ITEM 1. BUSINESS
Summary
Hemant Taneja, Glen Tullman, Stephen Klasko MD,
MBA, Jennifer Schneider, MD, Quentin Clark, Anita V. Pramoda and Evan Sotiriou, established Health Assurance Acquisition Corp., a recently
formed blank check company. Our mission is to partner with leading healthcare businesses leveraging technology. We aim to help them become
iconic category winners that accelerate the digital transformation of healthcare into a new system of health assurance.
Healthcare is a foundational pillar of society
and one of the largest sectors of the United States economy. Healthcare spending is projected to reach $4.0 trillion in 2020, accounting
for 18% of US GDP. As healthcare costs have continued to rise, consumers have shouldered an increasing portion of the expense out of pocket.
In 2018, the average family paid more to hospitals than to the federal government in taxes, representing 15% of median household income.
Even as consumers have paid more, the quality of care in the United States has fallen to the lowest in the developed world, and hospitals
regularly report declining revenues and rising administration costs. This complex and inflexible system is underpinned by misaligned incentives
across the stakeholder ecosystem that result in poor patient outcomes and high cost of care.
We believe the intersection of technology and
healthcare is one of the most significant value creation opportunities of this decade and the most important area where entrepreneurs
can make a difference to society. Over the past fifteen years, content, community, and commerce have been digitized and reorganized
online, giving rise to massive technology platforms, like Google, Amazon, and Netflix. Yet healthcare has remained largely untouched by
these developments.
We believe this is the pivotal moment to invest
in healthcare innovation. The recent COVID-19 pandemic starkly exposed the lack of resilience in our current healthcare system and accelerated
changes that might otherwise have taken years to evolve. The future is rushing to us—healthcare is at the beginning of its
internet moment. Our experience has shown that technology can fill the apparent gaps in healthcare and create a sustainable system, enabling
us to better care for individuals and empower them to take control of their own health.
We have a vision for this new tech-enabled system:
we call it health assurance. It is a new category of consumer-centric, data-driven, cloud-based healthcare designed to
help people stay healthy and avoid today’s “sick care” paradigm. Health assurance companies deliver modern consumer
health experiences while decreasing the overall healthcare GDP and are rooted in partnership with existing care providers. In a world
built on health assurance, care is continuous, proactive, personalized, and available everywhere. Health assurance companies will be rewarded
based on patient outcomes, enabling free-market economics to perform their important role in creating best-in-class solutions.
The goal for HAAC is to partner with companies
that help build this new system of health assurance. We know that health assurance companies can generate both positive clinical outcomes
and outsized shareholder returns because our team built the first one—Livongo. In 2014, Mr. Taneja and Mr. Tullman set
out to create a better experience for patients with diabetes. They knew that each person has a unique relationship with diabetes and should
have tools to manage their condition according to their experience. Livongo did not make the old model of diabetes treatment more efficient.
Instead, it created a new type of care model, empowering members with technology so that they could think less about their condition,
see doctors less often, and seldom have emergencies. The result was a high reported Net Promoter Score of 64 among patients using
Livongo, and reduced costs for both payers and providers. Net Promoter Score is a percentage, expressed as a numerical value up to a maximum
value of 100, to gauge customer satisfaction and reflects responses to the following question on a scale of zero to 10: “How likely
are you to recommend Livongo to a friend?” Responses of nine or 10 were considered “promoters,” responses of seven or
eight were considered neutral or “passives,” and responses of six or less were considered “detractors.” The number
of detractors were subtracted from the number of respondents who are promoters and that number was divided by the total number of respondents.
Livongo has since expanded the platform to holistically serve their members and offer the technology they developed to those with multiple
chronic conditions.
Livongo and chronic disease management are just
the beginning of our vision. We want to create the conditions for 1,000 Livongos to bloom. General Catalyst, our sponsor, has already
constructed a federation of synergistic companies within its portfolio. We believe there will be dozens of multi-billion dollar winners
created by this sectoral shift, and HAAC has a set of core beliefs and values that will help to identify the best health assurance businesses.
Our Beliefs
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Change will happen primarily through existing entry points.
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Innovators will build around the individual, focusing on empowering them and improving their health outcomes.
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The economic model of healthcare will shift.
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The digital health sector will become bigger than the physical health sector in terms of time and dollars spent.
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Person-centric data and improved workflows are at the core of this transformation.
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Our Values
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Contribute to reducing healthcare as a percentage of GDP.
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Design for bringing individuals along the journey.
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Partner with existing healthcare systems and physical care providers.
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Focus on retraining and deploying the healthcare workforce.
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Our Areas of Focus
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Persona-driven consumer experiences that leverage AI feedback loops.
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Virtual healthcare services that increase access and affordability.
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New economic models for managing risk and paying for care.
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Cloud infrastructure that helps generate data and enables the development of many health assurance companies.
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Modern workflows for health systems and providers.
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Full-stack, tech-enabled providers.
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Using this framework, HAAC aims to identify companies
and use our unique experience to help scale and transform them into category leaders in the public markets. We will look for companies
that align with our vision of health assurance, have high growth potential and expanding TAMs, and are led by mission-driven CEOs committed
to responsible innovation.
We have assembled one of the most credible teams
at the intersection of healthcare and technology to pursue this immense opportunity. We believe our insight and experience will attract
some of the world’s leading entrepreneurs to work with us on our shared vision. Each team member has deep industry and operational
expertise, a proven ability to identify and interpret healthcare and technology trends, history scaling businesses from inception and
at inflection, and an understanding of the requirements for successful execution. Our management team has a track record of success, born
from close collaboration through founding companies together, investing in technology, advising as board members and industry executives,
and sharing a joint goal. These individuals are prominent lights in the healthcare and technology ecosystems in their own right, and we
believe their deep networks will allow us to surface and win the best opportunities.
Health Assurance Acquisition Corp. is a recently
incorporated blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. We have not selected any
specific business combination target.
Our Operating, Investing, Advising, and Industry Experience
Our management team has extensive collective experience
as investors in, advisors to, and executives and board members of healthcare and technology companies at various stages of their growth
cycles, in both private and public markets. They have been long-term partners to healthcare technology businesses, successfully helping
them build and execute on their strategies, invest for long-term growth, and drive value for stakeholders.
Our team’s combined experience spans vital
parts of the healthcare ecosystem, including provider operations, virtual services, electronic health records and technology infrastructure.
This background, coupled with their deep networks and long-standing relationships, will provide valuable access to the highest quality
technology companies and will produce unique insights and opportunities for growth and value creation. They will contribute this expertise
and experience, as well as the capital raised in our initial offering, to partner with the leading companies at the intersection of healthcare
and technology to realize their collective goal.
Mr. Taneja has over twenty years of
experience in identifying and partnering with extraordinary companies. Mr. Taneja investing thesis is rooted in a belief that technology
is causing a paradigm shift in all industries, making it possible to efficiently and profitably offer highly personalized products and
services to everyone in society. Mr. Taneja has brought this thesis to healthcare by co-founding four health-assurance technology
companies, Livongo, Commure and two unannounced ventures. In addition, Mr. Taneja has backed category defining healthcare companies
like Color, Gusto, Mindstrong and Ro. Mr. Taneja is also an investor in numerous other market-leading companies like Anduril, Gitlab,
Grammarly, Samsara, Snap and Stripe.
Mr. Clark brings decades of executive-level
technical leadership. Before joining General Catalyst, Mr. Clark was the CTO of Dropbox, helping develop its growth strategy and
successfully taking them public. Mr. Clark was also CTO and CBO of SAP, driving product strategy across the cloud platform. Mr. Clark
spent twenty years of his career in various senior leadership roles at Microsoft, notably overseeing the design and delivery of data
products such as Azure and Microsoft SQL Server. Mr. Clark now focuses on investing in enterprise SaaS and healthcare and oversees
the ecosystem activity General Catalyst engages in to further its health assurance federation. Mr. Clark sits on the boards of Commure,
Kernel, ThoughtSpot, Coda, and Minio.
Dr. Klasko is the CEO of Jefferson Health
and President of Jefferson University. Dr. Klasko’s mission is “healthcare with no address.” Dr. Klasko is
someone at the heart of a huge healthcare institution who understands the balance of scaling up to meet demand while emphasizing unscaling
on a care delivery level to maintain personalized experience for consumers. When Livongo launched, Dr. Klasko agreed to have Jefferson
try this new solution. Jefferson was able to provide invaluable clinical feedback to Livongo’s product team. Dr. Klasko and
the team are deeply committed to the belief that to change care truly, healthcare technology companies need to partner and integrate with
existing health systems.
Mr. Tullman and Dr. Schneider are the
executive chairman and president, respectively, of Livongo a digital health pioneer committed to empowering people with chronic health
conditions. Mr. Tullman is not only a visionary founder, but he also has extensive experience taking companies public, first at Enterprise
Systems, where he was CEO, and then at Allscripts. Mr. Tullman is driven by the thesis that it is possible to successfully bring
consumer innovations from all sectors into healthcare as he did with Livongo. Dr. Schneider has been responsible for product, data
science, engineering, marketing, and clinical operations at Livongo, building those operations to a point they are now considered industry-leading.
Having previously also served as the Castlight’s Chief Medical Officer, Dr. Schneider brings a critical lens to assessing products
given her unique technology and clinical background. Both Mr. Tullman and Dr. Schneider have invaluable industry and operational
experience, standing at the helm of an unprecedented health assurance success story, and bring a passion for reimagining and redesigning
care experiences.
Ms. Pramoda is the CEO of Owned Outcomes, Inc.,
a health analytics software company helping customers engage with physicians, support patients, and win at bundled payments. Ms. Pramoda
brings a unique health data perspective, having served as both CFO of Epic Systems Corporation and a board member of Allscripts. Through
these experiences, Ms. Pramoda developed a deep commitment to democratizing consumer access to their own health information. Ms. Pramoda
has impressive financial acumen, having also served as chairperson / board director of the Federal Reserve Bank of San Francisco, allowing
her to assess the value of health assurance businesses deeply. Ms. Pramoda is currently a board member to several companies, including
Health Catalyst, Inc. and GoHealth, two companies at the intersection of technology and healthcare.
Uniquely, our team has worked together for several years
despite coming from different organizations, allowing the team to work in total alignment to identify exceptional opportunities. Mr. Taneja
and Mr. Tullman both served on the board of Humedica, founded Livongo together, and have co-invested in various companies. Mr. Taneja
and Mr. Clark came together in 2016, four years before Mr. Clark joined General Catalyst, to begin ideating on the foundations
of Commure. They both have worked with Ms. Pramoda since those early days, using her as a key strategic thought partner as they built
Commure. Dr. Klasko, as previously mentioned, has worked with all members of the team as a pioneering leader in health system innovation.
Mr. Taneja and Dr. Klasko recently authored a book together, UnHealthcare, in which they lay out their thesis of
the healthcare system’s transformation into one of health assurance. Their thesis underpins the mission of HAAC.
Our management team has extensive collective experience
as investors in, advisors to, and executives and board members of healthcare and technology companies at various stages of their growth
cycles, both private and public. All members, as technology and healthcare industry veterans, have been long-term partners to healthcare
technology businesses, successfully helping them build out and execute their visions, invest for long-term growth, and drive value for
all stakeholders.
Not all the companies in which our team has invested
have achieved the same level of value creation. Past performance by any member or members of our management team, any of their respective
affiliates, or HAAC is not a guarantee either (1) that we will be able to identify a suitable candidate for our initial business
combination or (2) of success with respect to any business combination we may consummate. You should not rely on the historical record
of any member or members of our management team, any of their respective affiliates, HAAC, or any related investment’s performance
as indicative of the future performance of an investment in the company or the returns the company will, or is likely to, generate going
forward. See “cautionary note regarding forward looking statements.”
Market Opportunity
We believe the intersection of technology and
healthcare is one of the most significant value creation opportunities of this decade.
The US annual spend on healthcare is $4 trillion.
There is a huge opportunity to reduce this spend while still capturing immense value. If tech entrepreneurs and the traditional healthcare
ecosystem work together to understand and reimagine care truly, we believe the health assurance space will generate more than ten to fifteen
$100 billion companies.
A substantial market opportunity exists at this
intersection of health and technology for a potential business combination. Globally, there are 46 healthcare unicorns, valued in aggregate
at $117 billion, with over $45 billion of cumulative value in digital health unicorns alone. The public markets have seen the
successful IPOs of several multi-billion dollar digital health companies over the last few years, including Teladoc, Livongo, Amwell,
and GoodRx, which currently have a combined market value of >$55 billion. This growth in the digital health sector is only set
to increase with the tailwinds presented by catalyzing events, including the COVID-19 pandemic, evidenced by a record-setting $5.4 billion
of digital health venture funding in the first half of 2020.
As the last several months have demonstrated,
periods of market volatility and dislocation can present even the highest quality healthcare or technology companies with challenges accessing
the public markets through a traditional IPO. While there has been an increasing number of technology-focused blank check companies issued
in recent months, we believe no other has the same degree of coherent vision, alignment with stakeholders, combination of sector
expertise, entrepreneurial mindset, track record, and desire for transformational change. We believe we can provide a high-quality company
with a lower risk path to the public capital markets while also providing our investors option value on an investment in these types of
companies during periods of market volatility. The recent cohort of blank check company IPOs and validation by the involvement of bulge
bracket investment banks and advisors have shown support for the effectiveness of this vehicle and substantiates our strategy. Health
Assurance Acquisition Corp. will be the only blank check company searching for its initial business combination led by a team that includes
seasoned healthcare technology company founders and entrepreneurs with operational public company experience and an unprecedented track
record for successfully effecting positive change. We believe the market opportunity is aligned with the advantages we bring to a potential
target.
Our Team
Our management team will be led by Hemant Taneja
as Chairman and CEO; Glen Tullman as Director; Stephen K. Klasko, MD, MBA as Director; Quentin Clark as Director; Jennifer Schneider,
MD as Director; Anita V. Pramoda as Director; and Evan Sotiriou as COO.
The team has entrenched relationships with one
another, as well as a broad network within the healthcare and technology industry. They are united by the common goal to digitize, transform,
and unscale the healthcare industry for the benefit of all stakeholders.
Hemant Taneja
Hemant Taneja has been a managing director at
General Catalyst since 2007 and the founder of the firm’s Silicon Valley operations. Mr. Taneja partners with mission-driven
founders building platform companies that are fundamentally aligned with the long-term interests of society. Mr. Taneja is an early
investor in market-leading companies across many sectors of the economy like Anduril, Canva, Color, Gitlab, Grammarly, Gusto, Livongo,
Ro, Samsara, Snap, and Stripe.
