Overview
We
are an early stage Delaware company structured as a blank check company for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer
to throughout this Amendment as our initial business combination.
Initial
Public Offering
On
September 11, 2020, we consummated our initial public offering of 7,500,000 units. Each unit consists of one public share and
one public warrant. The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $75,000,000.
Simultaneously
with the closing of our initial public offering, we completed the private sale of an aggregate of 3,075,000 private placement
warrants to our sponsor, generating gross proceeds to the Company of $3,075,000.
On
October 13, 2020, the underwriters partially exercised their over-allotment option, resulting in the purchase of an additional
123,600 units, generating total gross proceeds of $1,236,000. In connection with the underwriters’ partial exercise of their
over-allotment option, we also consummated the sale of an additional 37,080 private placement warrants at $1.00 per private placement
warrant, generating total proceeds of $37,080.
A
total of $76,998,360, comprised of $73,886,280 of the proceeds from the IPO (which amount includes $2,668,260 of the underwriters’
deferred discount) and $3,112,080 of the proceeds of the sale of the private placement warrants, was placed in a U.S.-based trust
account maintained by Continental Stock Transfer & Trust Company, acting as trustee.
Our
Class A common stock, units and warrants are each traded on Nasdaq under the symbols “ITAC,” “ITACU,”
and “ITACW,” respectively. Our units began trading on Nasdaq on September 9, 2020 and our Class A common stock and
warrants began trading on Nasdaq on October 30, 2020.
Arbe
Business Combination
On
March 19, 2021, we entered into a definitive business combination agreement (the “Business Combination Agreement”)
with Arbe Robotics Ltd. (“Arbe”), a leading provider of next-generation 4D Imaging Radar solutions. Pursuant to the
Business Combination Agreement, among other things, a newly formed subsidiary of Arbe will merge with our company, with our company
surviving as a wholly-owned subsidiary of Arbe. Arbe is expected to trade on The Nasdaq Stock Market. The transaction is expected
to close in early Q3 2021.
We
will file a proxy statement in connection with our proposed business combination with Arbe (the “Proxy Statement”).
Investors should review the Proxy Statement for additional information regarding the Business Combination Agreement, the proposed
business combination and Arbe, including the risks and uncertainties regarding the business combination and Arbe’s business.
Other
than as specifically discussed, this Amendment does not give effect to the transaction with Arbe.
Our
Business
While
we may pursue an initial business combination target in any business, industry or geographical location, we are focusing our search
on North American targets operating in the industrial and energy focused technology areas, including software, mobile and IoT
applications, cloud communications and ultra-high bandwidth services, including LTE and 5G communications.
Our
management team believes that the adoption of technology in the industrial sectors has traditionally evolved at a slower pace
than most other industries. Our management team believes that this is due to large companies that have entrenched and siloed management
teams and decision processes which discourage collaboration and adoption of new technologies. As such, many systems and practices
are outdated and lack the efficiencies critical for long-term success in a digitally-transformed and technology-enabled world.
In addition, the recent Covid-19 pandemic along with the related oil and gas contango have accelerated the need for advanced
technologies, such as artificial intelligence (“AI”), remote and cloud management, and visibility and analytics, as
well as general IoT capabilities for the industrial sectors. Consequently, our management believes that many customers and enterprises
are actively embracing such technologies and that there are significant opportunities to pursue a business combination.
We
believe that there are attractive opportunities to acquire and merge with rapidly growing technology companies that are at a strategic
inflection point. We are focused on identifying companies with disruptive technologies that have enabled them to grow quickly
and are positioned to sustain a robust growth trajectory through the addition of new capital, access to public markets, and operational
or strategic expertise. We are seeking combination targets that have new or evolving opportunities to respond to changes in the
marketplace. We are pursuing a target that presents a significant value proposition to its customer marketplace, including major
cost reductions in the field — with a high rate of return on investment (ROI), a substantial decrease in carbon footprint,
and/or vast improvements in safety, compliance and environmental protocol.
Our
team has extensive experience in technology-related entrepreneurship, venture capital, private equity and investment banking.
