ITEM 1. BUSINESS
Introduction
We are a blank check company incorporated
in Delaware on August 7, 2017 for the purpose of entering into a merger, stock exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination with one or more businesses or entities (a “business combination”).
Prior to executing the Merger Agreement with TGI Fridays, which is discussed in more detail below, Allegro’s efforts were
limited to organizational activities, completion of its initial public offering and the evaluation of possible business combinations.
Initial Public Offering
Prior our initial public offering, we issued
to Eric Rosenfeld, our Chief Executive Officer, an aggregate of 4,312,500 shares of common stock in exchange for a capital contribution
of $25,000, or approximately $0.01 per share. Mr. Rosenfeld then transferred all of the shares to two trusts for the benefit of
his immediate family members, and subsequently, a portion of such shares was transferred to the other initial stockholders in exchange
for $0.01 per share. In April 2018, the initial stockholders contributed to our capital an aggregate of 575,000 shares for no additional
consideration, leaving them with an aggregate of 3,737,500 shares of common stock.
On July 6, 2018, we closed our initial
public offering of 14,950,000 units, including 1,950,000 units that were issued pursuant to the exercise in full of the underwriters’
over-allotment option, with each unit consisting of one share of common stock, one right, and one warrant. The initial public offering
generated gross proceeds of $149,500,000.
Simultaneously with the consummation of
the initial public offering, we consummated the private placement of 372,500 private placement units at a price of $10.00 per private
placement unit, generating gross proceeds of $3,725,000. The private placement units were purchased by the initial stockholders,
Cantor, and Chardan.
Following the closing of the initial public
offering on July 6, 2018, an amount of $149,500,000 ($10.00 per unit) from the net proceeds of the sale of the units and private
placement units was placed in the trust account.
Proposed Business Combination
On November 8, 2019, we entered into the
Merger Agreement with Merger Sub, Holdings, Midco, Rohit Manocha, solely in his capacity as the initial representative of the equityholders
of Holdings and Midco. Pursuant to the Merger Agreement, (i) Holdings will distribute all of the shares of Midco held by Holdings
to its equityholders (the “Distribution”), (ii) immediately following the Distribution, Merger Sub will merge
with and into Midco, with Midco surviving (the “Merger”), and (iii) immediately following the Merger, Midco
will merge with and into Allegro with Allegro surviving (the “Second Merger”, and together with the Distribution,
the Merger, and the other transactions contemplated by the Merger Agreement, the “Transactions”).
Under the Merger Agreement, the
equityholders of Midco following the Distribution (which were the equityholders of Holdings prior to the Distribution) will
receive an aggregate of $30,000,000 in consideration, in the form of cash and shares of common stock, with the mix of cash
and shares of common stock determined at the option of the equityholders. Holders of approximately 86% of the outstanding
membership interests of Holdings have elected to receive shares of common stock as consideration in the Merger and holders of
approximately 14% of the outstanding membership interests of Holdings have elected to receive cash. Therefore, upon
consummation of the Merger, we will issue an aggregate of 2,561,786 shares of common stock and $3,997,919 in cash to the
equityholders of Midco. The equityholders of Midco will also have the right to receive up to 2,000,000 shares of common stock
upon the first to occur of: (i) Allegro’s adjusted EBITDA equals or exceeds $70,000,000 as reported in Allegro’s annual report on Form
10-K for the year ended December 31, 2020, December 31, 2021, or December 31, 2022 or (ii) the reported last sale price of
our common stock equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations or other similar actions) for any 20 trading days in a 30 trading day period at any time after the closing
of the Transactions and prior to December 31, 2022.
The equityholders of Midco receiving shares
of common stock upon the closing of the Transactions will be subject to a lockup period for all shares of common stock received
as part of the closing consideration, which terminates on the earlier of (i) December 15, 2020, (ii) our completion of a liquidation,
merger, stock exchange, or other similar transaction that results in all holders of our common stock having the right to exchange
their shares of common stock for cash or other property, or (iii) the reported closing sale price of our common stock on Nasdaq
equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for a
period of any 20 trading days during a 30-trading day period commencing at least 150 days after the closing of the Transactions.
Upon the closing of the Transactions, Cowen
and Company, LLC (“Cowen”) will be entitled to a facilitation fee in the amount of (i) $3,800,000 payable by Allegro
in cash, (ii) an aggregate of 796,875 shares of common stock to be transferred from David D. Sgro, Eric Rosenfeld 2017 Trust No.
1, Eric Rosenfeld 2017 Trust No. 2, and Gregory Monahan, and (iii) an aggregate of up to an additional 478,125 shares of common
stock to be transferred from David D. Sgro, Eric Rosenfeld 2017 Trust No. 1, Eric Rosenfeld 2017 Trust No. 2, and Gregory Monahan,
if Allegro requests assistance from Cowen to raise additional capital to satisfy the minimum cash closing condition set forth in
the Merger Agreement, with the number of shares of common stock transferrable to be determined by a ratio set forth in the Merger
Agreement. For one year after the closing of the Transactions, all shares of common stock transferred to Cowen will continue to
be subject to the transfer restrictions applicable to such shares prior to such transfer.
The Transactions will result in Allegro
acquiring the TGI Fridays business, an American casual dining bar and grill concept.
Consummation of the Transactions is subject
to customary conditions and covenants of the respective parties, including approval of our stockholders and us having cash on hand
of at least $30 million. Further information regarding the proposed business combination, the proposed business of the combined
company following consummation of the Transactions and the risks related to the proposed business of the combined company following
consummation of the Transactions can be found in our Current Report on Form 8-K filed with the SEC on November 8, 2019, the preliminary
proxy statement filed by the Company with the SEC on January 24, 2020, and the definitive proxy statement to be filed by the Company
with the SEC. Unless otherwise indicated, the information in this annual report assumes we will not consummate the Transactions, will not find an alternative target with which to consummate an initial business combination, and will be forced to liquidate.
Extension Amendment
On
November 27, 2019, we filed a preliminary proxy statement seeking approval from our stockholders to amend our charter (the “Extension
Amendment”) to extend the date by which we were required to complete our initial business combination from January 6,
2020 to March 31, 2020 (the “Extended Date”). On December 9, 2019, we filed our definitive proxy statement for
the Extension Amendment, and set a meeting date of December 23, 2019. On December 23, 2019, we announced that we had adjourned
the meeting until January 3, 2020 in order to provide our stockholders with sufficient time to review and act upon the proxy supplement
filed by us with the SEC on December 23, 2019. This proxy supplement informed Allegro’s shareholders that the individuals
and entities that participated in the private placement of units that occurred simultaneously with Allegro’s initial public
offering had agreed that if the Extension Amendment was approved, they or their affiliates would contribute, pro rata in accordance
with their purchases of private units, a loan (each loan being referred to as a “Contribution”) for each public
share that was not converted in connection with the stockholder vote to approve the Extension Amendment in an amount of $0.02 as
a prorated amount for the partial month of January 2020 and $0.025 for each of February 2020 and March 2020, for
aggregate Contributions of approximately $1.05 million (assuming no public shares were converted).
At the meeting held on January 3, 2020, our stockholders approved
extending the date by which we were required to complete a business combination transaction to the Extended Date, and in connection
therewith, an aggregate of 3,782,869 public shares were converted for their pro rata portion of the trust account balance and the
aggregate Contributions were reduced to $781,699, accordingly.
Effecting a Business Combination
Sources of Target Businesses
We anticipate
that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers,
venture capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial
community. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us
through calls or mailings. These sources may also introduce us to other target businesses in which they think we may be interested
on an unsolicited basis. Our officers and directors, as well as their affiliates, may also bring to our attention target business
candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions
they may have, as well as attending trade shows or conventions. We may determine to engage the services of professional firms or
other individuals that specialize in business acquisitions on a formal basis. If we do, we may pay such firms a finder’s
fee, consulting fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction.
In no event, however, will any of our existing officers, directors, special advisors or initial stockholders, or any entity with
which they are affiliated, be paid any finder’s fee, consulting fee or other compensation prior to, or for any services they
render in order to effectuate, the consummation of a business combination (regardless of the type of transaction). If we decide
to enter into a business combination with a target business that is affiliated with our officers, directors or initial stockholders,
we will do so only if we have obtained an opinion from an independent investment banking firm, another independent firm that commonly
renders valuation opinions on the type of target business we are seeking to acquire, or an independent accounting firm, and that
is reasonably acceptable to Cantor, that the business combination is fair to our unaffiliated stockholders from a financial point
of view.