Mr. Taneja’s primary investment thesis,
known as “economies of unscale,” explores how 21st-century founders leverage AI-based mass personalization techniques to innovate
and build platforms across all sectors of the economy. In his 2018 book Unscaled, Mr. Taneja builds on that thesis and
articulates the need for accountability, transparency, and explainability in AI technologies as they permeate deeper into daily life.
Mr. Taneja’s piece in Harvard Business Review, “The Era of Move Fast and Break Things is Over,” advocates for entrepreneurs
and venture capitalists to adopt frameworks for responsible innovation and investing.
Mr. Taneja is also the founder and Executive
Chairman of Commure, a company that has partnered with major health systems to modernize the software infrastructure for the healthcare
space since its inception in 2017. Mr. Taneja’s recently published book UnHealthcare, co-authored with Dr. Klasko,
lays out their thesis for how the healthcare system needs to transform into a health assurance system to bring consumerism, affordability,
and rational economic behavior to this important sector.
In addition to his investment work, Mr. Taneja
is the Co-Founder of Advanced Energy Economy, an organization focused on transforming energy policy in America since 2011; and is a Founding
Board Member of the Khan Lab School, a nonprofit K-12 school dedicated to classroom innovation since 2014. Mr. Taneja sits on the
Board of Fellows for the Stanford School of Medicine and teaches a course at the college on A.I., Entrepreneurship, and Society. More
recently, Mr. Taneja was featured in Business insider’s “100 People Transforming Business” list.
Glen Tullman
Glen Tullman is the Executive Chairman and Founder
of Livongo (NASDAQ: LVGO), the consumer first digital health pioneer committed to empowering people with chronic conditions to live better
and healthier lives. Mr. Tullman is dedicated to finding a cure for diabetes and other chronic conditions—and to keeping people
healthy until these cures are found.
A visionary leader and entrepreneur, Mr. Tullman
previously ran two public companies that changed how health care is delivered. Before Livongo, Mr. Tullman served as Chief Executive
Officer of Allscripts, which, during his tenure from 1998 to 2012, was a leading provider of electronic health records, practice management,
and electronic prescribing systems. Mr. Tullman took Allscripts public in 1999. Prior to Allscripts, Mr. Tullman was Chief Executive
Officer of Enterprise Systems from 1997 to 1998, which he also took public and then sold to McKesson/HBOC. Mr. Tullman is the author
of On Our Terms: Empowering the New Health Consumer, in which he proposes new solutions to address the chronic-condition epidemic
facing our country.
A strong proponent of philanthropy, Mr. Tullman
was honored in 2019 with a Robert F. Kennedy Human Rights Ripple of Hope Award for his career focused on improving the safety, empathy,
and efficiency of our healthcare system. Mr. Tullman also serves as a Chancellor to the International Board of the Juvenile Diabetes
Research Foundation and as a Board Member of the American Diabetes Association. Mr. Tullman has an undergraduate degree from Bucknell
University (1981) and a Master of Arts from the University of Oxford (1982).
Stephen K. Klasko, MD, MBA
Dr. Stephen Klasko has been a pioneer in
using connected care to build health assurance for all—especially as we emerge from the COVID-19 crisis.
As President and CEO of Philadelphia-based Thomas
Jefferson University and Jefferson Health since 2013, Dr. Klasko has led one of the U.S.’s fastest growing academic health
institutions based on his vision of the future of higher education. Jefferson Health focuses on managing the health of populations in
southeastern Pennsylvania and southern New Jersey. Jefferson has the largest faculty based telehealth network in the country, the NCI-designated
Sidney Kimmel Cancer Center, and an outpatient footprint that is among the most technologically advanced in the region.
This year, Dr. Klasko published UnHealthcare,
with Hemant Taneja, as well as the textbook, Patient No Longer: Why Healthcare Must Deliver the Care Experience that Consumers
Want and Expect.
Jefferson’s 14 hospitals handled the most
patients with COVID-19 in Philadelphia during the Spring 2020 surge. The hospital’s strategy included immediate universal masking,
early exchange of research with Italy, and a history of longtime pandemic planning.
In 2020, Dr. Klasko was named the first Distinguished
Fellow of the World Economic Forum.
Dr. Klasko attended medical school in Philadelphia
at Hahnemann University (1978), built his practice as an obstetrician in Allentown, and served as dean of Drexel University’s College
of Medicine (2000-2004). Dr. Klasko moved to Tampa, Florida, where he was dean of the Morsani College of Medicine and CEO of USF
Health at the University of South Florida (2004-2013).
Quentin Clark
Quentin Clark is a managing director at General
Catalyst, a venture capital firm that partners with seed- to endurance-stage founders to help build companies that withstand the test
of time. Since joining in 2020, Mr. Clark focuses on investing in healthcare and enterprise SaaS, software, and platforms concentrating
on transforming the workplace. Since joining the firm, Mr. Clark has made investments in Kernel, Minio, Range, Sprout, and several
yet to be announced companies. Mr. Clark is on the boards of Commure, Kernel, ThoughtSpot, Coda, and Minio.
Prior to joining General Catalyst, Mr. Clark
was CTO at Dropbox (NASDAQ: DBX) from 2017 to 2019, where he led the company’s engineering, product, design, growth, and IT teams.
Mr. Clark worked with them through its IPO, its pivot to Dropbox Spaces, and drove the portfolio expansion, starting with the acquisition
of HelloSign. Prior to Dropbox, Mr. Clark spent two decades with Microsoft between 1994 and 2014, starting as a software engineer,
then product manager, and eventually leading the whole data platform business into Microsoft’s cloud, Azure. Mr. Clark then
joined SAP from 2014 to 2016, first as CTO, then as Chief Business Officer, where he led strategy and product direction for the platform
and ultimately for the company.
Mr. Clark is a graduate of the University
of Massachusetts at Amherst (1994), where he earned a B.S. in Physics and double-majored in Computer Science and currently sits on the
Advisory Board for the College of Information & Computer Sciences.
Jennifer Schneider, MD
Dr. Jennifer Schneider has been the President
of Livongo since 2018, where she is responsible for product, data science, engineering, marketing, clinical operations, and growth strategy.
Dr. Schneider previously served as the company’s Chief Medical Officer from 2015 to 2018, where she led the company’s
strategic clinical product vision, data science, clinical trials, and the organization’s certified diabetes educators and coaches.
Dr. Schneider is the author of Decoding Health Signals: Silicon Valley’s Consumer-First Approach to a New Era of Health,
which offers a guide to the depth of the chronic conditions problem facing the industry today and explores how companies are using big
data analytics and artificial intelligence to reinvent care delivery for people with chronic conditions. Dr. Schneider was recently
named to Modern Healthcare’s List of Top Clinical Executives.
Prior to Livongo, Dr. Schneider held several
key leadership roles at Castlight from 2010 to 2015, most recently as Chief Medical Officer. Dr. Schneider also has held leadership
roles as a health outcomes researcher and Chief Resident at Stanford University from 2005 to 2006, and she has practiced medicine as an
attending physician at Stanford University, the VA Palo Alto Health Care System, and Kaiser Permanente. Dr. Schneider has an undergraduate
degree from the College of the Holy Cross (1997), a Doctor of Medicine degree from Johns Hopkins School of Medicine(2002), and a Master
of Science degree in Health Services Research from Stanford University (2010). Dr. Schneider completed her internal medicine residency
at Stanford University Hospital.
Anita V. Pramoda
Anita V. Pramoda has been the CEO of Owned Outcomes, Inc.,
a health analytics software company, since 2014. Ms. Pramoda has also served as the Chairperson of the Board of Directors of the
Federal Reserve Bank of San Francisco (Los Angeles) since 2016, and as a board member (and Chair of Compensation Committee) of Health
Catalyst, Inc., (NASDAQ: HCAT), a provider of data and analytics technology and services to healthcare organizations, since 2016.
Since 2020, Ms. Pramoda has also been a board member (and Chair of Audit Committee) of GoHealth (NASDAQ: GOCO), a digital marketplace
for health insurance.
Previously, Ms. Pramoda served as a member
of the board of directors of Dignity Health Foundation, from 2013 to 2017, Allscripts Healthcare, LLC (NASDAQ: MDRX), from 2013 to 2016,
and as Chief Financial Officer at Epic Systems Corporation, from 2009 to 2012. Ms. Pramoda holds a Master in Business Administration
degree from the University of Pennsylvania—The Wharton School (2004).
Evan Sotiriou
Evan Sotiriou has served in several senior management
capacities of General Catalyst since 2019. Prior to that, Mr. Sotiriou served as the CFO for OrbiMed, which invests globally across
the healthcare industry, from 2011 to 2019. Mr. Sotiriou also acted as the Vice President of GSC Group from 2000 to 2008, Managing
Director of Clearlake Capital Management, L.P. from 2008 to 2010 and subsequently as the Chief Financial Officer for Archer Capital Management,
L.P. from 2010 to 2011. Mr. Sotiriou holds an AB from Dartmouth College.
Background on Health Assurance Acquisition Corp.
Health Assurance Acquisition Corp. is a recently
formed company by Hemant Taneja, Glen Tullman, Stephen Klasko MD, MBA, Quentin Clark, Jennifer Schneider, MD, Anita V. Pramoda and Evan
Sotiriou, to execute its part in a broad mission of enabling the digital transformation of care, bringing disruptive innovation to the
healthcare system through technology.
Health
Assurance Acquisition Corp. is structured to reflect the economic transformation of the industry. To achieve our mission, we have formed
a new structure to remove friction, align stakeholder interests, and reward sustained, long-term performance. We call this new vehicle
SAILSM, or Stakeholder Aligned Initial Listing. The incentive structure of the
typical SPAC creates misalignment with target businesses and public market investors: the sponsor is entitled to a return of the sponsor
shares regardless of the SPAC’s performance, and dilution attributable to sponsor shares is borne immediately. The SAILSM
construct, however, uses a performance-based incentive structure to create alignment, designed to replicate a stock price-based return
in the public markets:
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Under the SAILSM structure, our initial stockholders will capture 20% to 30% of the year-over-year share-price performance (20% for first 30% performance, 30% thereafter) on all capital raised in connection with the transaction, which will include gross proceeds from the initial public offering and any subsequent capital raised in connection with the merger.
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Our economics are contingent upon sustained performance—our initial stockholders will not earn returns on our alignment shares until our other stockholders do.
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Dilution will occur over time, also contingent upon sustained performance.
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We believe this economic alignment is consistent
with our core beliefs and values, and coupled with the strength and credibility of our team, will help to attract the best entrepreneurs.
HAAC is not simply a liquidity vehicle—it is an opportunity to bring a transformational company to
the public markets.
We have also assembled a strong sponsor team that
we believe will provide us with valuable strategic, operational, product management, analytical, financial, transactional, communications,
legal, and other expertise and networks that we will leverage to identify and execute a business combination and drive future value for
the combined business.
Our Value-Add
We believe our founder-first ethos, our unique
wealth of experience transforming industries through innovation, our commitment to building enduring companies, and our focus on a consumer-centric
model give us a huge advantage in our quest to source and attract best-in-class, disruptive companies which sit at the intersection between
healthcare, technology, and the consumer.
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Pioneers in Health Assurance: Our team has crystallized a coherent vision of the future of healthcare through health assurance, and successfully executed on this vision with Livongo. We believe this unparalleled focus and experience will enable us to provide invaluable advice to management teams of other early-stage health assurance companies with the potential to be market leaders in their categories.
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Cross-industry, cross-disciplinary talent: Our team has created and operated multi-billion dollar companies in the technology, healthcare, and tech-enabled healthcare spaces. Many of these experiences were shared endeavors by members of our cross-disciplinary team. We have demonstrated a talent for spotting winning trends at the intersection of healthcare and technology, and building companies to capitalize on these.
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Experts in unscaled healthcare at scale: Health assurance calls for a new era of care that is personalized and ‘unscaled’ using AI-based techniques. We have deep experience in mass personalization techniques that enable platforms to provide care that feels tailored to the patient, even as they grow to serve hundreds of thousands and even millions of consumers.
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Deep networks: Our deep networks serve as a tool to find the best businesses and to match founders with top talent to fill areas of need and grow their businesses efficiently and intelligently.
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Impressive track record: We have an outstanding investment track record demonstrating a commitment to our strategy and core values, robust shareholder returns, and development of enduring businesses, including Airbnb, Livongo, Oscar, Snap, Stripe, and others.
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Mission-driven, principled: Our methods are rooted in respect for strong governance, responsible innovation, and a desire to nurture diversity, creativity, and mindfulness.
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Our Business Strategy
We are in the early stages of a digital transformation
of healthcare and have thought strategically about the framework needed to affect change. Our goal is to invest in platforms that help
accelerate a system of health assurance, a new category of innovation that delivers modern consumer health experiences while
decreasing the overall healthcare GDP. In partnership with existing care providers, health assurance companies can accelerate rational
economic behavior with innovative business models and price transparency in their offerings. We want to elevate care away from the reactive,
scaled, one-size-fits-all offering it currently operates in and transition from “sick care” to “health assurance.”
We will facilitate this paradigm shift through technologies like telehealth consultations, connected devices, and AI-driven interactions,
built upon open technology standards and empathetic user design.
Our experience building Livongo has demonstrated
that health assurance companies can generate both positive clinical outcomes and outsized economic returns. By eliminating the hassle
of managing chronic conditions, designing the experience around the individual and whole-person care, and building trust with members,
we defined a new market category and demonstrated public market success. Livongo and chronic disease management were just the beginning.
There is a myriad of consumer personas that deserve the same excellent care experiences, and there are dozens of infrastructure companies
required to support this sectoral shift.
Our strategy, based on our core beliefs and values,
is to identify a business combination where we can play an impactful role in partnership with a data-driven, cloud-based, consumer-centric
business positioned to affect change in a sick, rigid and broken healthcare system. Our mission is to create a new kind of healthcare
experience that works like consumer experiences in other industries, with free-market economics and optimization of patient outcomes.
Instead of improving inflexible systems, we want to reinvent these systems, to bend the cost and quality curve, and to overcome the entrenched
resistance to change. We want to empower good ideas and disruptive technologies to improve outcomes for the most important consumer—the
patient. We believe that if you create a great user experience of value, you have an open road to building a multi-billion dollar success
story like Livongo, Airbnb, or Stripe.