In addition, our Chairman and Chief Executive Officer, E. Scott Crist, has founded, built and successfully exited a number of
businesses in the technology, telecommunications and industrial sectors, including companies involved in emerging 5G, AI and IoT
technologies. Management believes that companies that focus on these new technologies will grow significantly faster than more
traditional companies. Mr. Crist is a partner at Texas Ventures, a leading technology venture firm, and the Chief Executive
Officer of Osperity, Inc., a market leader in AI-assisted industrial computer vision. Prior to his current positions, Mr. Crist
was the Chief Executive Officer and Chairman of Infrastructure Networks Inc., a leading 4G and 5G-LTE wireless broadband
provider for the energy industry, until its control position sale to Apollo Global Management. Earlier in his career, Mr. Crist
built Telscape International, Inc. from its start-up stage through multiple acquisitions, into a publicly traded industry
leader with a market cap in excess of $100 million. He also was the founding chairman of Asset Nation Inc., formerly known
as SalvageSale, Inc., an e-commerce leader in the surplus and salvage industry for the insurance brokerage and underwriting
industry. The company was acquired by Ritchie Bros. Auctioneers Incorporated (NYSE: RBA) (“Richie Brothers”) in May 2012.
The original SalvageSale platform served as a cornerstone of the Ritchie Brothers e-commerce strategy. Additionally, Mr. Crist
founded and has been chairman of the VA-Gov Housing Fund, a partnership of profit and non-profit companies advocating
for US veterans and their families since 2012. In this capacity, he became a large lender for the US government’s homeless
shelter program for veterans while deploying significant capital and achieving a blended IRR of approximately 15% for the “for-profit”
limited partners. Mr. Crist also served as President and Chief Executive Officer for Matrix Telecom, Inc., a long-distance telecommunications
company, which ranked 7th on the list of the 500 fastest growing private companies in the United States by Inc.
Magazine in 1995 and was named an Ernst & Young Entrepreneur of the Year in 2000 for the Texas region.
Being
based in Texas allows us to leverage the substantial proprietary deal sourcing, investing and operating expertise of our management
team and advisors, including relationships with business leaders and leading entrepreneurs in the upstream and midstream oil and
gas industries. In addition, we leverage the deep relationships and long-standing experience that our management team and
strategic advisors command in the industrial and technology venture capital and private equity sectors as discussed in “Competitive
Advantages” below. We believe that this combination of relationships and experience puts us in an excellent position to
locate potential targets, particularly those owned by private equity funds.
Business
Combination Criteria
Our
business combination criteria is not limited to a particular industry or geographic sector; however, given the experience of our
management team and board of directors, we are focusing our search on industrial and energy technology companies with an enterprise
value of approximately $250 million to $500 million. We believe that this relative size of target opportunities will
enable the Company to pursue companies that are the most attractive from a return standpoint and are less pursued by larger, more
established sources of capital.
We
have identified the following general criteria and guidelines that we believe are consistent with our acquisition philosophy and
our management’s experience, and that we believe are important in evaluating prospective business combination opportunities.
We use these criteria and guidelines to evaluate business combination opportunities, but we may decide to consummate our initial
business combination with a target business that does not meet one or more of these criteria and guidelines.
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Large
and Compelling Growth Market. We are focusing on investments in industry segments that we believe demonstrate
attractive long-term growth prospects and reasonable overall size or potential. We view growth as an important driver of
value and will seek companies whose growth potential can generate meaningful upside.
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Attractive,
Inherently Profitable Business With High Operating Leverage. We are seeking to invest in companies
that we believe possess not only established business models and sustainable competitive advantages, but also have inherently
profitable unit economics.
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Strong
Management Teams. We intend to acquire a business that has an experienced management team with a proven
track record for producing rapid growth and with an ability to clearly and confidently articulate the business and market opportunities
to public market investors. As such, we will spend significant time assessing a company’s leadership and personnel and evaluating
what we can do to augment and/or upgrade the team over time as needed.
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Opportunity
for Operational Improvements. We are seeking to identify businesses that we believe are stable but
at an inflection point and would benefit from our ability to drive improvements in the target’s processes, go-to-market strategy,
product or service offering, sales and marketing efforts, geographical presence and/or leadership team.
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Differentiated
Products or Services. We are evaluating metrics such as recurring revenues, product life cycle, cohort
consistency, pricing per product or customer, cross-sell success and churn rates to focus on businesses whose products or
services are differentiated or where we see an opportunity to create value by implementing best practices.