Selection of a Target Business and Structuring of a
Business Combination
Subject
to our management team’s pre-existing fiduciary duties and the Nasdaq requirement that a target business have a fair market
value of at least 80% of the balance in the trust account (excluding deferred underwriting fees and taxes payable on the income
earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination, our management
will have virtually unrestricted flexibility in identifying and selecting a prospective target business, although
we will not be permitted to effectuate our initial business combination with another blank check company or a similar company
with nominal operations. If our securities are not listed on Nasdaq at the time of our initial business combination, we will no
longer be subject to the Nasdaq requirement. In any case, we intend to consummate our initial business combination only if we (or
any entity that is a successor to us in a business combination) will acquire a majority of the outstanding voting securities or
assets of the target with the objective of making sure that we are not required to register as an investment company under the
Investment Company Act of 1940, as amended (the “Investment Company Act”). We believe that, if we own a majority of
the target’s outstanding voting securities, we will not be required to register as an investment company under the Investment
Company Act since the securities of a majority owned subsidiary that is not itself deemed an investment company are not deemed
to be “investment securities” as defined in the Investment Company Act, and since we expect that 60% or more of the
value of our total assets (excluding government securities and cash) will be represented by the securities of our target business
which we expect will be an operating business. We will seek to acquire established companies that have demonstrated sound historical
financial performance. Although we are not restricted from doing so, we do not intend to acquire start-up companies. To the extent
we effect a 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.
We have
not established any other specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating
a prospective target business, our management may consider a variety of factors, including one or more of the following:
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financial condition and results of operation;
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growth potential;
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brand recognition and potential;
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return on equity or invested capital;
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market capitalization or enterprise value;
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experience and skill of management and availability of additional personnel;
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capital requirements;
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competitive position;
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barriers to entry;
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stage of development of its products, processes or services;
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existing distribution and potential for expansion;
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degree of current or potential market acceptance of the products, processes or services;
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proprietary aspects of products and the extent of intellectual property or other protection for its products, processes, formulas or services;
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impact of regulation on the business;
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regulatory environment of the industry;
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costs associated with effecting the business combination;
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industry leadership, sustainability of market share and attractiveness of market industries in which a target business participates; and
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macro competitive dynamics in the industry within which the company competes.
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We believe
such factors will be important in evaluating prospective target businesses, regardless of the location or industry in which such
target business operates. However, this list is not intended to be exhaustive. Furthermore, we may decide to enter into a business
combination with a target business that does not meet these criteria and guidelines.
Any evaluation
relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well
as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective.
In evaluating a prospective target business, we will conduct an extensive due diligence review which will encompass, among other
things, meetings with incumbent management and inspection of facilities, as well as review of financial and other information which
is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties
we may engage.
The time
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 a 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. We will not
pay any finders or consulting fees to members of our management team, or any of their respective affiliates, for services rendered
to or in connection with a business combination.
Fair Market Value of Target Business
Pursuant
to Nasdaq listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to
at least 80% of the balance of the funds in the trust account (excluding deferred underwriting fees and taxes payable on the income
earned on the trust account) at the time of the execution of a definitive agreement for our initial business combination, although
we may acquire a target business whose fair market value significantly exceeds 80% of the trust account balance. We currently anticipate
structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses. We may,
however, structure a business combination where we merge directly with the target business or where we acquire less than 100% of
such interests or assets of the target business in order to meet certain objectives of the target management team or stockholders
or for other reasons, but we will only complete such business combination if the post-transaction company owns or acquires 50%
or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company
owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange
for all of the outstanding capital of a target. In this case, we would acquire a 100% controlling interest in the target. However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination
could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the
equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company, only the portion
of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair market value test.
In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to the sellers of
such businesses and/or seek to raise additional funds through a private offering of debt or equity securities.
The fair
market value of the target will be determined by our board of directors based upon one or more standards generally accepted by
the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board is not able to
independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an unaffiliated,
independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target
business we are seeking to acquire, or an independent accounting firm, each as reasonably acceptable to Cantor, with respect to
the satisfaction of such criteria. We will not be required to obtain an opinion from an independent investment banking firm, or
another independent entity that commonly renders valuation opinions on the type of target business we are seeking to acquire, as
to the fair market value if our board of directors independently determines that the target business complies with the 80% threshold.
Lack of Business Diversification
Our business
combination must be with a target business or businesses that collectively satisfy the minimum valuation standard at the time of
such acquisition, as discussed above, although this process may entail the simultaneous acquisitions of several operating businesses
at the same time. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance
of a single business. Unlike other entities which may have the resources to complete several business combinations of entities
operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to
diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination
with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments,
any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a
business combination, and
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cause us to depend on the performance of a single operating business
or the development or market acceptance of a single or limited number of products, processes or services.
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If we
determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each
of such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions,
we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and
due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business.
Limited Ability to Evaluate the Target Business’
Management
Although
we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business
combination, we cannot assure you that our assessment of the target business’ management will prove to be correct. We cannot
assure you that the future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore,
the future role of our officers and directors, if any, in the target business following a business combination cannot presently
be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior management or
advisory positions with us following a business combination, it is unlikely that they will devote their full time efforts to our
affairs subsequent to a business combination. Our key personnel would only be able to remain with the company after the consummation
of a business combination if they are able to negotiate employment or consulting agreements in connection with the business combination.
Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for them to
receive compensation in the form of cash payments and/or our securities for services they would render to the company after the
consummation of the business combination. Additionally, our officers and directors may not have significant experience or knowledge
relating to the operations of the particular target business.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do recruit
will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholder Approval of Business Combination
We may
not seek stockholder approval before we effect our initial business combination, since not all business combinations require stockholder
approval under applicable state law. We will seek stockholder approval if it is required by law or Nasdaq, or we may decide to
seek stockholder approval for business or other reasons. Presented in the table below are 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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Permitted purchases of our securities
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender
offer rules, our initial stockholders, directors, officers or their respective affiliates may purchase shares in the open market
or in privately negotiated transactions either prior to or following the consummation of our initial business combination, although
as of the date hereof they have no commitments or plans to engage in such transactions. If they do effect such purchases, we anticipate
that they would approach a limited number of large holders of our securities that have voted against the business combination or
sought redemption of their shares, or that have indicated an intention to do so, and engage in direct negotiations for the purchase
of such holders’ positions. All holders approached in this manner would be institutional or sophisticated holders. There
is no limit on the number of shares they may acquire. Our initial stockholders, directors, officers, advisors or their affiliates
will not make any such purchases when they are in possession of any material nonpublic information not disclosed to the seller
or during a restricted period under Regulation M under the Exchange Act or in transactions that would violate Section 9(a)(2) or
Rule 10(b)-5 under the Exchange Act. Although they do not currently anticipate paying any premium purchase price for such public
shares, there is no limit on the price they may pay. They may also enter into transactions to provide such stockholders with incentives
to acquire shares or vote their shares in favor of an initial business combination. We will notify stockholders of such material
purchases or arrangements that would affect the vote on an initial business combination, if any, by press release, filing a Form
8-K or by means of a supplement to our proxy statement. No funds in the trust account may be used to effect purchases of shares
in the open market or in privately negotiated transactions.
The purpose of such purchases would be
to (i) increase the likelihood of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of the business
combination, where it appears that such requirement would otherwise not be met. This may result in the consummation of a business
combination that may not otherwise have been possible.
As a consequence of any such purchases
by our initial stockholders, directors, officers or their affiliates, the public “float” of our common stock may be
reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to obtain the continued
listing of our securities on Nasdaq or another national securities exchange in connection with our initial business combination.
Our initial stockholders, officers, directors
and/or their respective affiliates anticipate that they will identify the public stockholders with whom they may pursue privately
negotiated purchases through either direct contact by the public stockholders or by our receipt of redemption requests or votes
against the business combination submitted by such public stockholders following our mailing of proxy materials in connection with
our initial business combination. The sellers of any shares so purchased by our initial stockholders, officers, advisors, directors
and/or their affiliates would, as part of the sale arrangement, revoke their election to redeem such shares and withdraw their
vote against the business combination. The terms of such purchases would operate to facilitate our ability to consummate a proposed
business combination by potentially reducing the number of shares redeemed for cash.
Redemption rights for public stockholders upon consummation
of our initial business combination
We will provide our stockholders with the
opportunity to redeem their shares upon the consummation 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, including any amounts representing deferred underwriting commissions
and interest earned on the trust account, less any interest released to us to pay our franchise and income taxes and up to $500,000
for working capital purposes, divided by the number of then outstanding public shares, subject to the limitations described herein.
The amount in the trust account is initially anticipated to be $10.00 per public share. The initial stockholders, Cantor, and Chardan
have each agreed with respect to their private shares and private placement shares, and in the case of the initial stockholders,
any public shares held by them, to waive their respective redemption rights in connection with the consummation of our initial
business combination.
Manner of Conducting Redemptions
We will provide our stockholders with the
opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either in
connection with a stockholder meeting called to approve the business combination or 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 the law or stock exchange listing requirement. We intend to conduct
redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by
law or by a Nasdaq listing requirement or we choose to seek stockholder approval for business or other legal reasons.