We are looking for companies that are aligned
with the health assurance thesis, are led by a mission-driven CEO who is committed to responsible innovation, and have high growth potential
in markets with TAM expansion opportunities. We are interested in companies building persona-driven consumer experiences that leverage
AI feedback loops, virtual healthcare services that increase access and affordability, new models to manage risk and pay for care, cloud
infrastructure that helps generate data and enables the development of many health assurance companies, and modern workflows for health
systems and providers.
Using this framework, we are creating HAAC to
identify companies that can be transformed into category leaders best positioned in the public markets. We believe we are well placed
to help a transformational company, aligned with our philosophy, to the public markets, and then to help it grow, thrive, and succeed
in its mission. Our partnership has value far beyond our capital, unlocking the potential of a disruptive business to revolutionize care,
supported by our team’s deep industry, operational and product experience, extensive networks, and track records as investors, advisors,
executives, and board members. Our alignment with the economic transformation of the industry will make this a vehicle with which the
best entrepreneurs will want to work.
Business Combination Criteria
While we may decide to enter into a business combination
with a business that does not meet these criteria, we intend to seek a business combination:
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sitting at the intersection between technology and healthcare, including consumer-focused, data-driven, cloud-based platforms;
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that has the potential to change the healthcare system to benefit the consumer (built with empathy, cuts down costs, and prioritizes personalization and consumer outcomes);
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where we can materially impact the value and growth of the company in partnership with management;
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close to our proximal networks of founders, operators, investors, and advisors; and
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where we have a differentiated view on the ability of the target to create value as a public company.
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We anticipate offering the following benefits
to our business combination partner:
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partnership with our management team members who have extensive and proven track records of founding, operating, advising, and investing in market-leading technology and healthcare companies;
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access to our network of leading industry executives, entrepreneurs, and investors;
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increase company presence and visibility with customers, employers, payors, and vendors;
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higher engagement with core, relevant, fundamental investors as anchor stockholders than a traditional IPO book-building process would offer;
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lower risk and expedited path to a public listing with flexible structuring;
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infusion of cash and ongoing access to public capital markets;
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listed public currency for future acquisitions and growth;
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ability for management to retain control and focus on growing the business; and
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opportunity to motivate and retain employees using stock-based compensation.
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Status as a Public Company
We believe our structure will make us an attractive
business combination partner to target businesses. As an existing public company, we offer a target business an alternative to the traditional
initial public offering through a merger or other business combination with us. In a business combination transaction with us, the owners
of the target business may, for example, exchange their shares of stock in the target business for our shares of Class A common stock
(or shares of a new holding company) or for a combination of our shares of Class A common stock and cash, allowing us to tailor the
consideration to the specific needs of the sellers. We believe target businesses will find this method a more expeditious and cost effective
method to becoming a public company than the typical initial public offering. The typical initial public offering process takes a significantly
longer period of time than the typical business combination transaction process, and there are significant expenses in the initial public
offering process, including underwriting discounts and commissions, that may not be present to the same extent in connection with a business
combination with us.
Furthermore, once a proposed business combination
is completed, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’
ability to complete the offering, as well as general market conditions, which could delay or prevent the offering from occurring or have
negative valuation consequences. Once public, we believe the target business would then have greater access to capital, an additional
means of providing management incentives consistent with stockholders’ interests and the ability to use its shares as currency for
acquisitions. Being a public company can offer further benefits by augmenting a company’s profile among potential new customers
and vendors and aid in attracting talented employees.
While we believe that our structure and our management
team’s backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank
check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial business
combination, negatively.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of
certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved, If some investors find our securities less attractive as a result, there may be
a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of
the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can
delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take
advantage of the benefits of this extended transition period.
We will remain an emerging growth company until
the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be
a large accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt during the prior three-year period.
Financial Position
With funds available for a business combination
initially in the amount of $535,000,000, we offer a target business a variety of options such as creating a liquidity event for its owners,
providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio.
Because we are able to complete our business combination using our cash, debt or equity securities, or a combination of the foregoing,
we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the target
business to fit its needs and desires. However, we have not taken any steps to secure third-party financing and there can be no assurance
it will be available to us.
Effecting Our Initial Business Combination
General
We are not presently engaged in, and we will not
engage in, any operations for an indefinite period of time following our initial public offering. We intend to effectuate our initial
business combination using cash from the proceeds of our initial public offering and the sale of the private placement warrants, our equity,
debt or a combination of these as the consideration to be paid in our initial business combination. We may seek to complete our initial
business combination with a company or business that may be financially unstable or in its early stages of development or growth, which
would subject us to the numerous risks inherent in such companies and businesses.
If our initial business combination is paid for
using equity or debt, or not all of the funds released from the trust account are used for payment of the consideration in connection
with our initial business combination or used for redemptions of our shares of Class A common stock, we may apply the balance of
the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of
the post-business combination company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
We have not selected any business combination
target. Additionally, we have not engaged or retained any agent or other representative to identify or locate any suitable acquisition
candidate, to conduct any research or take any measures, directly or indirectly, to locate or contact a target business, other than our
officers and directors. Although our management will assess the risks inherent in a particular target business with which we may combine,
we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter. Furthermore,
some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that those risks will
adversely affect a target business.
We may need to obtain additional financing to
complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held
in our trust account, or because we become obligated to redeem a significant number of our public shares upon completion of the business
combination, in which case we may issue additional securities or incur debt in connection with such business combination. There are no
prohibitions on our ability to issue securities or incur debt in connection with our initial business combination. We are not currently
a party to any arrangement or understanding with any third-party with respect to raising any additional funds through the sale of securities,
the incurrence of debt or otherwise.
Sources of Target Businesses
We anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment market participants, private equity groups, investment
banking firms, consultants, accounting firms and large business enterprises. Target businesses may be brought to our attention by such
unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target businesses
in which they think we may be interested on an unsolicited basis, since some of these sources will have read our prospectus or other materials
and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our attention
target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions
they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities
that would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors. While
we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay 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. We will engage
a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be
available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our
best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee
will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors,
or their respective affiliates paid by us any finder’s fee, consulting fee or other compensation prior to, or for any services they
render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is).
We have agreed to pay an affiliate of our sponsor a total of $10,000 per month for office space, secretarial and administrative support
and to reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination.
Some of our officers and directors may enter into employment or consulting agreements with the post-business combination company following
our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection
process of an acquisition candidate.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with our initial stockholders, Founders, officers or directors. In the event we
seek to complete our initial business combination with a company that is affiliated with our initial stockholders or any of our officers
or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is
a member of FINRA or an independent accounting firm that such initial business combination is fair to our company from a financial point
of view. We are not required to obtain such an opinion in any other context.
Each of our officers and directors presently has,
and any of them in the future may have, additional, fiduciary or contractual obligations to other entities, including entities that are
affiliates of our initial stockholders, pursuant to which such officer or director is or will be required to present a business combination
opportunity to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which
is suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary
or contractual obligations to present such business combination opportunity to such entity, subject to their fiduciary duties under Delaware
law. See “Management—Conflicts of Interest.”
Evaluation of a Target Business and Structuring of Our Initial Business
Combination
In evaluating a prospective target business, we
expect to conduct an extensive due diligence review which may encompass, as applicable and among other things, meetings with incumbent
management and employees, document reviews, interviews of customers and suppliers, inspection of facilities and a review of financial
and other information about the target and its industry. We will also utilize our management team’s operational and capital planning
experience. If we determine to move forward with a particular target, we will proceed to structure and negotiate the terms of the business
combination transaction.
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, and negotiation with,
a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses
and will reduce the funds we can use to complete another business combination. The company will not pay any consulting fees to members
of our management team, or their respective affiliates, for services rendered to or in connection with our initial business combination.
In addition, we have agreed not to enter into a definitive agreement regarding an initial business combination without the prior consent
of our sponsor.
Lack of Business Diversification
For an indefinite period of time after the completion
of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it
is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business.
By completing our initial business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry in which we operate after our initial business combination; and
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cause us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited Ability to Evaluate the Target’s Management Team
Although we intend to closely scrutinize the management
of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our
assessment of the target business’s management may not prove to be correct. In addition, the future management may not have the
necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our management team,
if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of the members of our
management team will remain with the combined company will be made at the time of our initial business combination. While it is possible
that one or more of our directors will remain associated in some capacity with us following our initial business combination, it is unlikely
that any of them will devote their full efforts to our affairs subsequent to our initial business combination. Moreover, we cannot assure
you that members of our management team will have significant experience or knowledge relating to the operations of the particular target
business.
We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with the combined company. The determination as to whether any of our key personnel
will remain with the combined company will be made at the time of our initial business combination.
Following a business combination, we may seek
to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the
ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary
to enhance the incumbent management.
Stockholders May Not Have the Ability to Approve Our Initial
Business Combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended and restated certificate of incorporation.
However, we will seek stockholder approval if it is required by applicable law or stock exchange listing requirement, or we may decide
to seek stockholder approval for business or other reasons.
Under Nasdaq’s listing rules, stockholder
approval would typically be required for our initial business combination if, for example:
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we issue common stock that will be equal to or in excess of 20% of the number of our common stock then-outstanding (other than in a public offering);
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any of our directors, officers or substantial security holder (as defined by the Nasdaq rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in issued and outstanding common stock or voting power of 1% or more (or 5% or more if the related party involved is classified as such solely because such person is a substantial security holder); or
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the issuance or potential issuance of common stock will result in our undergoing a change of control.
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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 initial business combination pursuant to the tender offer
rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares or public warrants in
privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination.
However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for any such transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
If they engage in such transactions, they will be restricted from making any such purchases when they are in possession of any material
non-public information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act.
In the event that our initial stockholders, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already
elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their
shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under
the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers
determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules.
The purpose of any such purchases of shares could
be to (i) vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder
approval of the initial business combination or (ii) to satisfy a closing condition in an agreement with a candidate for our initial
business combination that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce
the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection
with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination
that may not otherwise have been possible.
In addition, if such purchases are made, the public
“float” of our shares of Class A common stock or public warrants may be reduced and the number of beneficial holders
of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities
on a national securities exchange.
Our initial stockholders, officers, directors
and/or their affiliates anticipate that they may identify the stockholders with whom our initial stockholders, officers, directors or
their affiliates may pursue privately negotiated transactions by either the stockholders contacting us directly or by our receipt of redemption
requests submitted by stockholders (in the case of shares of Class A common stock) following our mailing of tender offer or proxy
materials in connection with our initial business combination. To the extent that our initial stockholders, officers, directors, advisors
or their affiliates enter into a private transaction, they would identify and contact only potential selling or redeeming stockholders
who have expressed their election to redeem their shares for a pro rata share of the trust account or vote against our initial business
combination, whether or not such stockholder has already submitted a proxy with respect to our initial business combination but only if
such shares have not already been voted at the stockholder meeting related to our initial business combination. Our initial stockholders,
executive officers, directors, advisors or their affiliates will select which stockholders to purchase shares from based on the negotiated
price and number of shares and any other factors that they may deem relevant, and will be restricted from purchasing shares if such purchases
do not comply with Regulation M under the Exchange Act and the other federal securities laws.
Our initial stockholders, officers, directors
and/or their affiliates will be restricted from making purchases of shares if the purchases would violate Section 9(a)(2) or
Rule 10b-5 of the Exchange Act. We expect any such purchases would be reported by such person pursuant to Section 13 and Section 16
of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
Redemption Rights for Public Stockholders upon
Completion of Our Initial Business Combination
We will provide our public stockholders with the
opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account calculated as of two business
days prior to the consummation of the initial business combination, including interest earned on the funds held in the trust account (net
of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), 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. Our initial stockholders, officers and directors have entered into a letter agreement with us, pursuant to which they have
agreed to waive their redemption rights with respect to any alignment shares and public shares they may hold in connection with the completion
of our initial business combination.
Limitations on Redemptions
Our amended and restated certificate of incorporation
will provide that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001.
In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid
to the target candidate or its owners; (ii) cash for working capital or other general corporate purposes; or (iii) the retention
of cash to satisfy other conditions. In the event the aggregate cash consideration we would be required to pay for all shares of Class A
common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to
the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial
business combination or redeem any shares in connection with such initial business combination, and all shares of Class A common
stock submitted for redemption will be returned to the holders thereof.
Manner of Conducting Redemptions
We will provide our public stockholders with the
opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either (i) in
connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision
as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will be made by us, solely
in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction
would require us to seek stockholder approval under applicable law or stock exchange listing requirement or whether we were deemed to
be a foreign private issuer (which would require a tender offer rather than seeking stockholder approval under SEC rules). Asset acquisitions
and share purchases would not typically require stockholder approval while direct mergers with our company where we do not survive and
any transactions where we issue more than 5% of our shares of outstanding common stock or seek to amend our amended and restated certificate
of incorporation would require stockholder approval. We currently intend to conduct redemptions in connection with a stockholder vote
unless stockholder approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions
pursuant to the tender offer rules of the SEC for business or other legal reasons. So long as we obtain and maintain a listing for
our securities on the Nasdaq, we will be required to comply with the Nasdaq rules.
If we held a stockholder vote to approve our initial
business combination, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules; and
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file proxy materials with the SEC.
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In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, we will complete
our initial business combination only if a majority of the common stock, represented in person or by proxy and entitled to vote thereon,
voted at a stockholder meeting are voted in favor of the business combination. In such case, our initial stockholders and each member
of our management team have agreed to vote their alignment shares and public shares in favor of our initial business combination. As a
result, in addition to our initial purchaser’s alignment shares, we would need 19,687,500, or 37.5%, of the 52,500,000 public shares
sold in our initial public offering to be voted in favor of an initial business combination in order to have our initial business combination
approved (assuming all outstanding shares are voted), of the 52,500,000 public shares sold in our initial public offering to be voted
in favor of an initial business combination in order to have our initial business combination approved. Each public stockholder may elect
to redeem their public shares irrespective of whether they vote for or against the proposed transaction or vote at all. In addition, our
initial stockholders and each member of our management team have entered into an agreement with us, pursuant to which they have agreed
to waive their redemption rights with respect to any alignment shares and public shares held by them in connection with (i) the completion
of a business combination and (ii) a stockholder vote to approve an amendment to our amended and restated certificate of incorporation
(A) that would modify the substance or timing of our obligation to provide holders of our shares of Class A common stock the
right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do
not complete our initial business combination within 24 months from the closing of our initial public offering (or such later date
as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting
together as a single class) or (B) with respect to any other provision relating to the rights of holders of our shares of Class A
common stock.