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Limited
Technology Risk. We are seeking to invest in companies that have established market-tested products
or service offerings, and do not lend themselves to erratic technology risks.
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Appropriate
Valuations. We are seeking target companies for our initial business combination based on disciplined
valuation-centric metrics. Management has significant negotiating and operating experience and recognizes the initial valuation
is an important component of the ultimate rate of return.
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Benefit
From Being a Public Company. We are pursuing a business combination with a company that we believe
will benefit from being publicly traded and can effectively utilize the broader access to capital and public profile that are
associated with being a publicly traded company.
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Leading
Industry Position and Competitive Market Advantage. We are focusing our search on one or more businesses
based in the North American market and within industries that we believe have strong fundamentals, favorable prospects and a high
likelihood of generating strong risk-adjusted returns for our stockholders. We seek to acquire a business whose products
utilize a proprietary or patented technology, have dominate market position in a specific geographic or technological niche, or
have some other form of distinct competitive advantage. The factors we consider include management’s credentials, growth
prospects, competitive dynamics, level of industry consolidation, need for capital investment, intellectual property, barriers
to entry, and merger terms.
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Potential
to Grow, Including Through Further Acquisition Opportunities. We seek to acquire a business which has
the potential to supplement its organic growth with a pipeline of potentially actionable acquisitions. We expect to work with
the ongoing management team to develop the business strategy around geographic expansion, new products, high-return capital
expenditure projects and acquisitions, as well as creating and maintaining the optimal capital structure for growth.
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High
Organic Revenue Growth, Attractive Gross Margins, Prudent Debt. We are seeking to acquire a business
that has the ability to grow rapidly across various market conditions and in varying economic cycles and the near-term potential
to generate significant increases in revenue as well as strong and sustainable operating margins. To provide reliable guidance,
we also seek to acquire a business that has strong visibility on forward financial performance and straightforward operating metrics.
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Sourced
on a Proprietary Basis. We do not expect to participate in broadly marketed processes, but rather aim
to leverage our extensive network to source a proprietary initial business combination. Notwithstanding the foregoing, we would
consider participating in a process that is focused primarily on special purpose acquisition companies, where we would not compete
with a conventional initial public offering or private equity acquisition, or at the tail end of a process when other alternatives
have been eliminated, on the strength of our prior experience in closing business combinations or because our company is most
appropriately sized to the target.
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Preparedness
for the Process and Public Markets. We seek to acquire a business that has or can put in place prior
to the closing of a business combination the governance, financial systems and controls required in the public markets.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management team may deem relevant. In the event that we find an opportunity that has characteristics more compelling to us than
the characteristics described above, we would pursue such opportunity.
Competitive
Strengths and Advantages
We
believe that our management team is well positioned to consummate an initial business combination due to its combination of operating
and investing expertise. We believe that the most likely business combination targets are those companies at a strategic inflection
point, such as rapidly growing companies stepping out from the control of private equity or venture capital owners, family-owned
businesses seeking some liquidity, or business units being carved out from larger conglomerates. In these scenarios in particular,
we believe the experience our management team brings in successfully scaling companies, especially those in the public markets,
will be looked upon favorably by both the target company and public stockholders.
Specifically,
we believe our competitive strengths to be the following:
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Experienced
Management Team. Our management team and strategic advisors have a substantial investment track record
and advisory experience, significant knowledge of both the North American energy and technology markets, access to proprietary
deal flow, and strong relationships with business leaders and entrepreneurs in the industrial production, technology, and telecommunications
industries. We believe their backgrounds allow us access to proprietary investment opportunities and position us to successfully
complete an initial business combination. In addition, our Chairman and Chief Executive Officer has prior experience in entrepreneurship,
venture capital, public offerings, and acquisition-led growth strategies across multiple industries, but with a focus in the energy,
industrial, technology and telecommunications space.
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Flexible
Structure. With a public market for our common stock and $75,750,000 in trust, we have flexibility
to be able to offer a target business a variety of options in structuring a transaction and funding future growth. Flexibility
in using our capital stock, debt, cash or a mixture of the foregoing, allows us to work with a target company to accommodate their
needs.
