filed as Exhibit 4.5 to this Annual Report will be adjusted (to the nearest cent) to be equal
to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price described in
the section titled “Redeemable Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per
share of our Class A common stock equals or exceeds $10.00” contained in the Description of Securities exhibit filed as Exhibit
4.5 to this Annual Report will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
This may make it more difficult for us to consummate an initial business combination with a target business.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District
of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our
warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating
in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State
of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to
such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any
objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created
by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and
exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to
have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which
is within the scope 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.
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 shares of our 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 three-year director terms and 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.
Section 203 of the DGCL affects the
ability of an “interested stockholder” to engage in certain business combinations, for a period of three years following the
time that the stockholder becomes an “interested stockholder.” We have elected in our certificate of incorporation not to
be subject to Section 203 of the DGCL. Nevertheless, our certificate of incorporation contains provisions that have the same effect as
Section 203 of the DGCL, except that it provides that affiliates of our sponsor and their transferees will not be deemed to be “interested
stockholders,” regardless of the percentage of our voting stock owned by them, and will therefore not be subject to such restrictions.
These charter provisions may limit the ability of third parties to acquire control of our company.
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, to the fullest extent permitted by law, 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 action (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) 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.
Our amended and restated certificate
of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section
27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the
Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce
any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section
22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability
created by the Securities Act or the rules and regulations thereunder. As noted above, our amended and restated certificate of incorporation
provides that the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction over
any action arising under the Securities Act. Accordingly, there is uncertainty as to whether a court would enforce such provision, and
our stockholders will not be deemed to have waived our compliance with the federal securities laws and 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.
We
may not hold an annual general meeting until after the consummation of our initial business combination. Our public stockholders
will not have the right to elect or remove directors prior to the consummation of our initial business combination.
We
may not hold an annual meeting of stockholders until after we consummate our initial business combination (unless required by
Nasdaq) and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be
held for the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written
consent in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to 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 an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this
could make our securities less attractive to investors and may make it more difficult to compare our performance with other public
companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access
to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our shares of common stock held by non-affiliates
exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth
company as of the end of such fiscal year. 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 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 shares of common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter,
and (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our shares of common
stock held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter. To the extent we take
advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies
difficult or impossible.
RISKS
RELATED TO OWNERSHIP OF OUR SECURITIES
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
increases. 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 our
redemption until we liquidate or you are able to sell your shares in the open market.
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 tender offer
rules or proxy 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 tender offer or proxy materials, as applicable, such stockholder may not become
aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable, that we will
furnish to holders of our public shares in connection with our initial business combination will describe the various procedures that
must be complied with in order to validly tender or redeem public shares. In the event that a stockholder fails to comply with these procedures,
its shares may not be redeemed. See the section titled “Item 1. Business—Manner of Conducting Redemptions—Tendering
stock certificates in connection with a tender offer or redemption rights.”
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your public shares and/or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (1) our completion
of an initial business combination, and then only in connection with those shares of our Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein; (2) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to allow redemption in connection with our initial business combination or to redeem 100% of our public
shares if we do not complete our initial business combination within 24 months from the closing of our IPO or (B) with respect
to any other provision relating to stockholders’ rights or pre-initial business combination activity; and (3) the redemption
of our public shares if we have not completed an initial business combination within 24 months from the closing of our IPO, subject
to applicable law. In addition, if we are unable to complete an initial business combination within 24 months from the closing
of our IPO 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 our IPO before they receive funds from our trust account. In no other
circumstances will a stockholder have any right or interest of any kind to or 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 and/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. Although we currently meet, on a pro forma basis, the minimum initial listing standards set forth in the Nasdaq
listing standards, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to
our 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 any of our securities from trading on its exchange and we are not able to list our securities on another national
securities exchange, we expect such 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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•
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reduced
liquidity for our securities;
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•
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a
determination that our Class A common stock is a “penny stock” which will
require brokers trading in our Class A common stock to adhere to more stringent rules
and possibly result in a reduced level of trading activity in the secondary trading market
for our securities;
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a
limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the
future.
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The National Securities Markets Improvement
Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred
to as “covered securities.” Because our Units, Class A common stock and warrants are listed on Nasdaq, our Units, shares of
our Class A common stock and warrants qualify as covered securities under such statute. Although the states are preempted from regulating
the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and,
if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.