If we conduct redemptions pursuant to the tender
offer rules of the SEC, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers; and
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file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement of our initial business
combination, if we elect to conduct redemptions pursuant to the tender offer rules, we and our initial stockholders will terminate any
plan established in accordance with Rule 10b5-1 to purchase shares of Class A common stock in the open market, in order to comply
with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to
the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under
the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period.
In addition, the tender offer will be conditioned on public stockholders not tendering more than the number of public shares we are permitted
to redeem. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete
such initial business combination.
Limitation on Redemption upon Completion of Our Initial Business
Combination If We Seek Shareholder Approval
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer
rules, our amended and restated certificate of incorporation will provide that a public stockholder, together with any affiliate of such
stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13
of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in
our initial public offering, which we refer to as “Excess Shares,” without our prior consent. We believe this restriction
will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to
exercise their redemption rights against a proposed business combination as a means to force us or our management to purchase their shares
at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding
more than an aggregate of 15% of the shares sold in our initial public offering could threaten to exercise its redemption rights if such
holder’s shares are not purchased by us, our initial stockholders or our management at a premium to the then-current market price
or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our initial
public offering without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt
to block our ability to complete our initial business combination, particularly in connection with a business combination with a target
that requires as a closing condition that we have a minimum net worth or a certain amount of cash.
However, we would not be restricting our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering Share Certificates in Connection with a Tender Offer or
Redemption Rights
Public stockholders seeking to exercise their
redemption rights, whether they are record holders or hold their shares in “street name,” will be required to either tender
their certificates (if any) to our transfer agent prior to the date set forth in the proxy solicitation or tender offer materials, as
applicable, mailed to such holders, or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s
DWAC (Deposit/ Withdrawal At Custodian) System (the “DWAC System”), at the holder’s option, in each case up to two business
days prior to the initially scheduled vote to approve the business combination. The proxy solicitation or tender offer materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will indicate the applicable
delivery requirements, which will include the requirement that a beneficial holder must identify itself in order to validly redeem its
shares. Accordingly, a public stockholder would have from the time we send out our tender offer materials until the close of the tender
offer period, or up to two business days prior to the initially scheduled vote on the proposal to approve the business combination if
we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively
short period in which to exercise redemption rights, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced
tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically
charge the tendering broker a fee of approximately $80.00 and it would be up to the broker whether or not to pass this cost on to the
redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights
to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such
delivery must be effectuated.
The foregoing is different from the procedures
used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank check
companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could simply
vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise his or her
redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for him or her to
deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window” after the completion
of the business combination during which he or she could monitor the price of the company’s shares in the market. If the price rose
above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares to
the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder
meeting, would become “option” rights surviving past the completion of the business combination until the redeeming holder
delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming stockholder’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 two business days prior to the initially scheduled vote on the proposal to approve the business combination,
unless otherwise agreed to by us. Furthermore, if a holder of a public share delivered its certificate in connection with an election
of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply
request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed
to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business
combination.
If our initial business combination is not approved
or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem
their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered
by public holders who elected to redeem their shares.
If our initial proposed business combination is
not completed, we may continue to try to complete a business combination with a different target until 24 months from the closing
of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that
are voted at a meeting to extend such date, voting together as a single class).
Redemption of Public Shares and Liquidation If No Initial Business
Combination
Our amended and restated certificate of incorporation
will provide that we will have only 24 months from the closing of our initial public offering (or such later date as approved by
holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a
single class) to consummate an initial business combination. If we have not consummated an initial business combination within 24 months
from the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class), we will: (i) cease all operations
except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest earned on the funds held in the trust account and not previously released to us to pay our taxes, if any (less up to $100,000
of interest to pay dissolution expenses) divided by the number of the 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, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to
our warrants, which will expire worthless if we fail to consummate an initial business combination within 24 months from the closing
of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that
are voted at a meeting to extend such date, voting together as a single class). Our amended and restated certificate of incorporation
will provide that, if we wind up for any other reason prior to the consummation of our initial business combination, we will follow the
foregoing procedures with respect to the liquidation of the trust account as promptly as reasonably possible but not more than ten business
days thereafter.
Our initial stockholders and each member of our
management team have entered into an agreement with us, pursuant to which they have agreed to waive their rights to liquidating distributions
from the trust account with respect to any alignment shares they hold if we fail to consummate an initial business combination within
24 months from the closing of our initial public offering, or such later date as described in the preceding paragraph (although they
will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete
our initial business combination within the prescribed time frame).
Our initial stockholders, executive officers,
directors and director nominees have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our
amended and restated certificate of incorporation (A) that would modify the substance or timing of our obligation to provide holders
of our shares of Class A common stock the right to have their shares redeemed in connection with our initial business combination
or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of
our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are
voted at a meeting to extend such date, voting together as a single class) or (B) with respect to any other provision relating to
the rights of holders of our shares of Class A common stock, unless we provide our public stockholders with the opportunity to redeem
their public shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes,
if any, divided by the number of the 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 do not then become subject to the SEC’s
“penny stock” rules). If this optional redemption right is exercised with respect to an excessive number of public shares
such that we cannot satisfy the net tangible asset requirement, we would not proceed with the amendment or the related redemption of our
public shares at such time. This redemption right shall apply in the event of the approval of any such amendment, whether proposed by
our initial stockholders, any executive officer, director or director nominee, or any other person.
We expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the $4,600,000
of proceeds held outside the trust account plus up to $100,000 of funds from the trust account available to us to pay
dissolution expenses, although we cannot assure you that there will be sufficient funds for such purpose.
If we were to expend all of the net proceeds of
our initial public offering and the sale of the private placement warrants, other than the proceeds deposited in the trust account, and
without taking into account interest, if any, earned on the trust account, the per-share redemption amount received by stockholders upon
our dissolution would be $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors
which would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption
amount received by stockholders will not be less than $10.00. While we intend to pay such amounts, if any, we cannot assure you that we
will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service
providers (except our independent registered public accounting firm), prospective target businesses and other entities with which we do
business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders, 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. The underwriters of
our initial public offering will not execute an agreement with us waiving such claims to the monies held in the trust account. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect
the amounts held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third-party
for services rendered or products sold to us (other than our independent registered public accounting firm), or a prospective target business
with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below the lesser of (i) $10.00
per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust
account if less than $10.00 per public share due to reductions in the value of the trust assets, in each case net of the interest that
may be withdrawn to pay our tax obligations; provided that such liability will not apply to any claims by a third-party
or prospective target business that executed a waiver of any and all rights to seek access to the trust account nor will it apply to any
claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third-party, our sponsor will not be
responsible to the extent of any liability for such third-party claims. However, we have not asked our sponsor to reserve for such indemnification
obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and we believe
that our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to
satisfy those obligations. None of our officers or directors will indemnify us for claims by third parties, including, without limitation,
claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account
are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account
as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions in the value of the trust
assets, in each case net of the amount of interest which may be withdrawn to pay our income tax obligations, and our sponsor asserts that
it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our
independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so in any
particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price
will not be less than $10.00 per public share.
We will seek to reduce the possibility that our
sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers (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 monies held in the trust account. Our sponsor will
also not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act. We will have access to up to $4,600,000 from the proceeds of our initial public offering
and the sale of the private placement warrants with which to pay any such potential claims (including costs and expenses incurred in connection
with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently
determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be
liable for claims made by creditors, however such liability will not be greater than the amount of funds from our trust account received
by any such stockholder. In the event that our offering expenses exceed our estimate of $4,600,000, we may fund such excess with funds
from the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would
decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $4,600,000, the
amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
Under the DGCL, stockholders may be held liable
for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata
portion of the funds in our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 24 months from the closing of our initial public offering (or such later
date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting
together as a single class) may be considered a liquidating distribution under Delaware law. If the corporation complies with certain
procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it,
including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which
the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made
to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after
the third anniversary of the dissolution.
Furthermore, if the pro rata portion of the
funds in our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 24 months from the closing of our initial public offering (or such later date as approved
by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as
a single class), is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful
(potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently unknown),
then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the
unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution. If we do not complete our
initial business combination within 24 months from the closing of our initial public offering (or such later date as approved by
holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a
single class), we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the funds held in the trust account (net of permitted withdrawals
and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public
shares as soon as reasonably possible following our 24th month and, therefore, we do not intend to comply with those procedures. As such,
our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability
of our stockholders may extend well beyond the third anniversary of such date.
Because we 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 recently organized company established for the purpose of identifying a company to partner with in order to effectuate
a merger, share exchange, asset acquisition, share purchase, reorganization or similar initial business combination, rather than an operating
company, and our operations will be limited to searching for prospective candidates for our initial business combination to acquire, the
only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective candidates for our
initial business combination. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to
have all vendors, service providers (except for our independent registered public accounting firm), prospective candidates for our initial
business combination or other entities with which we do business (other than our independent registered public accounting firm) execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a result
of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim that would result
in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that
the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share
held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each
case net of the amount of interest withdrawn to pay taxes and will not be liable as to any claims under our indemnity of the underwriters
of 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, our sponsor will not be responsible to the extent of any liability for such
third-party claims.
If we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.00 per share to our
public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is
not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either
a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
some or all amounts received by our stockholders.
Furthermore, our board of directors may be viewed
as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company
to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot
assure you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled to receive
funds from the trust account only (i) in the event of the redemption of our public shares if we do not complete our initial business
combination within 24 months from the closing of our initial public offering (or such later date as approved by holders of a majority
of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class), (ii) in
connection with a stockholder vote to amend our amended and restated certificate of incorporation to modify the substance or timing of
our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the
closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock
that are voted at a meeting to extend such date, voting together as a single class) or with respect to any other material provisions relating
to stockholders’ rights or pre-initial business combination activity or (iii) if they redeem their respective shares for cash
upon the completion of our initial business combination. In no other circumstances will a stockholder have any right or interest of any
kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s
voting in connection with the initial business combination alone will not result in a stockholder’s redeeming its shares to us for
an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with a stockholder vote.
Competition
In identifying, evaluating and selecting a target
business for our initial business combination, we may encounter intense competition from other entities having a business objective similar
to ours, including other blank check companies, private equity groups and leveraged buyout funds, public companies, operating businesses
seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business
combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other
resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent
limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection
with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination
and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses.
Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Facilities
We currently maintain our executive offices at
20 University Road, Cambridge, Massachusetts 02138. The cost for our use of this space is included in the $10,000 per month fee we will
pay to an affiliate of our sponsor for office space, administrative and support services. We consider our current office space adequate
for our current operations.
Employees
We currently have two executive officers. These
individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as
they deem necessary to our affairs until we have completed our initial business combination. The amount of time they 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 completion of our initial business combination.
Periodic Reporting and Financial Information
Our securities are registered under the Exchange
Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance
with the requirements of the Exchange Act, this annual report contains financial statements audited and reported on by our independent
registered public accountants.
We will provide stockholders with audited financial
statements of the prospective target business as part of the proxy solicitation or tender offer materials, as applicable, sent to stockholders.
These financial statements may be required to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances,
and the historical financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such statements
in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination within
the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential acquisition candidate
will have financial statements prepared in accordance with the requirements outlined above, or that the potential target business will
be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these requirements
cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition candidates,
we do not believe that this limitation will be material.
We will be required to evaluate our internal control
procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act. Only in the event we are deemed to
be a large accelerated filer or an accelerated filer and no longer qualify as an emerging growth company, will we not be required to comply
with the independent registered public accounting firm attestation requirement on our internal control over financial reporting. A target
business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
We filed a Registration Statement on Form 8-A
with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are subject to the rules and
regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other
obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of
certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less
active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of
the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can
delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take
advantage of the benefits of this extended transition period.
We will remain an emerging growth company until
the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be
a large accelerated filer, which means the market value of our shares of Class A common stock that are held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible
debt during the prior three-year period.
Additionally, we are a “smaller reporting
company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain
reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will
remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by
non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million during
such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.
Legal Proceedings
There is no material litigation, arbitration or
governmental proceeding currently pending against us or any members of our management team in their capacity as such.
Item 1A. Risk Factors
An investment in our securities involves a
high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in
this Report, before making a decision to invest in our securities. If any of the following events occur, our business, financial condition
and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you
could lose all or part of your investment.
We have no operating history and no revenues,
and you have no basis on which to evaluate our ability to achieve our business objective.
We were formed in September 8, 2020 and have
no operating results. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business
objective of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings
with any prospective target business concerning a business combination and may be unable to complete our initial business combination.
If we fail to complete our initial business combination, we will never generate any operating revenues.
We have identified a material weakness in our internal control over
financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial
condition accurately and in a timely manner.
Following the issuance of the SEC Staff Statement
on April 12, 2021, after consultation with our independent registered public accounting firm, our management and our audit committee
concluded that, in light of the SEC Statement, it was appropriate to restate previously issued and audited financial statements as of
and for the period ended December 31, 2020.
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise
required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses
identified through such evaluation of those internal controls. A material weakness is a deficiency, or a combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or
interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Amendment No. 1,
we have identified a material weakness in our internal control over financial reporting related to the accounting for a significant and
unusual transaction related to the warrants we issued in connection with our initial public offering in November 2020. As a result
of this material weakness, our management has concluded that our internal control over financial reporting was not effective as of December 31,
2020. This material weakness resulted in a material misstatement of our derivative warrant liabilities, change in fair value of derivative
warrant liabilities, Class A common stock subject to possible redemption, accumulated deficit and related financial disclosures for
the Affected Periods. For a discussion of management’s consideration of the material weakness identified related to our accounting
for a significant and unusual transaction related to the warrants we issued in connection with the November 2020 initial public offering,
see “Note 2—Restatement of Previously Issued Financial Statements” to the accompanying financial statements, as
well as “Part II, Item 9A. Controls and Procedures included in this Annual Report.”
As described in “Part II, Item
9A. Controls and Procedures,” we have concluded that our internal control over financial reporting was ineffective as of December 31,
2020 because material weaknesses existed in our internal control over financial reporting. We have taken a number of measures to remediate
the material weaknesses described therein; however, if we are unable to remediate our material weaknesses in a timely manner or we identify
additional material weaknesses, we may be unable to provide required financial information in a timely and reliable manner and we may
incorrectly report financial information. Likewise, if our financial statements are not filed on a timely basis, we could be subject to
sanctions or investigations by the stock exchange on which our Class A ordinary shares are listed, the SEC or other regulatory authorities.
Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3 or Form S-4,
which may impair our ability to obtain capital in a timely fashion to execute our business strategies or issue shares to effect an acquisition.
In either case, there could result a material adverse effect on our business. The existence of material weaknesses or significant deficiencies
in internal control over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative
effect on the trading price of our stock. In addition, we will incur additional costs to remediate material weaknesses in our internal
control over financial reporting, as described in “Part II, Item 9A. Controls and Procedures.”
We can give no assurance that the measures we
have taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or
restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over
financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures,
in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair
presentation of our financial statements.
Past performance by our management team or
their respective affiliates may not be indicative of future performance of an investment in us.
Information regarding performance is presented
for informational purposes only. Any past experience or performance of our management team and their respective affiliates is not a guarantee
of either (i) our ability to successfully identify and execute a transaction or (ii) success with respect to any business combination
that we may consummate. You should not rely on the historical record of our management team or their respective affiliates as indicative
of the future performance of an investment in us or the returns we will, or are likely to, generate going forward. Our management has
no experience in operating special purpose acquisition companies.
Our stockholders may not be afforded an opportunity
to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority
of our stockholders do not support such a combination.
We may choose not to hold a stockholder vote before
we complete our initial business combination if the business combination would not require stockholder approval under applicable law or
stock exchange listing requirement. For instance, if we were seeking to acquire a target business where the consideration we were paying
in the transaction was all cash, we would typically not be required to seek stockholder approval to complete such a transaction. Except
for as required by applicable law or stock exchange listing requirement, the decision as to whether we will seek stockholder approval
of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely
in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction
would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial business combination even if holders
of a majority of our issued and outstanding shares of Class A common stock do not approve of the business combination we complete.
Your only opportunity to affect the investment
decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
At the time of your investment in us, you will
not be provided with an opportunity to evaluate the specific merits or risks of any target businesses. Since our board of directors may
complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote
on the business combination, unless we seek such stockholder approval. Accordingly, your only opportunity to affect the investment decision
regarding a potential business combination may be limited to exercising your redemption rights within the period of time (which will be
at least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial
business combination.
If we seek stockholder approval of our initial
business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our
public stockholders vote.
Our initial stockholders own 20% of the voting
power of our common stock immediately following the completion of our public offering. Our initial stockholders and members of our management
team also may from time to time purchase shares of Class A common stock prior to our initial business combination. Our amended and
restated certificate of incorporation will provide that, if we seek stockholder approval, we will complete our initial business combination
only if a majority of the outstanding shares of common stock, represented in person or by proxy and entitled to vote thereon, voted at
a stockholder meeting are voted in favor of the business combination. As a result, in addition to our initial stockholders’ alignment
shares, we would need 19,687,500, or 37.5% of the 52,500,000 shares sold in our initial public offering to be voted in favor of an initial
business combination in order to have our initial business combination approved. Accordingly, if we seek stockholder approval of our initial
business combination, the agreement by our initial stockholders and each member of our management team to vote in favor of our initial
business combination will increase the likelihood that we will receive the requisite stockholder approval for such initial business combination.
The ability of our public stockholders to redeem
their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult
for us to enter into a business combination with a target.
We may seek to enter into a business combination
transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount
of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as
a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an
amount that would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny
stock” rules). Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less
than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption
and the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of
these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of our public stockholders to exercise
redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or
optimize our capital structure.
At the time we enter into an agreement for our
initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will need to
structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If a large number
of shares are submitted for redemption, we may need to restructure the transaction to reserve a greater portion of the cash in the trust
account or arrange for additional third-party financing. Raising additional third-party financing may involve dilutive equity issuances
or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most
desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions
payable to the underwriters will not be adjusted for any shares that are redeemed in connection with an initial business combination.
The per-share amount we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred
underwriting commission and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire
deferred underwriting commissions.
The ability of our public stockholders to exercise
redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would
be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement
requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business combination
is unsuccessful, you would not receive your pro rata portion of the funds in the trust account until we liquidate the trust account.
If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares
may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss
on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell
your shares in the open market.
The requirement that we consummate an initial
business combination within 24 months after the closing of our initial public offering (or such later date as approved by holders
of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class)
may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to
conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine
our ability to complete our initial business combination on terms that would produce value for our stockholders.
Any potential target business with which we enter
into negotiations concerning a business combination will be aware that we must consummate an initial business combination within 24 months
from the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class). Consequently, such target business may
obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination with
that particular target business, we may be unable to complete our initial business combination with any target business. This risk will
increase as we get closer to the time frame described above. In addition, we may have limited time to conduct due diligence and may enter
into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
Our search for a business combination, and
any target business with which we ultimately consummate a business combination, may be materially adversely affected by the recent coronavirus
(COVID-19) outbreak and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus
was reported to have surfaced, which has and is continuing to spread throughout the world, including the United States. On January 30,
2020, the World Health Organization declared the outbreak of the coronavirus disease (“COVID-19”) a “Public Health Emergency
of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public
health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the
World Health Organization characterized the outbreak as a “pandemic.” The COVID-19 outbreak has and a significant outbreak
of other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets
worldwide, and the business of any potential target business with which we consummate a business combination could be materially and adversely
affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 continues to restrict
travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers
are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business
combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may
emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed
by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination,
or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
In addition, our ability to consummate a transaction
may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including as a
result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable to us
or at all.
Finally, the outbreak of COVID-19 may also have
the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related to the market
for our securities and cross-border transactions.
We may not be able to consummate an initial
business combination within 24 months after the closing of our initial public offering (or such later date as approved by holders
of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class),
in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able to find a suitable candidate
for our initial business combination and complete our initial business combination within 24 months after the closing of our initial
public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a
meeting to extend such date, voting together as a single class). Our ability to complete our initial business combination may be negatively
impacted by general market conditions, volatility in the capital and debt markets and the other risks described herein. For example, the
outbreak of COVID-19 continues to grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend
on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market
volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally,
the outbreak of COVID-19 may negatively impact businesses we may seek to acquire. If we have not completed our initial business combination
within such time period, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account (net of permitted
withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, liquidate and dissolve, subject in each case, to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law.
Our search for a business
combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected
by the recent coronavirus (COVID-19) outbreak.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread
throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared
the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31,
2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S.
healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak
as a “pandemic.” A significant outbreak of COVID-19 and other infectious diseases could result in a widespread health
crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target business with
which we consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business
combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors
or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a
timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments,
which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and
the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters
of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations of a target
business with which we ultimately consummate a business combination, may be adversely affected in a material way.
If we seek stockholder approval of our initial
business combination, our initial stockholders, directors, executive officers, advisors and their affiliates may elect to purchase public
shares or warrants, which may influence a vote on a proposed business combination and reduce the public “float” of our shares
of Class A common stock or public warrants.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer
rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase public shares or warrants in
privately negotiated transactions or in the open market either prior to or following the completion of our initial business combination,
although they are under no obligation to do so. However, they have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase
public shares or warrants in such transactions.
In the event that our initial stockholders, directors,
executive officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have
already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem
their shares. The purpose of any such transaction could be to (i) vote in favor of the business combination and thereby increase
the likelihood of obtaining stockholder approval of the business combination, (ii) reduce the number of public warrants outstanding
or vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination
or (iii) satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount
of cash at the closing of our initial business combination, where it appears that such requirement would otherwise not be met. Any such
purchases of our securities may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our shares of Class A common stock or public warrants
may be reduced and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain
the quotation, listing or trading of our securities on a national securities exchange. Any such purchases will be reported pursuant to
Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. See
“Item 1. Business—Effecting Our Initial Business Combination—Permitted Purchases and Other Transactions with Respect
to Our Securities” for a description of how our initial stockholders, directors, executive officers, advisors or their affiliates
will select which stockholders to purchase securities from in any private transaction.
If a stockholder fails to receive notice of
our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for
tendering its shares, such shares may not be redeemed.
We will comply with the proxy rules or tender
offer rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance with
these rules, if a stockholder fails to receive our proxy solicitation or tender offer materials, as applicable, such stockholder may not
become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer materials, as applicable, that
we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly redeem or tender public shares. In the event that a stockholder fails to comply with these
procedures, its shares may not be redeemed.
You will not have any rights or interests in
funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced to
sell your public shares or warrants, potentially at a loss.
Our public stockholders are entitled to receive
funds from the trust account only upon the earliest to occur of: (i) our completion of an initial business combination, and then
only in connection with those shares of Class A common stock that such stockholder properly elected to redeem, subject to the limitations
described herein; (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended
and restated certificate of incorporation (A) to modify the substance or timing of our obligation to provide holders of our shares
of Class A common stock the right to have their shares redeemed in connection with our initial business combination or to redeem
100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our initial
public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a
meeting to extend such date, voting together as a single class) or (B) with respect to any other provision relating to the rights
of holders of our shares of Class A common stock; and (iii) the redemption of our public shares if we have not consummated an
initial business within 24 months from the closing of our initial public offering (or such later date as approved by holders of a
majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class),
subject to applicable law and as further described herein. Public stockholders who redeem their shares of Class A common stock in
connection with a stockholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the trust
account upon the subsequent completion of an initial business combination or liquidation if we have not consummated an initial business
combination within 24 months from the closing of our initial public offering (or such later date as approved by holders of a majority
of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class), with respect
to such shares of Class A common stock so redeemed. In no other circumstances will a public stockholder have any right or interest
of any kind in the trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to
the warrants. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Nasdaq may delist our securities from trading
on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading
restrictions.
Our
SAILSM securities, Class A common stock, and warrants are currently listed
on the Nasdaq. Although after giving effect to our initial public offering we expect to continue to meet, on a pro forma basis, the
minimum initial listing standards set forth in the Nasdaq listing standards, our securities may not be, or may not continue to be, listed
on the Nasdaq in the future or prior to our initial business combination. In order to continue listing our securities on the Nasdaq prior
to our initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain
a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally 300
public holders).
Additionally,
our SAILSM securities will not be traded after completion of our initial business
combination and, in connection with our initial business combination, we will be required to demonstrate compliance with the Nasdaq’s
initial listing requirements, which are more rigorous than the Nasdaq’s continued listing requirements, in order to continue to
maintain the listing of our securities on the Nasdaq. For instance, our share price would generally be required to be at least $4.00 per
share and our stockholders’ equity would generally be required to be at least $5.0 million and we would be required to have
a minimum of 300 round lot holders (with at least 50% of such round lot holders holding securities with a market value of at least $2,500).
We may not able to meet those initial listing requirements at that time.
If the Nasdaq delists our securities from trading
on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be
quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our Class A common stock are a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because our SAILSM securities
and Class A common stock and warrants are listed on the Nasdaq, our SAILSM securities, Class A common stock
and warrants will qualify as covered securities under the statute. Although the states are preempted from regulating the sale of our
securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding
of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware
of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State
of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these
powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the Nasdaq,
our securities would not qualify as covered securities under the statute, and we would be subject to regulation in each state in which
we offer our securities.
You will not be entitled to protections normally
afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete an
initial business combination with a target business that has not been selected, we may be deemed to be a “blank check” company
under the United States securities laws. However, because we have net tangible assets in excess of $5,000,000 upon the completion of
our initial public offering and the sale of the private placement warrants and have filed a Current Report on Form 8-K, including
an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank
check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among
other things, this means our SAILSM securities were immediately tradable and we have a longer period of time to complete
our initial business combination than do companies subject to Rule 419. Moreover, if our initial public offering were subject to
Rule 419, that rule would have prohibited the release of any interest earned on funds held in the trust account to us unless
and until the funds in the trust account were released to us in connection with our completion of an initial business combination.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders
are deemed to hold in excess of 15% of our shares of Class A common stock, you will lose the ability to redeem all such shares in
excess of 15% of our shares of Class A common stock.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer
rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the
Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in our
initial public offering without our prior consent, which we refer to as the “Excess Shares.” However, we would not be restricting
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination and
you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will
not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result,
you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your
shares in open market transactions, potentially at a loss.
Because of our limited resources and the significant
competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we
have not consummated our initial business combination within the required time period, our public stockholders may receive only approximately
$10.00 per public share, or less in certain circumstances, on the liquidation of our trust account and our warrants will expire worthless.
We expect to encounter competition from other
entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships),
other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire.
Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various industries. Many of these competitors possess similar or greater
technical, human and other resources to ours or more local industry knowledge than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors. While we believe there are numerous candidates for our initial business
combination we could potentially acquire with the net proceeds of our initial public offering and the sale of the private placement warrants,
our ability to compete with respect to the acquisition of certain candidates for our initial business combination 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 candidates for our initial business combination. Furthermore, we are obligated to offer holders of our public shares the right
to redeem their shares for cash at the time of our initial business combination in conjunction with a stockholder vote or via a tender
offer. Candidates for our initial business combination will be aware that this may reduce the resources available to us for our initial
business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating an initial business
combination. If we do not complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
If the net proceeds of our initial public offering
and the sale of the private placement warrants not being held in the trust account are insufficient to allow us to operate for the 24 months
following the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class), it could limit the amount available
to fund our search for a target business or businesses and our ability to complete our initial business combination, and we will depend
on loans from our sponsor, its affiliates or members of our management team to fund our search and to complete our initial business combination.
As of December 31, 2020, we had approximately
$4,600,000 in cash held outside the trust account to fund our working capital requirements. We believe that, upon the closing of our initial
public offering, the funds available to us outside of the trust account, together with funds available from loans from our sponsor, its
affiliates or members of our management team will be sufficient to allow us to operate for 24 months from the closing of our initial
public offering or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a
meeting to extend such date, voting together as a single class); however, we cannot assure you that our estimate is accurate, and our
sponsor, its affiliates or members of our management team are under no obligation to advance funds to us in such circumstances. Of the
funds available to us, we expect to use a portion of the funds available to us to pay fees to consultants to assist us with our search
for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent designed to keep target businesses from “shopping” around for transactions with other companies or investors
on terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have
any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity from a target
business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient
funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are required to seek additional capital,
we would need to borrow funds from our sponsor, its affiliates, members of our management team or other third parties to operate or may
be forced to liquidate. Neither our sponsor, members of our management team nor their affiliates is under any obligation to us in such
circumstances. Any such advances may be repaid only from funds held outside the trust account or from funds released to us upon completion
of our initial business combination. Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination
entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the private placement warrants.
Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor, its affiliates
or members of our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any
and all rights to seek access to funds in our trust account. If we have not consummated our initial business combination within the required
time period because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account.
Consequently, our public stockholders may only receive an estimated $10.00 per public share, or possibly less, on our redemption of our
public shares, and our warrants will expire worthless.
Subsequent to completion of our initial business
combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant
negative effect on our financial condition, results of operations and the price of our securities, which could cause you to lose some
or all of your investment.
Even if we conduct extensive due diligence on
a target business with which we combine, we cannot assure you that this diligence will identify all material issues with a particular
target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors
outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later
write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses.
Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize
in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate
impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our
securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result
of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any
holders who choose to retain their securities following the business combination could suffer a reduction in the value of their securities.
Such holders are unlikely to have a remedy for such reduction in value.
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 public share.
Our placing of funds in the trust account may
not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective
target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim
of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such
agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the trust account, including,
but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the
enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds
held in the trust account. If any third-party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third-party that
has not executed a waiver if management believes that such third-party’s engagement would be significantly more beneficial to us
than any alternative.
Examples of possible instances where we may engage
a third-party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases
where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we have not consummated
an initial business combination within 24 months from the closing of our initial public offering (or such later date as approved
by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as
a single class), or upon the exercise of a redemption right in connection with our initial business combination, we will be required to
provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following redemption.
Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per public share initially
held in the trust account, due to claims of such creditors. Pursuant to a letter agreement, our sponsor has agreed that it will be liable
to us if and to the extent any claims by a third-party (other than our independent auditors) for services rendered or products sold to
us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust
account to below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account
as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions in the value of the trust
assets, in each case net of the interest that may be withdrawn to pay our tax obligations; provided that such liability will
not apply to any claims by a third-party or prospective target business that executed a waiver of any and all rights to seek access to
the trust account nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable
against a third-party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
However, we have not asked our sponsor to reserve
for such indemnification obligations, nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity
obligations and we believe that our sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our
sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the trust account,
the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per public share. In such
event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share in connection
with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third parties, including,
without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the
indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution
to our public stockholders.
In the event that the proceeds in the trust account
are reduced below the lesser of (i) $10.00 per public share and (ii) the actual amount per public share held in the trust account
as of the date of the liquidation of the trust account if less than $10.00 per public share due to reductions in the value of the
trust assets, in each case net of the interest that may be withdrawn to pay our tax obligations, and our sponsor asserts that it is unable
to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would
determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that
our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not
to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount
of funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per public share.
We may not have sufficient funds to satisfy
indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors
to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of
any kind in or to any monies in the trust account and to not seek recourse against the trust account for any reason whatsoever (except
to the extent they are entitled to funds from the trust account due to their ownership of public shares). Accordingly, any indemnification
provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the trust account or (ii) we consummate
an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders from bringing a lawsuit
against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood
of derivative litigation against our officers and directors, even though such an action, if successful, might otherwise benefit us and
our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement
and damage awards against our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in the
trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that
is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having
breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive
damages.
If, after we distribute the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either
a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty
to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the
trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that
is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount
that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy
estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims
deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation
may be reduced.
If we are deemed to be an investment company
under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under
the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.
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In addition, we may have imposed upon us burdensome
requirements, including:
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registration as an investment company with the SEC;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.
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In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business
other than investing, reinvesting or trading of securities and that our activities do not include investing, reinvesting, owning, holding
or trading “investment securities” constituting more than 40% of our assets (exclusive of U.S. government securities and cash
items) on an unconsolidated basis. Our business will be to identify and complete a business combination and thereafter to operate the
post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from
their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our principal activities
will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States
“government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days
or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest
only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other
securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring
and growing businesses for the long-term (rather than on buying and selling businesses in the manner of a merchant bank or private equity
fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. An investment
in our securities is not intended for persons who are seeking a return on investments in government securities or investment securities.
The trust account is intended as a holding place for funds pending the earliest to occur of either: (i) the completion of our initial
business combination; (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our
amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to provide holders of our
shares of Class A common stock the right to have their shares redeemed in connection with our initial business combination or to
redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our
initial public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted
at a meeting to extend such date, voting together as a single class) or (B) with respect to any other provision relating to the rights
of holders of our shares of Class A common stock; or (iii) absent our completing an initial business combination within 24 months
from the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class), our return of the funds held in the
trust account to our public stockholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed
above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance
with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability
to complete a business combination. If we have not consummated our initial business combination within the required time period, our public
stockholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation of our trust
account and our warrants will expire worthless.
Changes in laws or regulations, or a failure
to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial
business combination, and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. In particular, we are required to comply with certain SEC and other legal requirements. Compliance
with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their
interpretation and application may also change from time to time and those changes could have a material adverse effect on our business,
investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied,
could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination,
and results of operations.
If we have not consummated an initial business
combination within 24 months from the closing of our initial public offering (or such later date as approved by holders of a majority
of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class), our public
stockholders may be forced to wait beyond such period before redemption from our trust account.
If we have not consummated an initial business
combination within 24 months from the closing of our initial public offering (or such later date as approved by holders of a majority
of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class), the proceeds
then on deposit in the trust account, including interest earned on the funds held in the trust account and not previously released to
us to pay our taxes, if any (less up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our
public shares, as further described herein. Any redemption of public stockholders from the trust account will be effected automatically
by function of our amended and restated certificate of incorporation prior to any voluntary winding up. If we are required to wind up,
liquidate the trust account and distribute such amount therein, pro rata, to our public stockholders, as part of any liquidation
process, such winding up, liquidation and distribution must comply with the applicable provisions of the Delaware General Corporation
Law (“DGCL”). In that case, investors may be forced to wait beyond 24 months from the closing of our initial public offering
(or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a meeting to extend
such date, voting together as a single class) before the redemption proceeds of our trust account become available to them, and they receive
the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior
to the date of our redemption or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions
of our amended and restated certificate of incorporation, and only then in cases where investors have sought to redeem their shares of
Class A common stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions if we do
not complete our initial business combination and do not amend certain provisions of our amended and restated certificate of incorporation.
Our amended and restated certificate of incorporation will provide that, if we wind up for any other reason prior to the consummation
of our initial business combination, we will follow the foregoing procedures with respect to the liquidation of the trust account as promptly
as reasonably possible but not more than ten business days thereafter.
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.
If we are forced to enter into an insolvent liquidation,
any distributions received by stockholders could be viewed as an unlawful payment if it was proved that immediately following the date
on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result,
a liquidator could seek to recover some or all amounts received by our stockholders. Furthermore, our directors may be viewed as having
breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company
to claims, 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.
You will not be permitted to exercise your
warrants unless we register and qualify the underlying shares of Class A common stock or certain exemptions are available.
If
the issuance of the shares of Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration
or qualification under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise
such warrants and such warrants may have no value and expire worthless. In such event, holders who acquired their warrants as part of
a purchase of SAILSM securities will have paid the full SAILSM securities purchase price solely for the
shares of Class A common stock included in the SAILSM securities.
We are not registering the shares of Class A
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under
the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days, after the
closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement covering the registration
under the Securities Act of the shares of Class A common stock issuable upon exercise of the warrants and thereafter will use our
best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain
a current prospectus relating to the shares of Class A common stock issuable upon exercise of the warrants until the expiration of
the warrants in accordance with the provisions of the warrant agreement.
We cannot assure you that we will be able to do
so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement
or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a
stop order.
If the shares of Class A common stock issuable
upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant agreement, holders of warrants
who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be required to do so on a cashless basis
in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants be exercisable for cash
or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance
of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
from registration or qualification is available.
If our shares of Class A common stock are
at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered
securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of warrants who seek
to exercise their warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of
the Securities Act; in the event we so elect, we will not be required to file or maintain in effect a registration statement or register
or qualify the shares underlying the warrants under applicable state securities laws, and in the event we do not so elect, we will use
our best efforts to register or qualify the shares underlying the warrants under applicable state securities laws to the extent an exemption
is not available.
In no event will we be required to net cash settle
any warrant, or issue securities (other than upon a cashless exercise as described above) or other compensation in exchange for the warrants
in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state
securities laws.
You may only be able to exercise your public
warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of Class A
common stock from such exercise than if you were to exercise such warrants for cash.
The warrant agreement provides that in the following
circumstances holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and will, instead, be required
to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the shares of Class A
common stock issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the terms of the warrant
agreement; (ii) if we have so elected and the shares of Class A common stock is at the time of any exercise of a warrant not
listed on a national securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of
the Securities Act; and (iii) if we have so elected and we call the public warrants for redemption. If you exercise your public warrants
on a cashless basis, you would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common
stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying
the warrants, multiplied by the excess of the “fair market value” of our shares of Class A common stock (as
defined in the next sentence) over the exercise price of the warrants by (y) the fair market value. The “fair market value”
is the average reported closing price of the shares of Class A common stock for the 10 trading days ending on the third trading day
prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the
holders of warrants, as applicable. As a result, you would receive fewer shares of Class A common stock from such exercise than if
you were to exercise such warrants for cash.
The grant of registration rights to our initial
stockholders and holders of our private placement warrants may make it more difficult to complete our initial business combination, and
the future exercise of such rights may adversely affect the market price of our shares of Class A common stock.
Pursuant to agreement registration and shareholder
rights agreement, our initial stockholders and their permitted transferees can demand that we register the alignment shares and the Class A
common stock into which such alignment shares are convertible, holders of our private placement warrants and their permitted transferees
can demand that we register the shares of Class A common stock and the warrants (and the shares of Class A common stock issuable
upon exercise of such warrants) underlying such private placement warrants, and holders of private placement warrants that may be issued
upon conversion of working capital loans may demand that we register the shares of Class A common stock and the shares of Class A
common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability
of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A
common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult
to conclude. This is because the stockholders of the candidate for our initial business combination may increase the equity stake they
seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our shares of Class A
common stock that is expected when the shares of common stock owned by our initial stockholders, holders of our private placement warrants,
holders of our working capital loans or their respective permitted transferees are registered.
Because we are neither limited to evaluating
a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial
business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Our efforts to identify a prospective initial
business combination candidate are not be limited to a particular industry, sector or geographic region. While we may pursue an initial
business combination opportunity in any industry or sector, we intend to capitalize on the ability of our management team to identify,
acquire and operate a business or businesses that can benefit from our management team’s established global relationships and operating
experience. Our management team has extensive experience in identifying and executing strategic investments globally and has done so successfully
in a number of sectors, including financial services. Our amended and restated certificate of incorporation prohibits us from effectuating
an initial business combination solely with another blank check company or similar company with nominal operations. Because we have not
yet selected any specific candidate for our initial business combination with respect to an initial business combination, there is no
basis to evaluate the possible merits or risks of any particular candidate for our initial business combination’s operations, results
of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our initial business combination, we
may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular candidate for our initial business combination, 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 candidate for our initial business combination. 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 a candidate for our initial business
combination. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant holders following the initial
business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are unlikely to have
a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers
or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities
laws that the proxy solicitation or tender offer materials, as applicable, relating to the initial business combination contained an actionable
material misstatement or material omission.
We may seek acquisition opportunities in industries
or sectors which may or may not be outside of our management’s area of expertise.
We
will consider a business combination outside of our management’s area of expertise if a business combination target is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our company. Although our management will
endeavor to evaluate the risks inherent in any particular business combination target, we cannot assure you that we will adequately ascertain
or assess all of the significant risk factors. We also cannot assure you that an investment in our securities
will not ultimately prove to be less favorable to investors than a direct investment, if an opportunity were available, in a business
combination target. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Report regarding the areas
of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our
management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any holders who choose
to retain their securities following the business combination could suffer a reduction in the value of their securities. Such holders
are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and
guidelines for evaluating prospective candidates for our initial business combination, it is possible that a candidate for our initial
business combination with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a candidate for our initial business combination 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 initial business combination with a candidate for our initial business combination 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 candidate for our initial business combination that requires us to have a minimum
net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide to obtain
stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial
business combination if the candidate for our initial business combination does not meet our general criteria and guidelines. If we do
not complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the
trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We are not required to obtain an opinion from
an independent accounting or investment banking firm, and consequently, you may have no assurance from an independent source that the
price we are paying for the business is fair to our stockholders from a financial point of view.
Unless we complete our initial business combination
with an affiliated entity, we are not required to obtain an opinion from an independent accounting firm or independent investment banking
firm that is a member of FINRA that the price we are paying is fair to our stockholders from a financial point of view. If no opinion
is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based on
standards generally accepted by the financial community. Such standards used will be disclosed in our proxy solicitation or tender offer
materials, as applicable, related to our initial business combination.
We may issue additional shares of Class A
common stock or preferred stock to complete our initial business combination or under an employee incentive plan after completion of our
initial business combination. Any such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of incorporation
authorizes the issuance of up to 700,000,000 shares of Class A common stock, 20,000,000 shares of Class B common stock and 10,000,000
shares of preferred stock, par value $0.0001 per share. There are 52,500,000 shares of Class A common stock issued and outstanding
and 2,625,000 shares of Class B common stock issued and outstanding. One tenth of the total outstanding alignment shares will convert
into shares of our Class A common stock in each of the ten fiscal years following our initial business combination based on the Total
Return on our outstanding equity capital as of the relevant measurement date above the Price Threshold. There are no shares of preferred
stock issued and outstanding.
We may issue a substantial number of additional
shares of Class A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue shares of Class A common stock upon conversion of our
Class B common stock from time to time after our initial business combination as a result of the conversion features of the alignment
shares contained in our amended and restated certificate of incorporation. In addition, we may also issue shares of Class A common
stock to redeem the warrants at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution
provisions as set forth therein. However, our amended and restated certificate of incorporation provides, among other things, that prior
to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds
from the trust account; or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to
approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we have to consummate an initial
business combination beyond 24 months from the closing of our initial public offering or (y) amend the foregoing provisions.
These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and restated certificate
of incorporation, may be amended with a stockholder vote. The issuance of additional shares of common stock or shares of preferred stock:
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may significantly dilute the equity interest of investors (which dilutive effect would increase as the price of our Class A common stock increases on a year-over-year basis, in respect of shares issued upon conversion of the alignment shares);
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may subordinate the rights of holders of shares of Class A common stock if shares of preferred stock are issued with rights senior to those afforded shares of our Class A common stock;
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could cause a change in control if a substantial number of shares of Class A common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our SAILSM securities, shares of Class A common stock and/or warrants.