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Public
Company Status. We believe our status as a public company makes us an attractive transaction partner
to prospective target businesses. As a public company, we believe the target business would benefit from greater access to capital
to fund future growth initiatives, further means of creating incentive and compensation plans for management that are closely
aligned with shareholders’ interests, and increased recognition and awareness potentially benefitting sales and recruiting.
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Established
Deal Sourcing Network and Personal Contacts. We maximize our pipeline of potential target investments
by proactively approaching our extensive network of contacts, including private equity and venture capital sponsors, family offices,
executives of public and private companies, merger and acquisition advisory firms, investment banks, capital markets desks, lenders
and other financial intermediaries. We believe the prior investment experience and track record of our team, including our Chairman
and Chief Executive Officer’s successful prior involvement in successful investments, will give us a competitive advantage
when sourcing potential initial business combination opportunities. Our management team also has relationships with private equity
and venture capital firms and with investment bankers who we believe are likely to provide us with potential combination targets.
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Deal-making and
Capital Markets Experience through all Market Cycles. Our management team and strategic advisors consist
of seasoned dealmakers with experience in a wide variety of industries, structures and market conditions, as well as experienced
equity and debt capital markets professionals. Most have worked both in the energy and technology markets throughout North America,
as principal investors and as advisors, through different market cycles. Our management team and strategic advisors apply the
same disciplined approach to acquire a business that they have used in connection with their current advisory services and principal
investment activities.
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Experience
with Complex Transactions. Members of our management team and strategic advisors have a track record
of completing transactions that involve an element of complexity not well-served by a competitive auction process and on
educating counterparties about the benefits of the special purpose acquisition company structure and process. We believe that
our management team and strategic advisors’ experience with complex situations requiring creative solutions is expected
to lead to less competitive transactions. Members of our management team and strategic advisors also have a history of leveraging
their relationship networks for due diligence and to develop a unique perspective and comfort with the issues faced in such complex
opportunities.
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Public
Company Operating Expertise. Our team has over 60 cumulative years of experience as either executive
officers or directors of private and publicly traded companies, have the ability to shepherd targets through the “going
public” process and to navigate the ongoing challenges of operating as a public company. We anticipate that one or more
members of our management team or board would remain on the board of the company post-business combination. In addition, some
of the potential acquisition targets we consider may operate within a closely regulated industry. We believe that the expertise
within our management team around closely regulated energy and telecommunications industries will be advantageous when evaluating
certain acquisition targets.
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Investment
Expertise. Our management team has extensive experience in identifying, evaluating, structuring, acquiring,
and investing in privately held companies. Collectively, the members of our management team alone have been involved with or led
over fifty acquisitions and investments.
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Broad
Sector Focused Expertise. Our management team brings deep expertise in a wide range of sub-sectors within
our target industries. We believe that our diverse range of expertise increases our chances of identifying a business combination
target where we have the expertise to appropriately diligence the investment and to provide value post business combination. Specifically,
members of our management team have experience operating, investing or serving on boards of companies in the following sub-sectors:
oil & gas upstream, downstream and production, renewable and transition fuels, refineries, terminals and network integration.
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Initial
Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
Our board of directors will make the determination as to the fair market value of our initial business combination. If our board
of directors is not able to independently determine the fair market value of our initial business combination, we will obtain
an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm with respect
to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent
determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or
experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s
assets or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of
our independent directors. If we are no longer listed on Nasdaq, we would not be required to satisfy the above-referenced fair
market value test.
We
anticipate structuring our initial business combination either (i) in such a way so that the post-transaction company
in which our public stockholders own shares will own or acquire 100% of the equity interests or assets of the target business
or businesses, or (ii) in such a way so that the post-transaction company owns or acquires less than 100% of such interests
or assets of the target business in order to meet certain objectives of the target management team or stockholders, or for other
reasons. However, we will only complete an initial business combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company
owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target
and us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number
of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately
prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the
post-transaction company, the portion of such business or businesses that is owned or acquired is what will be taken into
account for purposes of Nasdaq’s 80% of net assets test. If the initial business combination involves more than one target
business, the 80% of net assets test will be based on the aggregate value of all of the transactions and we will treat the target
businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as
applicable.