If a stockholder vote is not required and
we do not decide to hold a stockholder vote for business or other legal reasons, we will, 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 any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation
of terms of the proposed business combination, and
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file tender offer documents with the SEC prior to consummating our initial business combination
that will 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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If we conduct redemptions pursuant to the
tender offer rules, our offer to redeem must 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 consummate our initial business combination until the expiration of the tender
offer period.
In connection with the consummation of
our business combination, we may redeem pursuant to a tender offer up to that number of shares of common stock that would permit
us to maintain net tangible assets of $5,000,001. However, the redemption threshold may be further limited by the terms and conditions
of our proposed initial business combination. For example, the proposed business combination may require: (i) cash consideration
to be paid to the target or members of its management team, (ii) cash to be transferred to the target for working capital or other
general corporate purposes or (iii) the allocation of cash to satisfy other conditions in accordance with the terms of the proposed
business combination. If the aggregate cash consideration we would be required to pay for all shares of common stock that are validly
tendered plus the amount of any cash payments required pursuant to the terms of the proposed business combination exceeds the aggregate
amount of cash available to us, taking into consideration the requirement that we maintain net tangible assets of at least $5,000,001
or such greater amount depending on the terms of our potential business combination, we will not consummate the business combination,
we will not purchase any shares of common stock pursuant to the tender offer and any shares of common stock tendered pursuant to
the tender offer will be returned to the holders thereof following the expiration of the tender offer.
When we conduct a tender offer to redeem
our public shares upon consummation of our initial business combination, in order to comply with the tender offer rules, the offer
will be made to all of our stockholders, not just our public stockholders. In connection with any such tender offer, our initial
stockholders have agreed to waive their redemption rights with respect to their private shares, private placement shares and public
shares and Cantor and Chardan have agreed to waive their redemption rights with respect to their private placement shares.
If, however, stockholder approval of the
transaction is required by law or Nasdaq rule, or we decide to obtain stockholder approval for business or other reasons, we will:
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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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If 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 consummation of the initial business combination.
Further, if we seek stockholder approval,
we will consummate our initial business combination only if a majority of the outstanding shares of common stock voted are voted
in favor of the business combination. Our initial stockholders have agreed to vote their private shares and private placement shares
and any public shares held by them in favor of our initial business combination. Upon completion of our initial public offering
and the private placement, our initial stockholders owned an aggregate of 4,060,000 shares of common stock, representing 21.3%
of our outstanding shares. Accordingly 5,470,001 public shares constituting 36.6% of our outstanding public shares must be voted
in favor of our initial business combination in order for it to be approved. Additionally, each public stockholder may elect to
redeem its public shares, irrespective of whether it votes for or against the proposed transaction, for cash equal to its pro rata
share of the aggregate amount then on deposit in the trust account, including interest but less interest released to us for working
capital purposes, to pay taxes or dissolution costs and subject to certain volume limitations, as described below. Our initial
stockholders have agreed to waive their redemption rights with respect to their private shares, private placement shares and public
shares, and Cantor and Chardan have agreed to waive their redemption rights with respect to their private placement shares, in
connection with the consummation of a business combination.
Many blank check companies would not be
able to consummate a business combination if the holders of the company’s public shares voted against a proposed business
combination and elected to redeem or convert more than a specified maximum percentage of the shares sold in such company’s
initial public offering, which percentage threshold has typically been between 19.99% and 39.99%. As a result, many blank check
companies have been unable to complete business combinations because the number of shares voted, against their initial business
combination by their public stockholders electing conversion exceeded the maximum conversion threshold pursuant to which such company
could proceed with a business combination. Since we have no such specified maximum redemption threshold and since even those public
stockholders who vote in favor of our initial business combination will have the right to redeem their public shares, our structure
is different in this respect from the structure that has been used by many blank check companies. This may make it easier for us
to consummate our initial business combination. However, in no event will we redeem our public shares in an amount that would cause
our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination. Moreover, the redemption
threshold may be further limited by the terms and conditions of our initial business combination. If the amount of redemptions
plus any cash required by our initial business combination would cause our net tangible assets to fall below $5,000,001, we would
not proceed with the redemption of our public shares and the related business combination, and instead may search for an alternate
business combination.
Limitation on redemption upon consummation
of a business combination if we seek stockholder approval
Notwithstanding the foregoing, if we seek
stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to shares in
excess of 20.0% or more of the shares sold in our initial public offering. We
refer to such shares in excess of 20.0% or more of the shares sold in our initial public offering as “Excess Shares”.
We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts
by such holders to use their ability to exercise their redemption rights as a means to force us or our management to purchase their
shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public
stockholder holding an aggregate of 20.0% or more of the shares sold in our initial public offering could threaten to exercise
its redemption rights if such holder’s shares are not purchased by us or our management at a premium to the then-current
market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 20.0% (less one
share) of the shares sold in our initial public offering, we believe we will limit the ability of a small number of stockholders
to unreasonably attempt to block our ability to consummate 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.
Tendering stock certificates in connection
with redemption rights
If we hold a stockholder meeting to approve
a potential business combination, 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
up to two business days prior to the meeting date or to deliver their shares to the transfer agent electronically using Depository
Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The proxy materials
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. Accordingly, a public stockholder would have until
two days prior to the vote on the business combination to tender its shares if it wishes to seek to exercise its redemption rights.
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 $45.00 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 many blank check companies. In order to perfect redemption rights in connection with their business combinations, many
blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and
a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was
seeking to exercise his redemption rights. After the business combination was approved, the company would contact such stockholder
to arrange for him to deliver his certificate to verify ownership. As a result, the stockholder then had an “option window”
after the consummation of the business combination during which he could monitor the price of the company’s stock in the
market. If the price rose above the redemption price, he could sell his shares in the open market before actually delivering his
shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit
before the stockholder meeting, would become “option” rights surviving past the consummation 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 the date of the stockholder meeting
set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivers 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 a business combination.
If the initial business combination is
not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not
be entitled to redeem their shares for the applicable pro rata share of the trust account. 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 consummated, we may continue to try to consummate a business combination with a different target until March 31, 2020.
Redemption of public shares and liquidation if no initial
business combination
We will have until March 31, 2020 to complete
our initial business combination. If we are unable to consummate our initial business combination on or before March 31, 2020,
we will distribute the aggregate amount then on deposit in the trust account, pro rata to our public shareholders by way of redemption
and cease all operations except for the purposes of winding up of our affairs, as further described herein. If we have not consummated
a business combination on or before March 31, 2020, or earlier, at the discretion of our board pursuant to the expiration of a
tender offer conducted in connection with a failed business combination, we will: (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem all public shares
then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
any amounts representing interest earned on the trust account, less any interest released to us for working capital purposes, the
payment of taxes or 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 liquidation distributions,
if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law.
The initial stockholders, Cantor, and Chardan
have agreed to waive their redemption rights with respect to their private shares and private placement shares (i) in connection
with the consummation of a business combination, (ii) in connection with a stockholder vote to amend our amended and restated certificate
of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination by March 31, 2020 and (iii) if we fail to consummate a business combination or liquidate by March
31, 2020. The initial stockholders have also agreed to waive their redemption rights with respect to public shares in connection
with the consummation of a business combination and in connection with a stockholder vote to amend our amended and restated certificate
of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination by March 31, 2020. However, if the initial stockholders of, or any of our officers, directors
or affiliates acquires public shares, they will be entitled to redemption rights with respect to such public shares if we fail
to consummate our initial business combination or liquidate within the required time period. In addition, Cantor and Chardan will
have the same redemption rights as a public stockholder with respect to any public shares they acquire.
Our initial stockholders, executive 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 that would affect the substance or timing of our obligation to redeem 100% of our public
shares if we do not complete our initial business combination on or before March 31, 2020 unless we provide our public stockholders
with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust
account and not previously released to us for working capital purposes or to pay our franchise and income taxes, divided by the
number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible
assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules).
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 the net proceeds from our
initial public offering and the private placement held out of trust, interest income on the balance of the trust account (net of
any taxes payable), of which up to $125,000 on an annual basis will be released to us to fund certain of our working capital requirements
and up to $100,000 may be released to us for dissolution expenses, although we cannot assure you that there will be sufficient
funds for such purposes.
The proceeds deposited in the trust account
could 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 less than the $10.00 per
public share initially on deposit in the trust account. Under Section 281(b) of the Delaware General Corporation Law (“DGCL”),
our plan of dissolution must provide for all claims against us to be paid in full or make provision for payments to be made in
full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution
from the trust account to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have
funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors,
service providers (except 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 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 only enter into an agreement
with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly
more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to
be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive
any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, pursuant
to a written agreement, Eric S. Rosenfeld has agreed that he will be liable to us if and to the extent any claims by a vendor for
services rendered or products sold to us, or a prospective target business with which we have discussed entering into a definitive
transaction agreement, reduce the amounts in the trust account to below $10.00 per share, except as to any claims by a third party
who executed a waiver of rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that an
executed waiver is deemed to be unenforceable against a third party, Mr. Rosenfeld will not be responsible to the extent of any
liability for such third party claims. We cannot assure you, however, that Mr. Rosenfeld will be able to satisfy those obligations.