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Subsequent to the completion of our initial
business combination, our alignment shares will be eligible for conversion into shares of our Class A common stock based on the Total
Return of our outstanding equity capital. Any such issuance would dilute the interest of our stockholders and likely present other risks.
Our initial stockholders hold 2,587,500 shares
of our Class B common stock that will automatically convert into shares of our Class A common stock from time to time after
our initial business combination as a result of the conversion feature of the alignment shares contained in our amended and restated certificate
of incorporation. One tenth of the total number of outstanding alignment shares will convert into shares of our Class A common stock
for each of the ten fiscal years following our initial business combination based on the Total Return on our outstanding equity capital
as of the relevant measurement date above the Price Threshold.
As a result of such conversion feature, we may
issue a substantial number of additional shares of our Class A common stock to our initial stockholders, as the alignment shares
are not subject to a conversion limitation in the event of increases in the VWAP of our Class A common stock. The issuance of additional
shares of our Class A common stock upon the conversion of Class B common stock may significantly dilute the equity interest
of investors in our initial public offering, may adversely affect prevailing market prices for our Class A common stock, warrants
or other outstanding equity securities and will not result in adjustment to the exercise price of our warrants.
Resources could be wasted in researching initial
business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge
with another business. If we do not complete our initial business combination, our public stockholders may only receive their pro rata
portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We anticipate that the investigation of each specific
candidate for our initial business combination 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 candidate for our initial business combination,
we may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event
will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we do not complete our initial business combination, our public stockholders may only receive their
pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will
expire worthless.
We are dependent upon our executive officers
and directors and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued
service of our officers and directors, at least until we have completed our initial business combination. In addition, our executive officers
and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest
in allocating their time among various business activities, including identifying potential business combinations and monitoring the related
due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers.
The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our ability to successfully effect our initial
business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may
join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our ability to successfully effect our initial
business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however,
cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management, director
or advisory positions following our initial business combination, it is likely that some or all of the management of the target business
will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot
assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with
such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business combination
may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation
following our initial business combination and, as a result, may cause them to have conflicts of interest in determining whether a particular
business combination is the most advantageous.
Our key personnel may be able to remain with our
company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements
in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination
and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would
render to us after the completion of the business combination. Such negotiations also could make such key personnel’s retention
or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business. In addition, pursuant to an agreement to be entered into on or prior to the closing of
our initial public offering, our sponsor, upon and following consummation of an initial business combination, will be entitled to nominate
three individuals for election to our board of directors, as long as the sponsor holds any securities covered by the registration and
stockholder rights agreement.
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.
Our key personnel may be able to remain with our
company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements
in connection with the initial business combination. Such negotiations would take place simultaneously with the negotiation of the initial
business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities
for services they would render to us after the completion of the initial business combination. Such negotiations also could make such
key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such individuals
may influence their motivation in identifying and selecting a candidate for our initial business combination, subject to their fiduciary
duties under Delaware law.
The officers and directors of an acquisition
candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel
could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key
personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain
members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our initial
business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Our executive officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers and directors are not required
to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our
operations and our search for a business combination and their other businesses. We do not intend to have any full-time employees prior
to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors for
which he may be entitled to substantial compensation, and our executive officers are not obligated to contribute any specific number of
hours per week to our affairs. Our independent directors also serve as officers and board members for other entities. If our executive
officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess
of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our
ability to complete our initial business combination.
Our officers and directors presently have,
and any of them in the future may have, additional, fiduciary or contractual obligations to other entities, including another blank check
company, 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. Each of our officers and directors
presently has, and any of them in the future may have, additional fiduciary or contractual obligations to other entities pursuant to which
such officer or director is or will be required to present a business combination opportunity to such entity, subject to his or her fiduciary
duties under the DGCL. In particular, many of our officers and directors are affiliated with General Catalyst, our sponsor and other companies,
including Livongo and Health Catalyst, that may be interested in investing in or acquiring in similar business targets as the company.
Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us, subject to their fiduciary duties under the DGCL.
In addition, our independent directors may in
the future become affiliated with other blank check companies that may have acquisition objectives that are similar to ours. Accordingly,
they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts
may not be resolved in our favor and a potential target business may be presented to such other blank check companies prior to its presentation
to us, subject to our officers’ and directors’ fiduciary duties under the DGCL. Our amended and restated certificate of incorporation
will provide that we renounce our interest in any business combination opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of the company and it is an opportunity that
we are able to complete on a reasonable basis.
Other entities that our officers and directors
are associated with, and in particular General Catalyst, our sponsor, Livongo and Health Catalyst, may compete with us for acquisition
opportunities and if pursued by them we may be precluded from such opportunities. Investment ideas generated within General Catalyst,
our sponsor, Livongo and Health Catalyst may be suitable for both us and such entities and/or current or future investment vehicles associated
with our officers and directors, and such ideas may be directed to such entities rather than to us. Such opportunities may outperform
any businesses we acquire. Neither such entities nor members of our management team and board of directors who are also employed by such
entities have any obligation to present us with any opportunity for a potential business combination of which they become aware, unless
presented to such person solely in his or her capacity as an officer or director of the company. The sponsor and/or our officers and directors,
in their capacities as employees or other entities or in their other endeavors, may be required to present potential business to other
entities, before they present such opportunities to us.
Involvement of members of our management and
companies with which they are affiliated in civil disputes and litigation, governmental investigations or negative publicity unrelated
to our business affairs could materially impact our ability to consummate an initial business combination.
Members of our management team and companies with
which they are affiliated have been, and in the future will continue to be, involved in a wide variety of business affairs, including
transactions, such as sales and purchases of businesses, and ongoing operations. As a result of such involvement, members of our management
and companies with which they are affiliated in have been, and may in the future be, involved in civil disputes, litigation, governmental
investigations and negative publicity relating to their business affairs. Any such claims, investigations, lawsuits or negative publicity
may be detrimental to our reputation and could negatively affect our ability to identify and complete an initial business combination
in a material manner and may have an adverse effect on the price of our securities.
Our executive officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly prohibits
our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in
any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may
enter into a business combination with a target business that is affiliated with our sponsor, our directors or executive officers, although
we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
We may engage in a business combination with
one or more target businesses that have relationships with entities that may be affiliated with our sponsor, executive officers, directors
or initial stockholders which may raise potential conflicts of interest.
In light of the involvement of our sponsor, executive
officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, executive officers,
directors or initial stockholders. Such entities may compete with us for business combination opportunities. Our sponsor, officers and
directors are not currently aware of any specific opportunities for us to complete our initial business combination with any entities
with which they are affiliated, and there have been no substantive discussions concerning a business combination with any such entity
or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue
such a transaction if we determined that such affiliated entity met our criteria and guidelines for a business combination and such transaction
was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion from an independent
investment banking firm that is a member of FINRA or an independent accounting firm regarding the fairness to our company from a financial
point of view of a business combination with one or more domestic or international businesses affiliated with our sponsor, executive officers,
directors or 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.
Since our initial stockholders will lose their
entire investment in us if our initial business combination is not completed (other than with respect to public shares they may acquire
after our initial public offering), a conflict of interest may arise in determining whether a particular business combination target is
appropriate for our initial business combination.
On September 24, 2020, an affiliate of our
sponsor paid $22,500, or approximately $0.009 per share, and the foundation paid $2,500, or approximately $0.009 per share, in consideration
of 2,587,500 and 287,500 Class B shares, respectively. Such Class B shares held by an affiliate of our sponsor were subsequently
transferred to our sponsor. Up to 375,000 of the Alignment Shares were to be forfeited depending on the extent to which the underwriters’
over-allotment was exercised. The Alignment Shares are entitled to (together with the shares of Class B common stock) a number of
votes representing 20% of the Company’s outstanding common stock prior to the completion of the Initial Business Combination. The
underwriters exercised the over-allotment option in part and the Company consummated the sale of such SAILSM Securities on November 17,
2020; thus, 125,000 Alignment Shares were no longer subject to forfeiture. In November 2020, our sponsor transferred 6,469 alignment
shares to each of our independent directors resulting in our sponsor holding 2,561,624 alignment shares. Prior to the initial investment
in the company of $25,000 by our initial stockholders for the alignment shares, the company had no assets, tangible or intangible. The
per share price of the alignment shares was determined by dividing the amount contributed to the company by the number of alignment shares
issued. The alignment shares will be worthless if we do not complete an initial business combination. In addition, our sponsor and certain
directors of the Company purchased an aggregate of 11,666,666 private placement warrants, each exercisable to purchase one share of Class A
common stock at $11.50 per share, subject to adjustment, at a price of $1.50 per warrant ($17,500,000 in the aggregate) in a private placement
that closed simultaneously with the closing of our initial public offering. If we do not consummate an initial business within 24 months
from the closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding
common stock that are voted at a meeting to extend such date, voting together as a single class), the private placement warrants will
expire worthless. The personal and financial interests of our executive officers and directors may influence their motivation in identifying
and selecting a target business combination, completing an initial business combination and influencing the operation of the business
following the initial business combination. This risk may become more acute as the 24-month anniversary of the closing of our initial
public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock that are voted at a
meeting to extend such date, voting together as a single class) nears, which is the deadline for our consummation of an initial business
combination.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of the date
of this report to issue any notes or other debt securities, or to otherwise incur outstanding debt following our initial public offering,
we may choose to incur substantial debt to complete our initial business combination. We and our officers have agreed that we will not
incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the
monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust
account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
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our inability to pay dividends on our shares of Class A common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our shares of Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the
private placement warrants, which will cause us to be solely dependent on a single business which may have a limited number of products
or services. This lack of diversification may negatively impact our operations and profitability.
The net proceeds from our offering and the sale
of the private placement warrants provided us with $513,625,000 that we may use to complete our initial business combination (after taking
into account the $18,375,000 of deferred underwriting commissions being held in the trust account and the estimated expenses of our initial
public offering).
We may effectuate our initial business combination
with a single-target business or multiple-target businesses simultaneously or within a short period of time. However, we may not be able
to effectuate our initial business combination with more than one target business because of various factors, including the existence
of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present
operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing
our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive
and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks
or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries
or different areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset; or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This lack of diversification may subject us to
numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry
in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete business
combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and give rise
to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire several
businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is contingent
on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete
our initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens
and costs with respect to possible multiple negotiations and due diligence (if there are multiple sellers) and the additional risks associated
with the subsequent assimilation of the operations and services or products of the acquired companies in a single operating business.
If we are unable to adequately address these risks, it could negatively impact our profitability and results of operations.
We may attempt to complete our initial business
combination with a private company about which little information is available, which may result in a business combination with a company
that is not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek
to effectuate our initial business combination with a privately held company. Very little public information generally exists about private
companies, and we could be required to make our decision on whether to pursue a potential initial business combination on the basis of
limited information, which may result in a business combination with a company that is not as profitable as we suspected, if at all.
Our management may not be able to maintain
control of a target business after our initial business combination. Upon the loss of control of a target business, new management may
not possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination
so that the post-business combination company in which our public stockholders own shares will own less than 100% of the equity interests
or assets of a target business, but we will only complete such business combination if the post-business combination company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient
for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction
that does not meet such criteria. Even if the post-business combination company owns 50% or more of the voting securities of the target,
our stockholders prior to our initial business combination may collectively own a minority interest in the post-business combination company,
depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction in which
we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a target.
In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares
of Class A common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding
shares of Class A common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine
their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially acquired.
Accordingly, this may make it more likely that our management will not be able to maintain control of the target business.
We may seek business combination opportunities
with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our
desired results.
We may seek business combination opportunities
with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements,
to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as
successful as we anticipate.
To the extent we complete our initial business
combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent
in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our
management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able to
properly ascertain or assess all of the significant risk factors until we complete our business combination. If we are not able to achieve
our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains that
we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control
or reduce the chances that those risks and complexities will adversely impact a target business. Such combination may not be as successful
as a combination with a smaller, less complex organization.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which
a substantial majority of our stockholders do not agree.
Our amended and restated certificate of incorporation
does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny
stock” rules). As a result, we may be able to complete our initial business combination even though a substantial majority of our
public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial
business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules,
have entered into privately negotiated agreements to sell their shares to our initial stockholders, officers, directors, advisors or their
affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that
are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed
business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any
shares, all shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search
for an alternate business combination.
In order to effectuate an initial business
combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments,
including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation
or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders
may not support.
In
order to effectuate a business combination, special purpose acquisition companies have, in the recent past, amended various provisions
of their charters and governing instruments, including their warrant agreements. For example, special purpose acquisition companies have
amended the definition of business combination, increased redemption thresholds and extended the time to consummate a business combination
and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities.
Amending our amended and restated certificate of incorporation will require the approval of holders of 51% of our common stock, and amending
our warrant agreement will require a vote of holders of at least 50% of the public warrants that vote on such amendment and, solely with
respect to any amendment to the terms of the private placement SAILSM securities or any provision of the warrant agreement
with respect to the private placement SAILSM securities, 50% of the number of the then outstanding private placement
SAILSM securities. In addition, our amended and restated certificate of incorporation requires us to provide our public
stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our 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 a business
combination within 24 months of the closing of our initial public offering (or such later date as approved by holders of a majority
of shares of our outstanding common stock that are voted at a meeting to extend such date, voting together as a single class) or with
respect to any other material provisions relating to stockholders’ rights or business combination transaction activity. To the
extent any of such amendments would be deemed to fundamentally change the nature of the securities offered, we would register, or seek
an exemption from registration for, the affected securities. We may seek to amend our charter or governing instruments or extend the
time to consummate a business combination in order to effectuate our business combination.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing
the release of funds from our trust account) may be amended with the approval of holders of at least 65% of our common stock, which is
a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our amended and
restated certificate of incorporation to facilitate the completion of an initial business combination that some of our stockholders may
not support.
Some other blank check companies have a provision
in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s pre-business
combination activity, without approval by a certain percentage of the company’s stockholders. In those companies, amendment
of these provisions typically requires approval by 90% of the company’s stockholders attending and voting at an annual meeting.
Our amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity
(including the requirement to deposit proceeds of our initial public offering and the private placement of warrants into the trust account
and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described herein)
may be amended if approved by holders of 65% of our common stock entitled to vote thereon and corresponding provisions of the trust agreement
governing the release of funds from our trust account may be amended if approved by holders of at least 65% of our common stock entitled
to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority
of our outstanding shares of common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange
rules. Our initial stockholders and their permitted transferees, if any, who will collectively beneficially own 20% of the voting power
of our common stock immediately following the completion of our initial public offering, will participate in any vote to amend our amended
and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a
result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-business
combination behavior more easily than some other blank check companies, and this may increase our ability to complete a business combination
with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of
incorporation.