Our
Business Combination Process
In
evaluating prospective business combinations, we conduct a thorough due diligence review process that encompasses, among other
things, a review of historical and projected financial and operating data, meetings with management and their advisors (if applicable),
on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and other reviews as
we deem appropriate.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor or our officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor,
officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm that is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company
from a financial point of view.
Our
officers and directors will indirectly own founder shares and/or private placement warrants following our initial public offering.
Because of this ownership, our sponsor and our officers and directors may have a conflict of interest in determining whether a
particular target business is an appropriate business with which to effectuate our initial business combination. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if
the retention or resignation of any such officers and directors were to be included by a target business as a condition to any
agreement with respect to our initial business combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity.
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 opportunity to such entity. We believe, however, that the fiduciary duties or contractual
obligations of our officers or directors will not materially affect our ability to complete our initial business combination.
Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered
to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director
or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without
violating another legal obligation.
Our
officers and directors have agreed not to participate in the formation of, or become an officer or director of any other special
purpose acquisition company with a class of securities registered under the Exchange Act until we have entered into a definitive
agreement regarding our initial business combination or we have failed to complete our initial business combination by December
11, 2021 (or by June 11, 2022, if we extend in full the period of time to consummate a business combination).
Our
Management Team
Members
of our management team are not obligated to devote any specific number of hours to our matters, but they intend to devote as much
of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time
that any member of our management team will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the current stage of the business combination process.
We
believe our management team’s operating and transaction experience and relationships with companies will provide us with
a substantial number of potential business combination targets. Over the course of their careers, the members of our management
team have developed a broad network of contacts and corporate relationships in various industries. This network has grown through
the activities of our management team sourcing, acquiring and financing businesses, our management team’s relationships
with sellers, financing sources and target management teams and the experience of our management team in executing transactions
under varying economic and financial market conditions.
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As a public company, we offer
a target business an alternative to the traditional initial public offering through a merger or other business combination with
us. Following an initial business combination, we believe the target business would have greater access to capital and additional
means of creating management incentives that are better aligned with stockholders’ interests than it would as a private
company. A target business can further benefit by augmenting its profile among potential new customers and vendors and aid in
attracting talented employees. 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.
Although
there are various costs and obligations associated with being a public company, 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,
marketing and road show efforts that may not be present to the same extent in connection with an initial business combination
with us.
Furthermore,
once a proposed initial 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 could have negative valuation consequences. Following
an initial business combination, we believe the target business would then have greater access to capital and 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 makes 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 independent registered public accounting firm 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) ending on December
31, 2025, (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 Class A common stock that is held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies
may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited
financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market
value of our common stock held by non-affiliates exceeds $250 million as of the end of the prior June 30th
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 30th.
Financial
Position
With
funds available for an initial business combination initially in the amount of $76,998,360, after payment of $2,668,260 of deferred
underwriting fees, before fees and expenses associated with our initial business combination, 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 or leverage ratio. Because we are able to complete our initial
business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to
use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its
needs and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will
be available to us.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations other than looking for an initial business combination
for an indefinite period of time. We intend to effectuate our initial business combination using cash from the proceeds of our
initial public offering and the private placement of the private placement warrants, the proceeds of the sale of our shares in
connection with our initial business combination (including pursuant to forward purchase agreements or backstop agreements we
may enter into), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target,
or a combination of the foregoing. We may seek to complete our initial business combination with a company or business that may
be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent
in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our initial business combination or used for redemptions
of our Class A common stock, we may apply the balance of the cash released to us from the trust account for general corporate
purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal
or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies
or for working capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account. In addition, we are targeting businesses larger than we could acquire with the
net proceeds of our initial public offering and the sale of the private placement warrants, and may as a result be required to
seek additional financing to complete such proposed initial business combination. Subject to compliance with applicable securities
laws, we would expect to complete such financing only simultaneously with the completion of our initial business combination.
In the case of an initial business combination funded with assets other than the trust account assets, our proxy materials or
tender offer documents disclosing the initial business combination would disclose the terms of the financing and, only if required
by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately,
or through loans in connection with our initial business combination.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
bankers and investment professionals. Target businesses may be brought to our attention by such unaffiliated sources as a result
of being solicited by us by calls or mailings. These sources may also introduce us to target businesses in which they think we
may be interested on an unsolicited basis, since many of these sources will have read the prospectus filed in connection with
our initial public offering and will know what types of businesses we are targeting. Our officers and directors, as well as our
sponsor and 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 and our sponsor and their affiliates.