If the proceeds in the trust account are
reduced below $10.00 per public share and Mr. Rosenfeld asserts that he is unable to satisfy any applicable obligations or that
he has no indemnification obligations related to a particular claim, our independent directors would determine whether to take
legal action against Mr. Rosenfeld to enforce his indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against Mr. Rosenfeld to enforce his indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment may choose not to do so in a particular instance. Accordingly,
we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.00
per public share.
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 if we do
not consummate our initial business combination by March 31, 2020 may be considered a liquidation distribution under Delaware law.
If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate
our initial business combination by March 31, 2020 is not considered a liquidation distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors
could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.
If we have not consummated a business combination by March 31, 2020, or earlier at the discretion of our board, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released
to us to pay our franchise and income taxes, up to $125,000 on an annual basis for certain of our working capital expenses and
up to $100,000 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 liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject in 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 March 31, 2020 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 10 years.
However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement,
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation and Mr. Rosenfeld’s indemnification of the trust account against certain claims as previously
described in this section, we believe that the claims that could be made against us will be significantly limited and that the
likelihood that any claim that would result in any liability extending to the trust account is remote.
If we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority
over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will
be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, our board may be viewed
as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not
be brought against us for these reasons.
Our public stockholders will be entitled
to receive funds from the trust account only (i) in the event of the redemption of our public shares if we do not consummate a
business combination on or before March 31, 2020, (ii) in connection with a stockholder vote to amend our amended and restated
certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not
complete our initial business combination on or before March 31, 2020 or (iii) if they redeem their respective shares for cash
upon the consummation of the initial business combination. Also, our management may cease to pursue a business combination prior
to March 31, 2020 (our board of directors may determine to liquidate the trust account prior to such expiration if it determines,
in its business judgment, that it is improbable within the remaining time to identify an attractive business combination or satisfy
regulatory and other business and legal requirements to consummate a business combination). In no other circumstances will a stockholder
have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with
our initial business combination, a stockholder’s voting in connection with the business combination alone will not result
in a stockholder’s redeeming its shares for an applicable pro rata share of the trust account. Such stockholder must have
also exercised its redemption rights described above.
Competition
In identifying, evaluating and selecting
a target business for a business combination, we may encounter intense competition from other entities having a business objective
similar to ours, including other blank check companies, private equity groups and leveraged buyout funds and operating businesses
seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation
to pay cash to our public stockholders who exercise their redemption rights may reduce the resources available to us for an initial
business combination. In addition, the number of our outstanding warrants, and the future dilution they potentially represent,
may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in
successfully negotiating an initial business combination.
If we succeed in effecting a business combination,
there will be, in all likelihood, intense competition from competitors of the target business. We cannot assure you that, subsequent
to a business combination, we will have the resources or ability to compete effectively.
Employees
We currently have three executive officers.
These individuals are not obligated to devote any specific number of hours to our affairs but they intend to devote as much of
their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time they
will devote in any time period will vary based on whether a target business has been selected for our initial business combination
and the stage of the business combination process we are in. We do not intend to have any full time employees prior to the consummation
of our initial business combination.
ITEM 1A. RISK FACTORS
An investment in our securities involves
a high degree of risk. You should consider carefully the material risks described below, which we believe represent the material
risks related to our business and our securities, together with the other information contained in this annual report on Form 10-K,
before making a decision to invest in our securities. This annual report on Form 10-K also contains forward-looking statements
that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking
statements as a result of specific factors, including the risks described below.
We are an emerging growth company
with no operating history and no revenue and, accordingly, you have no basis on which to evaluate our ability to achieve our business
objective.
We are an emerging growth company with
no operating history and no revenue. We will not commence operations until we consummate 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 acquiring
one or more operating businesses or entities. If we fail to complete a business combination, we will never generate any operating
revenues.
The report of our independent registered public accounting
firm expresses substantial doubt about our ability to continue as a going concern
As of December 31, 2019, we had $87,797 in cash
and cash equivalents and working capital of $101,158 (excluding income taxes and franchise fees which may be paid
out of the Trust Account and the note payable to our sponsor). Further, we have incurred and expect to continue to incur significant
costs in pursuit of our acquisition plans. Our plans to consummate our initial business combination may not be successful.
Additionally, we have only until March 31, 2020 to complete
our initial business combination. If we are unable to complete our business combination within such period, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest (less up to $100,000 of interest to pay dissolution expenses (which interest shall be net of
taxes payable and up to $125,000 released to us annually to fund working capital requirements) divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right
to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law.
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. No adjustments to our financial statements contained in this
Form 10-K have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after March
31, 2020.
Our public stockholders may not be
afforded an opportunity to vote on our proposed business combination, unless such vote is required by law or Nasdaq rule, which
means we may consummate 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 state law
or the rules of Nasdaq or if we decide to hold a stockholder vote for business or other reasons. For example, Nasdaq rules currently
allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder approval
if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination.
Therefore, if we structure a business combination that requires us to issue more than 20% of our outstanding shares, we would seek
stockholder approval of such business combination. However, except as required by law, the decision as to whether we will seek
stockholder approval of a proposed business combination 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 outstanding shares
of our common stock do not approve of the business combination we consummate.
In connection with any stockholder
meeting called to approve a proposed initial business combination, we may require stockholders who wish to convert their shares
in connection with a proposed business combination to comply with specific requirements for conversion that may make it more difficult
for them to exercise their conversion rights prior to the deadline for exercising their rights.
In connection with any stockholder meeting
called to approve a proposed initial business combination, each public stockholder will have the right, regardless of whether he
is voting for or against such proposed business combination, to demand that we convert his shares of common stock into a pro rata
share of the trust account as of two business days prior to the consummation of the initial business combination. We may require
public stockholders who wish to convert their shares in connection with a proposed business combination to either (i) tender their
certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically using the Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holders’ option, in each case prior to a date set forth
in the tender offer documents or proxy materials sent in connection with the proposal to approve the business combination. In order
to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need
to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain
physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers
or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. While we have been advised that
it takes a short time to deliver shares through the DWAC System, we cannot assure you of this fact. Accordingly, if it takes longer
than we anticipate for stockholders to deliver their shares, stockholders who wish to convert may be unable to meet the deadline
for exercising their conversion rights and thus may be unable to convert their shares.
If we seek stockholder approval of
our business combination and we do not conduct redemptions pursuant to the tender offer rules, a stockholder, or a “group”
of stockholders, who are deemed to hold an aggregate of 20.0% or more of our common stock may not redeem any shares they hold that
equal or exceed such 20.0% amount.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender
offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined
under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to shares in excess of 20.0%
or more of the shares sold in our initial public offering. We refer to such shares in excess of 20.0% or more of the shares sold
in our initial public offering as “Excess Shares”. Your inability to redeem any Excess Shares will reduce your influence
over our ability to consummate a 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 consummate our business combination. As a result, you would continue to hold that number of shares exceeding 20.0%
(less one share) and, in order to dispose of such shares, would be required to sell them in open market transactions, potentially
at a loss.
If, in connection with any stockholder
meeting called to approve a proposed business combination, we require public stockholders who wish to convert their shares to comply
with specific requirements for conversion, such converting stockholders may be unable to sell their securities when they wish to
in the event that the proposed business combination is not approved.
If we require public stockholders who wish
to convert their shares to comply with specific requirements for conversion and such proposed business combination is not consummated,
we will promptly return such certificates to the tendering public stockholders. Accordingly, investors who attempted to convert
their shares in such a circumstance will be unable to sell their securities after the failed acquisition until we have returned
their securities to them. The market price for our shares of common stock may decline during this time and you may not be able
to sell your securities when you wish to, even while other stockholders that did not seek conversion may be able to sell their
securities.
If we seek stockholder approval of
our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless
of how our public stockholders vote.
Our initial stockholders have agreed to
vote the private shares and any private placement shares and public shares they hold in favor of our initial business combination.
Our initial stockholders own approximately 26.6% of our common stock as of the date of this annual report. 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 our initial stockholders agreed to vote their private shares, private placement shares and public shares
in accordance with the majority of the votes cast by our public stockholders.
Your ability to affect the investment
decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us
for cash, unless we seek stockholder approval of the business combination.
At the time of your investment in us, you
will not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Since our board of
directors may consummate a business combination without seeking stockholder approval, public stockholders may not have the right
to vote on the business combination unless we seek such stockholder vote. Accordingly, your ability to affect the investment decision
regarding a potential business combination may be limited to exercising your redemption rights with respect to a proposed business
combination.