While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by special purpose acquisition
companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these
powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our
securities would not qualify as covered securities under such 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 our IPO 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 U.S. 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 of the company demonstrating this fact, we are exempt from rules promulgated by
the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits
or protections of those rules. Among other things, this means our Units were immediately tradable and we will have a longer period
of time to complete our initial business combination than do companies subject to Rule 419. Moreover, if our IPO were subject
to Rule 419, that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until
the funds in the trust account were released to us in connection with our completion of an 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 the shares of our Class A common
stock, you will lose your ability to redeem all such shares in excess of 15% of shares 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 redeeming its shares with respect to Excess Shares, without our prior consent. 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.
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 (other than our independent auditors), 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 perform an analysis of the alternatives available to it and will enter into an agreement with a third party
that has not executed a waiver only if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where we are 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 have not completed our initial business combination within the required
time period, 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.
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent auditors)
for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below (1) $10.00 per public share or (2) 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 the value of
the trust assets, in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party
who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity
of the underwriter of our IPO against certain liabilities, including liabilities under the Securities Act. Moreover, 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. We have not independently verified whether our sponsor has sufficient funds to satisfy
its indemnity obligations and believe that our sponsor’s only assets are securities of our company. Our sponsor may not
have sufficient funds available to satisfy those obligations. We have not asked our sponsor to reserve for such obligations, and
therefore, no funds are currently set aside to cover any such 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 public share in connection with any redemption of your public shares. None of our directors or officers
will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
The
securities in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the
value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00
per share.
The
proceeds held in the trust account will be invested only in U.S. government treasury bills with a maturity of 185 days or less
or in money market funds investing solely in U.S. Treasuries. While short-term U.S. government treasury obligations currently
yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe
and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled
out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to
complete our initial business combination or make certain amendments to our amended and restated certificate of incorporation,
our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest
income, net of taxes paid or payable (less, in the case we are unable to complete our initial business combination, $100,000 of
interest). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption amount
received by public stockholders may be less than $10.00 per share.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a winding-up or bankruptcy petition
or an involuntary winding-up or 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 winding-up or bankruptcy petition
or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders
could be viewed under applicable debtor/creditor and/or insolvency laws as a voidable performance. As a result, a liquidator 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 winding-up or bankruptcy petition
or an involuntary winding-up or 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 winding-up or bankruptcy petition
or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust
account could be subject to applicable insolvency law, and may be included in our liquidation estate and subject to the claims
of third parties with priority over the claims of our stockholders. To the extent any liquidation claims deplete the trust account,
the per-share amount that would otherwise be received by our stockholders in connection with our liquidation would be reduced.
If
we have not completed our initial business combination within the allotted time period, our public stockholders may be forced
to wait beyond such allotted time period before redemption from our trust account.
If
we have not completed our initial business combination within 24 months from the closing of our IPO or during any Extension Period,
we will distribute the aggregate amount then on deposit in the trust account, including interest (less up to $100,000 of interest
to pay dissolution expenses and which interest shall be net of taxes payable), pro rata to our public stockholders by way of redemption
and cease all operations except for the purposes of winding up of our affairs, as further described herein. Any redemption of
public stockholders from the trust account shall be effected automatically by function of our amended and restated certificate
of incorporation prior to any voluntary winding up. If we are required to windup, liquidate the trust account and distribute such
amount therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and distribution
must comply with the applicable provisions of Delaware law. In that case, investors may be forced to wait beyond the allotted
time period before the redemption proceeds of our trust account become available to them and they receive the return of their
pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date
of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions
of our amended and restated certificate of incorporation and then only in cases where investors have properly sought to redeem
their shares of our Class A common stock. Only upon our redemption or any liquidation will public stockholders be entitled to
distributions if we have not completed our initial business combination within the required time period and do not amend certain
provisions of our amended and restated certificate of incorporation prior thereto.
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 of the closing of our IPO
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 our IPO in the event we do not complete our initial business combination
and, therefore, we do not intend to comply with the foregoing procedures.
Because
we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our vendors (such as lawyers, investment bankers, consultants, etc.) or prospective target businesses. If our plan
of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder,
and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you
that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may
extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our
public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination
within 24 months of the closing of our IPO is not considered a liquidating distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors
could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We have not registered the issuance of the shares of
our Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws, and such registration
may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants
except on a cashless basis and potentially causing such warrants to expire worthless.