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, advisory 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 any entity with which our sponsor or officers are affiliated, be
paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by
the company prior to, or in connection with any services rendered 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). None of our sponsor, executive officers
or directors, or any of their respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting
fees from a prospective business combination target in connection with a contemplated initial business combination. We have agreed
to pay an affiliate of our sponsor a total of $10,000 per month for office space, utilities and 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-transaction 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 initial business combination candidate.
We
are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated
with our sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared
ownership with our sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial
business combination target that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors,
would obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm
that such an initial business combination is fair to our company from a financial point of view. We are not required to obtain
such an opinion in any other context.
If
any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business
of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present
such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers
and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties
to us.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of
the value of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a definitive agreement in connection with our initial business combination.
The fair market value of our initial business combination will be determined by our board of directors based upon one or more
standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading
multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable
businesses. If our board of directors is not able to independently determine the fair market value of our initial business combination,
we will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent accounting firm
with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able
to make an independent determination of the fair market value of our initial business combination, it may be unable to do so if
it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty
as to the value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination. Subject to this requirement, our management has virtually unrestricted flexibility
in identifying and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial
business combination with another blank check company or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets
of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction company
is what will be taken into account for purposes of Nasdaq’s 80% of net assets test.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early
stages of development or growth, we may be affected by numerous risks inherent in such company or business. Although our management
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective business target, we expect to conduct a thorough due diligence review, which may encompass, among other
things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection
of facilities, as well as a review of financial and other information that will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we are focusing our search for an initial business
combination in a single industry. 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’ 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
an initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target
business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will
have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder
approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business
or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we
may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
TYPE
OF TRANSACTION
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WHETHER STOCKHOLDER APPROVAL
IS REQUIRED
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Purchase
of assets
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No
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Purchase
of stock of target not involving a merger with the company
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No
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Merger
of target into a subsidiary of the company
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No
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Merger of the company
with a target
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Yes
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Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A
common stock then outstanding;
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any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons
collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise
and the present or potential issuance of common stock could result in an increase in outstanding common shares or voting power
of 5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change of control.
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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 sponsor, initial stockholders, directors, officers, advisors or their
affiliates may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or
following the completion of our initial business combination. There is no limit on the number of shares our initial stockholders,
directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law
and Nasdaq rules. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions. If they engage in such transactions, they will not make any such purchases
when they are in possession of any material nonpublic information not disclosed to the seller or if such purchases are prohibited
by Regulation M under the Exchange Act. 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. 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. None of the funds
held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion of our initial
business combination.
The
purpose of any such purchases of shares could be to 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 to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial
business combination, where it appears that such requirement would otherwise not be met. The purpose of any such purchases of
public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted
to the warrant holders for approval in connection with our initial business combination. Any such purchases of our securities
may result in the completion of our initial business combination that may not otherwise have been possible. In addition, if such
purchases are made, the public “float” of our shares of Class A common stock or warrants may be reduced and the
number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation,
listing or trading of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor,
officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly
or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into
a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem
their shares for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder
has already submitted a proxy with respect to our initial business combination. Our sponsor, officers, directors, advisors or
their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and other federal
securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under
the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which
is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has
certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor,
officers, directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16
of the Exchange Act to the extent such purchases are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock
upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account 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 and not previously released to us to pay our franchise and income taxes,
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 approximately $10.10 per public share. The per-share amount we will distribute to
investors who properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters.
Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive
their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion
of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock
upon the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve
the initial business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder
approval of a proposed initial business combination or conduct a tender offer will be made by us, solely in our discretion, and
will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would require
us to seek stockholder approval under the law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and
stock purchases would not typically require stockholder approval while direct mergers with our company where we do not survive
and any transactions where we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate
of incorporation would require stockholder approval. If we structure an initial business combination with a target company in
a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder vote to approve the
proposed initial business combination. We may conduct redemptions without a stockholder vote pursuant to the tender offer rules
of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder
approval for business or other legal reasons.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will,
pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers,
and
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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, we or our sponsor will terminate any plan established in accordance
with Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public
shares through a tender offer, 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 a specified number of public shares which are not purchased by our sponsor, which number will be based
on the requirement that we will only redeem our public shares so long as (after such redemption) our net tangible assets will
be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or
any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete
the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules, and
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file
proxy materials with the SEC.