The ability of our public stockholders
to redeem their shares for cash may make us unattractive to potential business combination targets, which may make it difficult
for us to enter into a business combination with a target.
We may enter into a 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. Our
amended and restated certificate of incorporation requires us to provide all of our stockholders with an opportunity to redeem
all of their shares in connection with the consummation of any initial business combination, although each initial stockholder
and each holder of private placement units has agreed to waive his, her or its respective redemption rights with respect to private
shares and private placement shares, and in the case of the initial stockholders, public shares, held by him, her or it in connection
with the consummation of our initial business combination. Consequently, if accepting all properly submitted redemption requests
would cause our net tangible assets to be less than the amount necessary to satisfy a closing condition as described above, or
less than the $5,000,001 minimum of tangible net assets which we are required to maintain, we would not proceed with such redemption
and the related business combination. However, we may be required to maintain significantly larger amounts of cash depending upon
the terms of the business combination. Accordingly, we may need to arrange third party financing to help fund our business combination
in case a larger percentage of stockholders exercise their redemption rights than we expect. Raising additional funds to cover
any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our
ability to effectuate the most attractive business combination available to us.
If, pursuant to the terms of our proposed
business combination, we are required to maintain a minimum net worth or retain a certain amount of cash in trust in order to consummate
the business combination, the ability of our public shareholders to cause us to redeem their shares in connection with such proposed
transaction will increase the risk that we will not meet that condition and, accordingly, that we will not be able to complete
the proposed transaction. If we do not complete a proposed business combination, you would not receive your pro rata portion of
the trust account until we liquidate or you are able to sell your stock in the open market. If you were to attempt to sell your
stock in the open market at that time, the price you receive could represent a discount to the pro rata amount in our 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.
Prospective targets would be aware of these
risks and, thus, may be reluctant to enter into a business combination transaction with us.
The requirement that we complete
a business combination by March 31, 2020 may give potential target businesses leverage over us in negotiating a business combination
and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution
deadline, which could undermine our ability to consummate a 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 consummate a business combination on or
before March 31, 2020. Consequently, such target businesses may obtain leverage over us in negotiating a business combination,
knowing that if we do not complete a business combination with it, we may be unable to identify another target business and complete
a business combination with any target business. This risk will increase as we get closer to March 31, 2020. Depending upon when
we identify a potential target business, we may have only a limited time to conduct due diligence and may enter into a business
combination on terms that we might have rejected upon a more comprehensive investigation.
We may not obtain a fairness opinion
with respect to the target business that we seek to acquire and therefore you may be relying solely on the judgment of our board
of directors in approving a proposed business combination.
We will only be required to obtain a fairness
opinion with respect to the target business that we seek to acquire if it is an entity that is affiliated with any of our officers,
directors or initial stockholders. In all other instances, we will have no obligation to obtain an opinion. Accordingly, investors
will be relying solely on the judgment of our board of directors in approving a proposed business combination.
If we seek stockholder approval of
our initial business combination, our sponsor, directors, executive officers, advisors and their affiliates may elect to purchase
shares from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float”
of our common stock.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender
offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated
transactions or in the open market either prior to or following the completion of our initial business combination, although they
are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such stockholder, although still
the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights.
In the event that our sponsor, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated
transactions from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would
be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares
in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination
or to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount
of cash at the closing of our business combination, where it appears that such requirement would otherwise not be met. This may
result in the completion of our business combination that may not otherwise have been possible.
Purchases of common stock in the
open market or in privately negotiated transactions by our initial stockholders, directors, officers or their affiliates may make
it difficult for us to continue to list our common stock on Nasdaq or another national securities exchange.
If our initial stockholders, directors,
officers or their affiliates purchase shares of our common stock in the open market or in privately negotiated transactions, it
would reduce the public “float” of our common stock and the number of beneficial holders of our common stock, which
may make it difficult to maintain the listing or trading of our common stock on a national securities exchange if we determine
to apply for such listing in connection with the business combination. If the number of our public holders falls below 300 or if
the total number of shares held by non-affiliates is less than 500,000, we will be non-compliant with Nasdaq’s continued
listing rules and our common stock could be de-listed.
We may not be able to consummate
a business combination by March 31, 2020, in which case we would cease all operations except for the purpose of winding up and
we would redeem our public shares and liquidate.
We must complete our initial business combination
by March 31, 2020. We may not be able to find a suitable target business and consummate a business combination within that time
period. If we have not consummated a business combination on or before March 31, 2020, or earlier, at the discretion of our board
pursuant to the expiration of a tender offer conducted in connection with a failed business combination, we will: (i) cease all
operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us
for working capital purposes, the payment of taxes or 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
liquidation distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii)
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
If we are unable to complete our
initial business combination within the prescribed time frame, our warrants will expire worthless.
Our outstanding warrants may not be exercised
until after the completion of our initial business combination and are not entitled to participate in the redemption of the shares
of our common stock conducted in connection with the consummation of our business combination. Accordingly, our warrants will expire
worthless if we are unable to consummate a business combination by March 31, 2020, or earlier if our board resolves to liquidate
and dissolve in connection with a failed business combination.
You will not have any rights to or
interest in funds from the trust account, except under limited circumstances. To liquidate your investment, therefore, you may
be forced to sell your shares or warrants, potentially at a loss.
Our public stockholders will be entitled
to receive funds from the trust account only upon the earlier to occur of: (i) the consummation of our initial business combination;
(ii) the redemption of our public shares if we are unable to consummate a business combination by March 31, 2020, subject to applicable
law; (iii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and
restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if
we do not complete our initial business combination by March 31, 2020; or (iv) otherwise upon our liquidation or in the event our
board of directors resolves to liquidate the trust account and ceases to pursue the consummation of a business combination prior
to March 31, 2020 (our board of directors may determine to liquidate the trust account prior to such expiration if it determines,
in its business judgment, that it is improbable within the remaining time that we will be able to identify an attractive business
combination or satisfy regulatory and other business and legal requirements to consummate a business combination). In addition,
if our plan to redeem our public shares if we are unable to consummate an initial business combination by March 31, 2020 is not
consummated for any reason, 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 March 31, 2020 before they receive funds from our trust account. In no other circumstances will a public stockholder
have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell
your public shares or warrants, potentially at a loss.
Because of our limited resources
and the significant competition for business combination opportunities, it may be more difficult for us to complete a business
combination. If we are unable to complete our initial business combination, you may receive only $10.00 per share from our redemption
of your shares, and our rights and 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 initial public offering, 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.
Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination. If we are
unable to complete our initial business combination, our public stockholders may receive only $10.00 per share from our redemption
of our shares, and our rights and warrants will expire worthless.
If the net proceeds from our initial
public offering and the private placement held out of trust and the interest income earned on the trust account available to us
are insufficient to allow us to operate until we consummate an initial business combination, we may be unable to complete such
initial business combination.
We cannot assure you that available funds
will be sufficient to allow us to consummate an initial business combination within the required time period. Our initial stockholders,
officers, directors or their affiliates are not obligated to loan any funds to us. Additionally, if we 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 expend funds available
to us more rapidly than we currently expect. If our funds are insufficient, and we are unable to generate funds from other sources,
we may be forced to liquidate.
Subsequent to consummation of our
initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges
that could have a significant negative effect on our financial condition, results of operations and our stock price, which could
cause you to lose some or all of your investment.
Even if we conduct extensive due diligence
on a target business with which we combine, we cannot assure you that this examination will uncover all material risks that may
be presented by a particular target business, or that factors outside of the target business and outside of our control will not
later arise. Even if our due diligence successfully identifies the principal risks, unexpected risks may arise and previously known
risks may materialize in a manner not consistent with our preliminary risk analysis. As a result, from time to time following our
initial business combination, we may be forced to write-down or write-off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even though these charges may be non-cash items and not have an immediate
impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us
or our 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.
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.
Placing funds in the trust account may
not protect those funds from third party claims against us. Although we will seek to have all vendors, service providers (except
our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim 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, claims for fraudulent inducement, breach
of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver. If any third
party refuses to execute an agreement waiving claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement without a waiver if management believes that such third
party’s engagement would be significantly more beneficial to us than any available 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 management believes to be significantly superior to those of other consultants who would execute a waiver or in cases
where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such
entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts
or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares,
if we are unable to complete a business combination within the required time frame, or upon the exercise of a redemption right
in connection with a business combination, we will be required to provide for payment of claims of creditors that were not waived
that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received
by public stockholders could be less than the $10.00 per share initially held in the trust account due to claims of such creditors.