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 allow redemption in connection with our initial business
combination or to redeem 100% of our public shares if we do not complete an initial business combination within 24 months from the
closing of our initial public offering (or such later date as approved by holders of a majority of shares of our outstanding common stock
that are voted at a meeting to extend such date, voting together as a single class), unless we provide our public stockholders with the
opportunity to redeem their Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal
to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust account and not
previously released to us to pay our taxes, if any (less up to $100,000 of interest to pay dissolution expenses) divided by the
number of then outstanding public shares. These agreements are contained in letter agreements that we have entered into with our initial
stockholders, directors and each member of our management team. Our stockholders are not parties to, or third-party beneficiaries of,
these agreements and, as a result, will not have the ability to pursue remedies against our initial stockholders, executive officers or
directors for any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder
derivative action, subject to applicable law.
We may be unable to obtain additional financing
to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination. If we do not complete our initial business combination, our public stockholders may only
receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and
our warrants will expire worthless.
Although we believe that the net proceeds of our
initial public offering and the sale of the private placement warrants will be sufficient to allow us to complete our initial business
combination, because we have not yet negotiated the acquisition of a target business we cannot ascertain the capital requirements for
any particular transaction. If the net proceeds of our initial public offering and the sale of the private placement warrants prove to
be insufficient, either because of the size of our initial business combination, the depletion of the available net proceeds in search
of a target business, the obligation to redeem for cash a significant number of shares from stockholders who elect redemption in connection
with our initial business combination or the terms of negotiated transactions to purchase shares in connection with our initial business
combination, we may be required to seek additional financing or to abandon the proposed business combination. We cannot assure you that
such financing will be available on acceptable terms, if at all. The current economic environment has made it especially difficult for
companies to obtain acquisition financing. To the extent that additional financing proves to be unavailable when needed to complete our
initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination
and seek an alternative target business candidate. If we have not consummated our initial business combination within the required time
period, our public stockholders may receive only approximately $10.00 per public share, or less in certain circumstances, on the liquidation
of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our
initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure
additional financing could have a material adverse effect on the continued development or growth of the target business. None of our officers,
directors or stockholders is required to provide any financing to us in connection with or after our initial business combination.
Our initial stockholders control a substantial
interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do
not support.
Upon closing of our initial public offering, our
initial stockholders, with their alignment shares, owns approximately 20% of the voting power of our common stock prior to the completion
of an initial business combination. In addition, the alignment shares, all of which are held by our initial stockholders, will entitle
the holders to elect all of our directors prior to our initial business combination. Following the completion of our initial business
combination, the alignment shares will be entitled to one vote per share. Accordingly, they may exert a substantial influence on actions
requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate
of incorporation. Further, pursuant to a letter agreement with our sponsor, we have agreed not to enter into a definitive agreement regarding
an initial business combination without the prior written consent of our sponsor. As a result, we may not be permitted to enter into an
initial business combination that our Board believes to be in the stockholders’ best interests. Further, for so long as any alignment
shares remain outstanding, we may not, without the prior or written consent of the holders of a majority of the alignment shares then
outstanding, voting separately as a single class, (i) amend, alter or repeal any provision of our amended and restated certificate
of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers,
preferences or relative, participating, optional or other or special rights of our Class B Shares, (ii) change our fiscal year,
(iii) increase the number of directors on the Board, (iv) pay any dividends or effect any split on any of our capital stock
or make any distributions of cash, securities or any other property, (v) adopt any stockholder rights plan, (vi) acquire any
entity or business with assets at a purchase price greater than 10% or more of our total assets measured in accordance with generally
accepted accounting principles in the United States or the accounting standards then used by us in the preparation of our financial statements,
(vii) issue any shares of Class A common stock in excess of 5% of our Class A common stock outstanding at the closing of
our initial public offering or that would otherwise require a stockholder vote pursuant to the rules of the stock exchange on which
the Class A shares are then listed, (viii) make a rights offering to all or substantially all holders of any class of our common
stock or (ix) issue additional Class B shares. As a result, the holders of the alignment shares may be able to prevent us from
taking such actions that the Board believes is in our interest.
If our initial stockholders purchase any securities
or if our initial stockholders purchase any additional shares of Class A common stock in the aftermarket or in privately negotiated
transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers or directors,
have any current intention to purchase additional securities. Factors that would be considered in making such additional purchases would
include consideration of the current trading price of our shares of Class A common stock. In addition, our board of directors, whose
members were elected by our sponsor, is and will be divided into three classes, each of which will generally serve for a terms for three years
with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors
prior to the completion of our initial business combination, in which case all of the current directors will continue in office until
at least the completion of the initial business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of
their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue
to exert control at least until the completion of our initial business combination.
We may amend the terms of the warrants in a
manner that may be adverse to holders of public warrants. As a result, the exercise price of your warrants could be increased, the exercise
period could be shortened and the number of shares of Class A common stock purchasable upon exercise of a warrant could be decreased,
all without your approval.
Our warrants be issued in registered form under
a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides
that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or to correct any defective provision
but requires the approval by the holders of at least 50% of the then-outstanding public warrants is required to make any change that adversely
affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner
adverse to a holder provided 50% of the holders of the then outstanding public warrants that vote on such amendment approve of such amendment,
after at least 10 days’ notice that an amendment is being sought. Although our ability to amend the terms of the public warrants
with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments
to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than
initially provided), shorten the exercise period or decrease the number of shares of Class A common stock purchasable upon exercise
of a warrant.
We may redeem your unexpired warrants prior
to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem the outstanding
public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that
the closing price of our shares of Class A common stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number
of shares issuable upon exercise or the exercise price of a warrant as described under the heading “Description of Securities—Warrants—Public
Stockholders’ Warrants—Anti-Dilution Adjustments”) for any 20 trading days within a 30 trading-day period ending on
the third trading day prior to proper notice of such redemption and provided that certain other conditions are met. If and when
the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying
securities for sale under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the
holders are otherwise unable to exercise the warrants. Redemption of the outstanding warrants could force you to (i) exercise your
warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at
the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which,
at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of your warrants.
In addition, we have the ability to redeem the
outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant upon
a minimum of 30 days’ prior written notice of redemption provided that certain other conditions are met. Any
such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when
the warrants are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent
increase in the value of the Class A common stock had your warrants remained outstanding.
Our warrants may have an adverse effect on
the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business combination.
Simultaneously with the closing of our initial
public offering, we issued in a private placement an aggregate of 11,666,666 private placement warrants, including 333,333 Private Placement
Warrants as a result of the underwriters’ exercise in part of their over-allotment option, each whole private placement warrant
exercisable to purchase one share of Class A common stock at $11.50 per share. In addition, if our sponsor or an affiliate of our
sponsor or certain of our officers and directors makes any working capital loans, such lender may convert those loans into up to an additional
1,000,000 private placement warrants, at the price of $1.50 per private placement warrant. To the extent we issue common stock to effectuate
a business transaction, the potential for the issuance of a substantial number of additional shares of Class A common stock upon
exercise of these warrants could make us a less attractive acquisition vehicle to a candidate for our initial business combination. Such
warrants, when exercised, will increase the number of issued and outstanding shares of Class A common stock and reduce the value
of the shares of Class A common stock issued to complete the business transaction. Therefore, our warrants may make it more difficult
to effectuate a business transaction or increase the cost of acquiring the candidate for our initial business combination.
Because
each SAILSM security contains one-fourth of one redeemable warrant
and only a whole warrant may be exercised, the SAILSM securities may be worth less
than units of other blank check companies.
Each
SAILSM security contains one-fourth of one redeemable warrant. Pursuant to the warrant agreement, no fractional warrants
will be issued upon separation of the SAILSM securities, and only whole SAILSM securities will trade.
If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round
down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder. This is different
from other offerings similar to ours whose units include one share of Class A common stock and one whole warrant to purchase
one whole share. We have established the components of the SAILSM securities in this way in order to reduce the dilutive
effect of the warrants upon completion of a business combination since the warrants will be exercisable in the aggregate for one-fourth
of the number of shares compared to SAILSM securities that each contain a whole warrant to purchase one whole share,
thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this SAILSM securities
structure may cause our SAILSM securities to be worth less than if a SAILSM securities included a warrant
to purchase one whole share.
A provision of our warrant agreement may make
it more difficult for us to consummate an initial business combination.
Unlike most blank check companies, if (x) we
issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing
of our initial business combination at a Newly Issued Price of less than $9.20 per share of common stock, (ii) the aggregate gross
proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of
our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (iii) the
Market Value is below $9.20 per share, the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the Market
Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal
to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted
(to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us
to consummate an initial business combination with a target business.
A market for our securities may not develop,
which would adversely affect the liquidity and price of our securities.
The price of our securities may vary significantly
due to one or more potential business combinations and general market or economic conditions. Furthermore, an active trading market for
our securities may never develop or, if developed, it may not be sustained. You may be unable to sell your securities unless a market
can be established and sustained.
Because we must furnish our stockholders with
target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with
some prospective target businesses.
The federal proxy rules require that a proxy
statement with respect to a vote on a business combination meeting certain financial significance tests include historical and/or pro forma
financial statement disclosure in periodic reports. We will include the same financial statement disclosure in connection with our tender
offer documents, whether or not they are required under the tender offer rules. These financial statements may be required to be prepared
in accordance with, or be reconciled to, accounting principles generally accepted in the United States of America, or GAAP, or international
financial reporting standards as issued by the International Accounting Standards Board, or IFRS, depending on the circumstances and the
historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight
Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire
because some targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy
rules and complete our initial business combination within the prescribed time frame.
We are an emerging growth company and a smaller
reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to “emerging growth companies” or “smaller reporting companies,” this could make our securities less
attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited
to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company
for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our shares
of Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we
would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our
securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result
of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less
active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when
a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has
opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
Additionally, we are a “smaller reporting
company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain
reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will
remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our shares of common stock
held by non-affiliates exceeds $250 million as of the prior June 30th, or (ii) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our shares of common stock held by non-affiliates exceeds $700 million
as of the prior June 30. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our
financial statements with other public companies difficult or impossible.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate a business combination, require substantial financial and management resources, and
increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending
December 31, 2021. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no longer qualify
as an emerging growth company, will we not be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek
to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such acquisition.
Provisions in our amended and restated certificate
of incorporation may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our shares
of Class A common stock and could entrench management.
Our amended and restated certificate of incorporation
contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These
provisions include a staggered board of directors, the ability of the board of directors to designate the terms of and issue new series
of preferred stock, and potential payments owed with respect to our alignment 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.
Provisions in our amended and restated certificate
of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of incorporation
will require, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding
brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee
to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to
any provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim
against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery
in the State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is
an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal
jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction
of a court or forum other than the Court of Chancery, and (C) for which the Court of Chancery does not have subject matter jurisdiction.
If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process
on such stockholder’s counsel.
Although we believe this provision benefits us
by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine
that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits
against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities
laws and the rules and regulations thereunder.
Unless we consent in writing to the selection
of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of
any complaint asserting a cause of action arising under the Securities Act. A court may determine that this provision is unenforceable,
and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although
our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Notwithstanding the foregoing, our amended and
restated certificate of incorporation will provide that the exclusive forum provision will not apply to suits brought to enforce a duty
or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27
of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange
Act or the rules and regulations thereunder.
Our warrant agreement will designate the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders
to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that, subject to
applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for
the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive
forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum.
Notwithstanding the foregoing, these provisions
of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim
for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing
or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions
in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement,
is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York
(a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the
personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such
court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant
holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant
holder.
This choice-of-forum provision may limit a warrant
holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage
such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect
to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters
in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result
in a diversion of the time and resources of our management and board of directors.
Cyber incidents or attacks directed at us could
result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information
systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the
cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early
stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.
We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents.
It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial
loss.
Since only holders of our alignment shares
will have the right to vote on the election of directors, upon the listing of our shares on Nasdaq, Nasdaq may consider us to be a “controlled
company” within the meaning of the Nasdaq rules and, as a result, we may qualify for exemptions from certain corporate governance
requirements.
After completion of our initial public offering,
only holders of our alignment shares will have the right to vote on the election of directors. As a result, Nasdaq may consider us to
be a “controlled company” within the meaning of the Nasdaq corporate governance standards. Under the Nasdaq corporate governance
standards, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled
company” and may elect not to comply with certain corporate governance requirements, including the requirements that:
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we have a board that includes a majority of “independent directors,” as defined under the rules of Nasdaq;
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we have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and
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we have a nominating and corporate governance committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.
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We do not intend to utilize these exemptions and
intend to comply with the corporate governance requirements of Nasdaq, subject to applicable phase-in rules. However, if we determine
in the future to utilize some or all of these exemptions, you will not have the same protections afforded to stockholders of companies
that are subject to all of the Nasdaq corporate governance requirements.
If we effect our initial business combination
with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us.
If we pursue a candidate for our initial business
combination with operations or opportunities outside of the United States for our initial business combination, we may face additional
burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial
business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a candidate for our initial business
combination with operations or opportunities outside of the United States for our initial business combination, we would be subject to
risks associated with cross-border initial business combinations, including in connection with investigating, agreeing to and completing
our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments,
regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination
with such a company, we would be subject to any special considerations or risks associated with companies operating in an international
setting, including any of the following:
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costs and difficulties inherent in managing cross-border business operations;
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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exchange listing and/or delisting requirements;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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local or regional economic policies and market conditions;
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unexpected changes in regulatory requirements;
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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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underdeveloped or unpredictable legal or regulatory systems;
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protection of intellectual property;
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social unrest, crime, strikes, riots and civil disturbances;
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regime changes and political upheaval;
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terrorist attacks, natural disasters 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 were unable to do so, we may be unable to complete such initial business combination, or, if we complete such
combination, our operations might suffer, either of which may adversely impact our business, financial condition and results of operations.
We are subject to changing law and regulations
regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.
We are subject to rules and regulations by
various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies
whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new
and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses
and a diversion of management time and attention from seeking a business combination target.
Moreover, because these laws, regulations and
standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available.
This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions
to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may
be subject to penalty and our business may be harmed.