We have not registered the issuance of
the shares of our Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws. However,
under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days after
the closing of our initial business combination, we will use our commercially reasonable efforts to file with the SEC a registration statement
covering the issuance of such shares, and we will use our commercially reasonable efforts to cause the same to become effective within
60 business days after the closing of our initial business combination and to maintain the effectiveness of such registration statement
and a current prospectus relating to those shares of our Class A common stock until the warrants expire or are redeemed. 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,
complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the
Securities Act in accordance with the above requirements, we will be required to permit holders to exercise their warrants on a cashless
basis, in which case, the number of shares of our Class A common stock that you will receive upon cashless exercise will be based on a
formula subject to a maximum amount of shares equal to 0.361 shares of our Class A common stock per warrant (subject to adjustment). However,
no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to
exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of
the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if shares of our Class
A common stock are, at the time of any exercise of a warrant, not listed on a national securities exchange such that they do not satisfy
the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders
of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our
commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants
in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and no
exemption is available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration
or qualification, the holder of such warrant 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 our 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 our IPO. 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 our 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
grant of registration rights to our initial stockholders and their permitted transferees 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 shares of our
Class A common stock.
Pursuant
to an agreement, at or after the time of our initial business combination, our initial stockholders and their permitted transferees
can demand that we register the resale of their founder shares after those shares convert to shares of our Class A common stock.
In addition, our sponsor and its permitted transferees can demand that we register the resale of the private placement warrants
and the shares of our 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 the resale of such warrants or the shares of
our Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the
market price of shares 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 shares of our Class A common stock that is expected when the shares of common stock owned by our initial stockholders
or their permitted transferees, our private placement warrants or warrants issued in connection with working capital loans are
registered for resale.
We
may issue additional shares of our 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 our Class
A common stock upon the conversion of the shares of our Class B common stock at a ratio greater than one-to-one at the time of
our initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate
of incorporation. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate
of incorporation authorizes the issuance of up to 400,000,000 shares of our Class A common stock, par value $0.0001 per share, 40,000,000
shares of our Class B common stock, par value $0.0001 per share, and 1,000,000 undesignated shares of preferred stock, par value $0.0001
per share. There are 353,126,667 and 32,237,500 authorized but unissued shares of our Class A common stock and shares of our Class B common
stock, respectively, available for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding
warrants but not upon conversion of the shares of our Class B common stock. Shares of our Class B common stock are convertible into shares
of our Class A common stock, initially at a one-for-one ratio but subject to adjustment. There are no shares of preferred stock issued
and outstanding.
We may issue a substantial number of
additional shares of our Class A common stock, and may issue shares of preferred stock, in order 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 our Class A common
stock to redeem the warrants as described in the section titled “Redeemable Warrants—Public Stockholders’ Warrants—Redemption
of warrants when the price per share of our Class A common stock equals or exceeds $10.00” contained in the Description of Securities
exhibit filed as Exhibit 4.5 to this Annual Report or upon conversion of the shares of our Class B common stock at a ratio greater than
one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated
certificate of incorporation. However, our amended and restated certificate of incorporation provides, among other things, that prior
to our initial business combination, we may not issue additional shares of common stock that would entitle the holders thereof to (1)
receive funds from the trust account or (2) vote as a class with our public shares on any initial business combination. 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 the IPO, which dilution would
increase if the anti-dilution provisions in the shares of our Class B common stock resulted
in the issuance of shares of our Class A common stock on a greater than one-to-one basis
upon conversion of the shares of our Class B common stock;
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may
subordinate the rights of holders of shares of common stock if shares of preferred stock
are issued with rights senior to those afforded our shares of common stock;
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could
cause a change of control if a substantial number of our shares of 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 directors
and officers;
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may
have the effect of delaying or preventing a change of control of us by diluting the share
ownership or voting rights of a person seeking to obtain control of us;
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may adversely affect prevailing market prices for our Units, shares
of common stock and/or warrants; and
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may
not result in adjustment to the exercise price of our warrants.
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The
exercise price for the public warrants is higher than in many similar blank check company offerings in the past, and, accordingly,
the warrants are more likely to expire worthless.
The
exercise price of the public warrants is higher than is typical in many similar blank check companies in the past. Historically,
the exercise price of a warrant was generally a fraction of the purchase price of the Units in the initial public offering. The
exercise price for our public warrants is $11.50 per share, subject to adjustment. As a result, the warrants are more likely to
expire worthless.