Pursuant to a written agreement, Eric S. Rosenfeld has agreed that he will be liable to us if and to the extent any claims by a
vendor for services rendered or products sold to us, or a prospective target business with which we discussed entering into a transaction
agreement, reduce the amounts in the trust account to below $10.00 per share except as to any claims by a third party who executed
a waiver of rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our
initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, if an executed waiver
is deemed to be unenforceable against a third party, Mr. Rosenfeld will not be responsible to the extent of any liability for such
third party claims. We have not independently verified whether Mr. Rosenfeld has sufficient funds to satisfy his indemnity obligations,
we have not asked Mr. Rosenfeld to reserve for such indemnification obligations and we cannot assure you that he would be able
to satisfy those obligations.
Our directors may decide not to enforce
the indemnification obligations of Mr. Rosenfeld, resulting in a reduction in the amount of funds in the trust account available
for distribution to our public stockholders.
If proceeds in the trust account are reduced
below $10.00 per public share and Mr. Rosenfeld asserts that he is unable to satisfy his obligations or that he has no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against Mr. Rosenfeld
to enforce his indemnification obligations. While we currently expect that our independent directors would take legal action on
our behalf against Mr. Rosenfeld to enforce his 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.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be
viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us
to claims of punitive damages.
If, after we distribute the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court
could seek to recover all amounts received by our stockholders. In addition, by making distributions to public stockholders before
making provision for creditors, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or
having acted in bad faith, thereby exposing itself and us to claims for punitive damages.
If, before distributing the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and
the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included
in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent
any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection
with our liquidation may be reduced.
If we are deemed to be an investment
company under the Investment Company Act, we may be subject to burdensome regulatory requirements and our activities may be restricted,
which may make it difficult for us to complete a 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;
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restrictions on the issuance of securities; and
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restrictions on the incurrence of debt.
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Each of the foregoing risks may make it
difficult for us to complete a business combination. In addition, we may have to:
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register as an investment company;
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adopt a specific form of corporate structure; and
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file reports, maintain records, and adhere to voting, proxy, disclosure and other requirements.
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We do not believe that our anticipated
principal activities will subject us to Investment Company Act regulation. The proceeds held in the trust account may be invested
by the trustee only in United States government treasury bills with a maturity of 180 days or less or in money market funds investing
solely in United States treasury 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 make it
more difficult to complete our initial business combination. If we are unable to complete our initial business combination, our
public stockholders may only receive $10.00 per share on our redemption, and our rights and warrants will expire worthless.
Changes in laws or regulations, or
a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations
enacted by national, regional and local governments, including in particular, reporting and other requirements under the Exchange
Act. 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 result in fines, injunctive relief or similar remedies which could be costly to
us or limit our ability to complete an initial business combination or operate the post-combination company successfully.
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 consummate our initial business combination on or before March 31, 2020 may be considered a liquidation 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 March 31, 2020 if we do not consummate
an initial business combination and, therefore, we do not intend to comply with those procedures.
Because we will not be complying with Section
280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our
dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited
to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers
or investment bankers) 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 if
we do not consummate our initial business combination within the required time period is not considered a liquidation distribution
under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute
of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years,
as in the case of a liquidation distribution.
We may not hold an annual meeting
of stockholders until after we consummate a business combination.
We may not hold an annual meeting of stockholders
until after we consummate a business combination (unless required by Nasdaq), and thus may not be in compliance with Section 211(b)
of the DGCL, which requires that an annual meeting of stockholders be held for the purposes of electing directors in accordance
with a company’s bylaws unless directors are elected by written consent in lieu of such a meeting. Therefore, if our stockholders
want us to hold an annual meeting prior to our consummation of a 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.
A registration statement covering
the shares underlying our warrants may not be in place when an investor desires to exercise warrants, thus precluding such investor
from being able to exercise its warrants and causing such warrants to expire worthless.
Under the terms of the warrant agreement
governing our warrants, we have agreed to use our best efforts to file a registration statement under the Securities Act covering
such shares and maintain a current prospectus relating to the common stock issuable upon exercise of the warrants, and to use our
best efforts to take such action as is necessary to register or qualify for sale, in those states in which the warrants were initially
offered by us, the shares issuable upon exercise of the warrants, to the extent an exemption is not available. We cannot assure
you that we will be able to do so. If the shares issuable upon exercise of the warrants are not registered under the Securities
Act, we will be required to permit holders to exercise their warrants on a cashless basis under the circumstances specified in
the warrant agreement. However, in no event will we be required to issue cash, securities or other compensation in exchange for
the warrants if we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable
state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified, the warrant
holder will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders
who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of
common stock included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right even
if we are unable to register or qualify the underlying shares of common stock for sale under all applicable state securities laws.
The grant of registration rights
to our initial stockholders and purchasers of private placement units may make it more difficult to complete our initial business
combination, and the future exercise of such rights may reduce the market price of our common stock.
Pursuant to an agreement entered into concurrently
with the consummation of our initial public offering, our initial stockholders, purchasers of private placement units and their
permitted transferees can demand that we register the private shares, private placement units, private placement shares, private
placement rights and private placement warrants, and the shares of common stock issuable upon conversion of the private placement
rights and exercise of the private placement warrants. These registration rights will be exercisable at any time commencing upon
the date that such shares are released from transfer restrictions. 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 reduce the market price of our
common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult
to conclude because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask
for more cash consideration to offset the negative impact on the market price of our common stock that is expected when the securities
owned by our initial stockholders are registered.
You will be unable to ascertain the
merits or risks of any particular target business’ operations.
We may pursue acquisition opportunities
in any business sector or geographic region we wish, except that we will not, under our amended and restated certificate of incorporation,
be permitted to effectuate a business combination with another blank check company or similar company with nominal operations.
If we consummate our initial business combination, we may be affected by numerous risks inherent in the business operations of
the entity with which we combine. Because we will seek to acquire businesses that potentially need financial, operational, strategic
or managerial redirection, we may be affected by the risks inherent in the business and operations of a financially or operationally
unstable entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business,
we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate
time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to
control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment
in our securities will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available,
in an acquisition target.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into a 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 specific criteria
and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into a business
combination will not have all of these positive attributes. If we consummate a business combination with a target that does not
meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet
all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does
not meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may
make it difficult for us to meet any closing condition with a target business that requires us to have a minimum net worth or a
certain amount of cash. In addition, if stockholder approval of the transaction is required by law or Nasdaq, or we decide to obtain
stockholder approval for business or other reasons, it may be more difficult for us to obtain stockholder approval of our initial
business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our
initial business combination, our public stockholders may only receive $10.00 per share on our redemption, and our warrants will
expire worthless.
You may not have any assurance from
an independent source that the price we are paying for the target in our initial business combination is fair to our stockholders
from a financial point of view.
Unless we consummate our initial business
combination with an affiliated entity, we are not required to obtain an opinion from an independent third party that the price
we are paying is fair to our stockholders from a financial point of view. If we do not obtain an opinion, 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.
We may issue additional common or
preferred stock to complete our initial business combination or under an employee incentive plan after consummation of our initial
business combination, which would dilute the interest of our stockholders and likely present other risks.
We may issue a substantial number of additional
shares of common or preferred stock to complete our initial business combination or under an employee incentive plan after consummation
of our initial business combination. The issuance of additional shares of common or preferred stock:
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may significantly dilute the equity interest of investors of our initial public offering;
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may subordinate the rights of holders of common stock if preferred stock is issued with rights
senior to those afforded our common stock;
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could cause a change in control if a substantial number of 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 officers and directors; and
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may adversely affect prevailing market prices for our common stock, and/or warrants after the business
combination.
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Resources could be wasted in researching
acquisitions that are not consummated, which could materially adversely affect subsequent attempts to locate another target business
and consummate our initial business combination. If we are unable to complete our initial business combination, our public stockholders
may only receive $10.00 per share from our redemption of our shares 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 consummate
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 due to a reduction in the funds available for expenses relating to such efforts. If we are unable to
complete our initial business combination, our public stockholders may only receive $10.00 per share from our redemption of their
shares and our warrants will expire worthless.
We are dependent upon our officers
and directors; the loss of any one or more of them could adversely affect our ability to complete a business combination.
Our operations depend upon the background,
experience and contacts of our officers and directors. We believe that our success depends on the continued service of our officers
and directors, at least until we have consummated a business combination. We do not have an employment agreement with, or key-man
insurance on the life of, any of our directors or officers. In addition, our executive officers and directors are not required
to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between
our operations and the search for a business combination and their other business commitments. We do not intend to have any full-time
employees prior to the consummation of our business combination. Each of our executive officers and directors is engaged in other
business endeavors and is not obligated to contribute any specific number of hours per week to our affairs. If our executive officers’
and directors’ other business commitments require them to devote substantial amounts of time in excess of their current commitment
levels, it could limit their ability to devote time to our affairs which make it more difficult for us to identify an acquisition
target and consummate our business combination.
Our success following our initial
business combination likely will depend upon the efforts of management of the target business. The loss of any of the key personnel
of the target’s management team could make it more difficult to operate the target profitably.