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 the outstanding warrants
at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant if, among other things, the last
reported sale price of shares of our Class A common stock for any 20 trading days within a 30-trading day period ending on the third trading
day prior to the date on which we send the notice of redemption to the warrant holders (the “Reference Value”) equals or exceeds
$18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described
under the heading “Redeemable Warrants—Public Stockholders’ Warrants—Anti-dilution Adjustments” contained
in the Description of Securities exhibit filed as Exhibit 4.5 to this Annual Report). Please see the section titled “Redeemable
Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of our Class A common stock equals
or exceeds $18.00” contained in the Description of Securities exhibit filed as Exhibit 4.5 to this Annual Report. 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 as described above could force you to: (1) exercise
your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so; (2) sell your warrants at
the then-current market price when you might otherwise wish to hold your warrants; or (3) accept the nominal redemption price which, at
the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
None of the private placement warrants will be redeemable by us (except as described in the section titled “Redeemable Warrants—Public
Stockholders’ Warrants—Redemption of warrants when the price per share of our Class A common stock equals or exceeds $10.00”
contained in the Description of Securities exhibit filed as Exhibit 4.5 to this Annual Report) so long as they are held by our sponsor
or its permitted transferees.
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 if, among
other things, the Reference Value equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon
exercise or the exercise price of a warrant as described under the heading “Redeemable Warrants—Public Stockholders’
Warrants—Anti-dilution Adjustments” contained in the Description of Securities exhibit filed as Exhibit 4.5 to this Annual
Report). In such a case, the holders will be able to exercise their warrants prior to redemption for a number of shares of our Class A
common stock determined based on the redemption date and the fair market value of shares of our Class A common stock. Please see “Redeemable
Warrants—Public Stockholders’ Warrants—Redemption of warrants when the price per share of our Class A common stock equals
or exceeds $10.00” contained in the Description of Securities exhibit filed as Exhibit 4.5 to this Annual Report. 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 of common stock received is capped at 0.361 shares of our Class A common stock per warrant (subject to adjustment)
irrespective of the remaining life of the warrants.
Our
warrants and founder shares may have an adverse effect on the market price of shares of our Class A common stock and make it more
difficult to effectuate our initial business combination.
We issued warrants to purchase 10,350,000 Class
A common stock, at a price of $11.50 per whole share (subject to adjustment), as part of the Units offered in our IPO and we issued in
a private placement an aggregate of 5,473,333 private placement warrants, each exercisable to purchase one share of our Class A common
stock at a price of $11.50 per share, subject to adjustment. Our initial stockholders currently hold 7,762,500 shares of our Class B common
stock. The shares of our Class B common stock are convertible into shares of our Class A common stock on a one-for-one basis, subject
to adjustment. In addition, if our sponsor, an affiliate of our sponsor or certain of our directors and officers make any working capital
loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.50 per warrant at the option of the lender. Such
warrants would be identical to the private placement warrants. To the extent we issue shares of our Class A common stock to effectuate
a business combination, the potential for the issuance of a substantial number of additional shares of our Class A common stock upon exercise
of these warrants or conversion rights could make us a less attractive acquisition vehicle to a target business. Any such issuance will
increase the number of issued and outstanding shares of our Class A common stock and reduce the value of the shares of our Class A common
stock issued to complete the business combination. Therefore, our warrants and founder shares may make it more difficult to effectuate
a business combination or increase the cost of acquiring the target business.
The private placement warrants are identical to
the warrants sold as part of the Units in our IPO except that, so long as they are held by our sponsor or its permitted transferees: (1)
they will not be redeemable by us (except as described in the section titled “Redeemable Warrants—Public Stockholders’
Warrants—Redemption of warrants when the price per share of our Class A common stock equals or exceeds $10.00” contained in
the Description of Securities exhibit filed as Exhibit 4.5 to this Annual Report); (2) they (including the shares of our Class A common
stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our
sponsor until 30 days after the completion of our initial business combination; (3) they may be exercised by the holders on a cashless
basis; and (4) they (including the shares of common stock issuable upon exercise of these warrants) are entitled to registration rights.
Because each Unit contains one-third of one redeemable warrant and
only a whole warrant may be exercised, the Units may be worth less than units of other blank check companies.
Each Unit contains one-third of one redeemable
warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the Units, and only whole warrants
will trade. This is different from other offerings similar to ours whose units include one share of common stock and one whole warrant
to purchase one 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 a third of the number of shares
compared to units that each contain a whole warrant to purchase one whole share, thus making us, we believe, a more attractive business
combination partner for target businesses. Nevertheless, this unit structure may cause our Units to be worth less than if they included
a warrant to purchase one whole share.