Although some of our key personnel may
remain with the target business in senior management or advisory positions following a business combination, we can offer no assurance
that any will do so. Moreover, as a result of the existing commitments of our key personnel, it is likely that we will retain some
or all of the management of the target business to conduct its operations. The departure of any key members of the target’s
management team could thus make it more difficult to operate the post-combination business profitably. Moreover, to the extent
that we will rely upon the target’s management team to operate the post-combination business, we will be subject to risks
regarding their managerial competence. While we intend to closely scrutinize the skills, abilities and qualifications of any individuals
we retain after a business combination, our ability to do so may be limited due to a lack of time resources or information. Accordingly,
we cannot assure you that our assessment of these individuals will prove to be correct and that they will have the skills, abilities
and qualifications we expect.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with our initial 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 would be advantageous to us.
Our key personnel may decide to remain
with the company after the consummation 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 consummation of our initial business combination. The personal and
financial interests of such individuals may influence their motivation in identifying and selecting a target business and cause
them to have conflicts of interest in determining whether a particular business combination would be advantageous to us.
Our officers and directors are now
and 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 or entities. Our executive
officers and directors may in the future become affiliated with entities that are engaged in the business of acquiring other businesses
or entities. In each case, our executive officers and directors’ existing directorships or other responsibilities may give
rise to contractual or fiduciary obligations that take priority over any obligation owed to us. Our amended and restated certificate
of incorporation provides that the doctrine of corporate opportunity, or any other analogous doctrine, will not apply to us or
any of our officers or directors or in circumstances that would conflict with any fiduciary duties or contractual obligations to
other entities they may have. Accordingly, business opportunities that may be attractive to the entities described above will not
be presented to us unless such entities have declined to accept such opportunities. As a result, our officers and directors may
have conflicts of interest in determining to which entity a particular business opportunity should be presented. We cannot assure
you that these conflicts will be resolved in our favor or that a potential target business would not be presented to another entity
prior to its presentation to us.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our executive officers, directors
or existing stockholders, which may raise potential conflicts of interest.
We may decide to acquire one or more businesses
affiliated with our initial stockholders, or our officers and directors. Our officers and directors also serve as officers and
board members of other entities. Such entities may compete with us for business combination opportunities. Despite our agreement
to obtain an opinion from an independent investment banking firm, a firm that regularly prepares valuation reports on the type
of company that we are seeking to acquire or an independent accounting firm regarding the fairness to our stockholders from a financial
point of view of a business combination with one or more businesses affiliated with our executive officers, directors or our initial
stockholders, 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.
We may have a limited ability to
assess the management of a prospective target business and, as a result, may affect our initial business combination with a target
business whose management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting
a business combination with a prospective target business, our ability to assess the target business’ 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 expected. 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.
The officers and directors of an
acquisition candidate may resign upon consummation of a business combination. The loss of an acquisition 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 consummation 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 us 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 an acquisition target’s key personnel could negatively impact the operations and profitability of our post-combination
business.
Since holders of private shares and
private placement units will lose some or all of their investment in us if we do not consummate a business combination, and since
certain of our officers and directors have significant financial interests in us, a conflict of interest may arise in determining
whether a particular acquisition target is appropriate for our initial business combination.
The personal and financial interests of
our officers and directors in consummating an initial business combination, along with their flexibility in identifying and selecting
a prospective acquisition candidate, may influence their motivation in identifying and selecting a target business combination
and completing an initial business combination that is not in the best interests of our stockholders. Consequently, the discretion
of our officers and directors, in identifying and selecting a suitable target business combination may result in a conflict of
interest when determining whether the terms, conditions and timing of a particular initial business combination are appropriate
and in the best interest of our public stockholders.
We may issue notes or other debt
securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our financial condition
and the value of our stockholders’ investment in us.
Although we have no commitments to issue
any notes or other debt securities, otherwise to incur debt, we may choose to incur substantial debt in order to complete our initial
business combination. The incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues or cash flows after an initial
business combination are insufficient to meet our debt service obligations;
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acceleration of our obligations to repay the indebtedness, even if we make all principal and interest
payments when due, if we breach covenants that require the maintenance of financial ratios or reserves without a waiver or renegotiation
of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on
demand and the lender demands payment;
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our inability to obtain necessary additional financing if any debt we incur contains covenants
restricting our ability to obtain additional financing while the debt is outstanding;
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prohibitions of, or limitations on, our ability to pay dividends on our common stock;
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use of a substantial portion of our cash flow to pay principal and interest on our debt, which
will reduce the funds available for dividends on our common stock if declared, as well as for expenses, capital expenditures, acquisitions
and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the
industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, execution of growth strategies and other purposes and other disadvantages compared to our competitors
who have less debt.
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We do not have a policy with respect to
how much debt we may incur. To the extent that the amount of our debt increases, the impact of the effects listed above may also
increase.
We may be able to complete a business
combination with only one business, which would result in our success being dependent solely on a single business which may have
a limited number of products or services. This lack of diversification may harm our operations and profitability.
We are not limited as to the number of
businesses we may acquire in our initial business combination. However, we may not be able to effectuate a business combination
with more than one target business because of various factors, including the limited amount of the net proceeds of our initial
public offering, 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 consummating an initial business combination with only a single entity, our lack of diversification may
subject us to numerous economic, competitive and regulatory risks particular to the industry area in which the acquired business
operates. 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:
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solely depend upon the performance of a single business, property or asset, or
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depend upon the development or market acceptance of a single or limited number of products, processes
or services.
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We may attempt to consummate business
combinations with multiple prospective targets simultaneously, which may hinder our ability to consummate an initial business combination
and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to acquire several businesses
simultaneously that are owned by different sellers, we will need each seller 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 the 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, we may be unable to operate
the combined business successfully, and you could lose some or all of your investment in us.
We may attempt to consummate 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 expected, or at all.
In pursuing our acquisition strategy, we
may seek to effectuate our initial business combination with a privately held company. By definition, very little public information
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 the information developed during our due diligence examination, which may be limited. As a result,
we could acquire a company that is not as profitable as we expected, or at all. Furthermore, the relative lack of information about
a private company may hinder our ability to properly assess the value of such a company which could result in our overpaying for
that company.
If we effect our initial business
combination with a business located outside of the United States, we would be subject to a variety of additional risks that could
result in us being unable to operate the business successfully.
We may pursue an initial business combination
with a business located outside of the United States. If we do, we would be subject to any special considerations or risks associated
with businesses operating in the target’s home jurisdiction, including any of the following:
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist attacks and wars; and
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deterioration of political relations with the United States.
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We may not be able to adequately address
these additional risks. If we are unable to do so, we may be unable to operate the acquired business successfully.
If we effect our initial business
combination with a business located outside of the United States, the laws applicable to such business will likely govern all of
our material agreements and we may not be able to enforce our legal rights.
If we effect our initial business combination
with a business located outside of the United States, the laws of the country in which such business operates will govern almost
all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements
or enforce remedies for breaches of those agreements in that jurisdiction. The system of laws and the enforcement of existing laws
in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce
or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or
capital. Additionally, if we acquire a business located outside of the United States, it is likely that substantially all of our
assets would be located outside of the United States and some of our officers and directors might reside outside of the United
States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service
of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and
criminal penalties of our directors and officers under federal securities laws.
We 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 anticipate structuring our initial business
combination to acquire 100% of the equity interest or assets of the target business or businesses. However, we may structure our
initial business combination to acquire less than 100% of the equity interest or assets of the target business, but only if we
(or any entity that is a successor to us in a business combination) acquire a majority of the outstanding voting securities or
assets of the target. Even if we own a majority interest in the target, our stockholders prior to the business combination may
collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and
us in the business combination 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 outstanding capital stock of a target. In this case, we would acquire a 100%
interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders
immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such
transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group
obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that
we will not be able to maintain our control of the target business.
We do not have a specified maximum
redemption threshold. The absence of such a redemption threshold will make it easier for us to consummate a business combination
with which a substantial number of our stockholders do not agree.
Since we have no specified percentage threshold
for redemption in our amended and restated certificate of incorporation, our structure is different in this respect from the structure
that has been used by many blank check companies. Many blank check companies would not be able to consummate a business combination
if the holders of the company’s public shares voted against a proposed business combination and elected to redeem or convert
more than a specified percentage of the shares sold in such company’s initial public offering, which percentage threshold
has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations
because the amount of public shares for which conversion was elected exceeded the maximum conversion threshold pursuant to which
such company could proceed with a business combination. However, we may be able to consummate a business combination even though
a substantial number of our public stockholders do not agree with the transaction and have redeemed their shares. However, in no
event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation
of our initial business combination, and the amount that we redeem may be further limited by the terms and conditions of our initial
business combination. In such case, we would not proceed with the redemption of our public shares and the related initial business
combination, and instead may search for an alternate business combination.
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 owning 65% of the issued and
outstanding shares of our common stock, which is a lower amendment threshold than that of many blank check companies. It may be
easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the consummation of an initial
business combination that our stockholders may not support.
Many blank check companies have a provision
in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s
pre-business combination activity, without approval by a certain percentage of the company’s stockholders. Amendment of these
provisions requires approval by between 90% and 100% of the company’s public stockholders in many cases. Our amended and
restated certificate of incorporation provides that provisions related to pre-business combination activity may be amended if approved
by holders owning 65% of the issued and outstanding shares 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 owning 65% of the issued and outstanding
shares of our common stock (in each case including all shares held by the initial stockholders, holders of private placement units,
our officers and our directors); provided, however, that if the effect of any proposed amendment, if adopted, would be either to
(i) reduce the amount in the trust account available to redeeming stockholders to less than $10.00 per share, or (ii) delay the
date on which a public stockholder could otherwise redeem shares for such per share amount in the trust account, we will provide
a right for public shareholders to redeem public shares if such an amendment is approved). As a result, we may be able to amend
the provisions of our amended and restated certificate of incorporation which govern our pre-business combination actions more
easily that many blank check companies, and this may increase our ability to consummate a business combination with which you do
not agree.
Our initial stockholders, executive 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 that would affect the substance or timing of our obligation to redeem 100% of our public
shares if we do not complete our initial business combination by March 31, 2020 unless we provide our public stockholders with
the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares. Our
stockholders are not parties to, or third-party beneficiaries of, this written agreement with our initial stockholders, executive
officers and directors and, as a result, will not have the ability to pursue remedies against these persons and entities for any
breach of such agreement. Accordingly, in the event of a breach, our stockholders would need to pursue a stockholder derivative
action, subject to applicable law.
We may amend the terms of the rights
in a manner that may be adverse to holders with the approval by the holders of at least 65% of the then outstanding rights.
Our rights were issued in registered form
under a Right Agreement between Continental Stock Transfer & Trust Company, as rights agent, and us. The Right Agreement provides
that the terms of the rights may be amended without the consent of any holder to cure any ambiguity or correct any defective provision.
The Right Agreement requires the approval by the holders of at least 65% of the then outstanding rights in order to make any change
that adversely affects the interests of the registered holders. Accordingly, we may amend the terms of the rights in a manner adverse
to a holder if holders of at least 65% of the then outstanding rights approve of such amendment. Although our ability to amend
the terms of the rights with the consent of at least 65% of the then outstanding rights is unlimited, examples of such amendments
could be amendments to, among other things, decrease the number of shares of our common stock issuable upon conversion of a right.
We may amend the terms of the warrants
in a manner that may be adverse to holders with the approval by the holders of at least 65% of the then outstanding warrants.
Our warrants were issued in registered
form under a Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The Warrant Agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective
provision, but requires the approval by the holders of at least 65% of the then outstanding warrants to make any change that adversely
affects the interests of the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder
if holders of at least 65% of the then outstanding warrants approve of such amendment. Although our ability to amend the terms
of the warrants with the consent of at least 65% of the then outstanding 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 our common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding
warrants (excluding any private placement warrants held by our initial stockholders or their permitted transferees) at any time
after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price
(or the closing bid price of our common stock in the event the shares of our common stock are not traded on any specific trading
day) of the common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending on the
third business day prior to the date we send proper notice of such redemption, provided that on the date we give notice of redemption
and during the entire period thereafter until the time we redeem the warrants, we have an effective registration statement under
the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating
to them is available. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable
to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding
warrants could force you: (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants
or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely
to be substantially less than the market value of your warrants.
Our ability to require holders of
our warrants to exercise such warrants on a cashless basis will cause holders to receive fewer shares upon their exercise of the
warrants than they would have received had they been able to exercise their warrants for cash.
If we call our warrants for redemption,
we will have the option to require any holder that wishes to exercise his warrants (including any warrants held by our initial
stockholders or their permitted transferees) to do so on a “cashless basis.” If we choose to require holders to exercise
their warrants on a cashless basis, the number of shares received by a holder upon exercise will be fewer than it would have been
had such holder exercised his warrants for cash. This will have the effect of reducing the potential “upside” of the
holder’s investment in our company.
Nasdaq may delist our securities
from trading which could limit investors’ ability to make transactions in our securities and subject us to additional trading
restrictions.
Our securities are listed on Nasdaq. However,
we cannot assure you that our securities will continue to be listed on Nasdaq in the future or prior to a business combination.
In order to continue listing our securities on Nasdaq prior to a business combination, we must maintain certain financial, distribution
and stock price levels. Generally, we must maintain a minimum amount in stockholders’ equity (generally $2,500,000), a minimum
number of public stockholders (generally 300 public holders), and a minimum number of shares held by non-affiliates (500,000 shares).
Additionally, in connection with our business combination, it is likely that Nasdaq may require us to file a new initial listing
application and meet its initial listing requirements which are more rigorous than Nasdaq’s continued listing requirements.
We cannot assure you that we will be able to meet those initial listing requirements at that time.
If Nasdaq delists our securities from trading
on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could
be quoted on the Over-The-Counter Bulletin Board or the “pink sheets.” If this were to occur, there could be material
adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our common stock is a “penny stock” which will require brokers
trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the
secondary trading market for our securities;
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a limited amount of, or no, 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, common stock, rights and warrants are listed on Nasdaq,
our units, common stock, rights and warrants are covered securities. Although the states are preempted from regulating the sale
of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud and, if
there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.
While we are not aware of a state, other than the state of Idaho, having used these powers to prohibit or restrict the sale of
securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might
use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further,
if we were no longer listed on Nasdaq, our securities would not be covered securities and we would be subject to regulation in
each state in which we offer our securities.
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.
If we hold a stockholder vote to approve
our initial business combination, 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.
If we make a tender offer for our public shares, we will include the same financial statement disclosure in our tender offer documents
that is required under the tender offer rules. These financial statements must be prepared in accordance with accounting principles
generally accepted in the United States of America, or GAAP, and the historical financial statements must be audited in accordance
with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements
may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements
in time for us to disclose such statements in accordance with federal proxy rules and consummate our initial business combination
by March 31, 2020.
The requirements of being a public
company may strain our resources and divert management’s attention.
As a public company, we will be subject
to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (which we refer to as the Sarbanes-Oxley Act),
the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (which we refer to as the Dodd-Frank Act), the listing requirements
of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our
legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our
systems and resources, particularly after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires,
among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting.
In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting
to meet this standard, significant resources and management oversight may be required. As a result, management’s attention
may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire
more employees in the future or engage outside consultants to comply with these requirements, which will increase our costs and
expenses.
In addition, changing laws, regulations
and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing
legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are
subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice
may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty
regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend
to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general
and administrative expenses and a diversion of management’s time and attention from operational activities to compliance
activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory
or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings
against us and our business may be adversely affected.
However, for as long as we remain an “emerging
growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements
that are applicable to “emerging growth companies” including, but not limited to, not being required to comply with
the auditor attestation requirements of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements, and exemptions from the requirement of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these
reporting exemptions until we are no longer an “emerging growth company.”
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 initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large
accelerated filer, which means the market value of our shares of common stock that are held by non-affiliates exceeds $700 million
as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior
three year period.
As an “emerging growth company,”
we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock
less attractive to investors.
We are an “emerging growth company,”
as defined in 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 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 shareholder approval of any golden parachute payments not previously approved. Additionally,
as an emerging growth company, we have elected to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies. As such, our financial statements
may not be comparable to companies that comply with all public company accounting standards. We cannot predict if investors will
find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive
as a result, there may be a less active trading market for our common stock and our share price may be more volatile.
Compliance obligations under the
Sarbanes-Oxley Act may make it more difficult for us to effectuate a business combination, require substantial financial and management
resources, and increase the time and costs of completing an acquisition.
The Sarbanes-Oxley Act requires that we
maintain a system of internal controls and, beginning with our annual report on Form 10-K for the fiscal year ending December 31,
2019, that we evaluate and report on such system of internal controls over financial reporting. In addition, once we are no longer
an “emerging growth company,” we must have our system of internal controls over financial reporting audited. The fact
that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us
as compared to other public companies because a target company with which we seek to complete a business combination may not be
in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls over financial reporting.
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.
Provisions in our amended and restated
certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing
to pay in the future for our common stock and could entrench management.
Our amended and restated certificate of
incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their
best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate
the terms of and issue new series of preferred shares, which may make 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.
Our amended and restated certificate
of incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole
and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable
judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our amended and restated certificate of
incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors,
officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the
State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder’s counsel. Any person or entity purchasing or otherwise acquiring any interest in shares of
our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate
of incorporation.
This choice of forum provision may limit
a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors,
officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court
were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable
or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which
could harm our business, operating results and financial condition.