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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 outstanding shares of
common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders
present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power
of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count
toward this quorum and pursuant to a letter agreement, our sponsor, officers and directors have agreed to vote their founder shares
and any public shares purchased during or after our initial public offering (including in open market and privately negotiated
transactions) in favor of our initial business combination. For purposes of seeking approval of the majority of our outstanding
shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum
is obtained. As a result, in addition to our initial stockholders’ founder shares, we would need only 363,050, or 4.8%,
of the 7,623,600 public shares sold in our initial public offering to be voted in favor of an initial business combination (assuming
only a quorum is present at the meeting and only a majority of shares are required to approve the business combination) in order
to have our initial business combination approved. We intend to give approximately 30 days’ (but not less than 10 days’
nor more than 60 days’) prior written notice of any such meeting, if required, at which a vote shall be taken to approve
our initial business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may
make it more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its
public shares irrespective of whether they vote for or against the proposed transaction.
Our
amended and restated certificate of incorporation will provide that we will only redeem our public shares so long as (after such
redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial
business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s
“penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement
relating to our initial business combination. For example, the proposed initial business combination may require: (i) cash
consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other
general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the
proposed initial business combination. 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, and all shares of Class A common stock submitted for redemption will
be returned to the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our 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
seeking redemption rights with respect to more than an aggregate of 1,143,540 shares, or 15% of the shares sold in our initial
public offering, which we refer to as the “Excess Shares.” Such restriction shall also be applicable to our affiliates.
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 initial 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 1,143,540 shares could threaten to exercise its
redemption rights if such holder’s shares are not purchased by us or our management at a premium to the then-current market
price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 1,143,540 shares, 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 an initial business combination with a target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in
the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote on the proposal
to approve the initial business combination in the event we distribute proxy materials, or to deliver their shares to the transfer
agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s
option. The tender offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection
with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements.
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 days prior to the vote on the initial 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 exercise period, it is
advisable for stockholders to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $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 initial business combination and check a
box on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the initial 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 initial
business combination during which he or she could monitor the price of the company’s stock in the market. If the price rose
above the redemption price, he or she could sell his or her shares in the open market before actually delivering his or her shares
to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit before
the stockholder meeting, would become “option” rights surviving past the completion of the initial business combination
until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting
ensures that a redeeming holder’s election to redeem is irrevocable once the initial business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials
or the date of the stockholder meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share
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 initial business combination is not completed, we may continue to try to complete an initial business combination
with a different target until December 11, 2021 (or until a later date up to June 11, 2022, if we extend the period of time to
consummate a business combination, as described below).
Extension
of Time to Complete Business Combination
We
have until December 11, 2021 to consummate an initial business combination. However, if we anticipate that we may not be able
to consummate our initial business combination by December 11, 2021, we will extend the period of time to consummate a business
combination up to two times, each by an additional three months (up to June 11, 2022). Pursuant to the terms of our amended and
restated certificate of incorporation and the trust agreement entered into between us and Continental Stock Transfer& Trust
Company on the date of closing our initial public offering, in order to extend the time available for us to consummate our initial
business combination, our sponsor or its affiliates or designees, upon five days’ advance notice prior to the applicable
deadline, must deposit into the trust account $762,360 on or prior to the date of the applicable deadline, for each three-month
extension (up to an aggregate of $1,524,720), or $0.20 per share, if we extend for the full six months. We intend to issue a press
release announcing such extension at least three days prior to the applicable deadline. In addition, we intend to issue a press
release the day after the applicable deadline announcing whether or not the funds had been timely deposited. Our sponsor and its
affiliates or designees not obligated to fund the trust account to extend the time for us to complete our initial business combination.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we have until December 11, 2021 (or until June 11, 2022 if we
extend in full the period of time to consummate a business combination) to complete our initial business combination. If we are
unable to complete our initial business combination by December 11, 2021 (or by June 11, 2022, if we extend the period of time
to consummate a business combination in full), 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 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 franchise and income taxes (less up to $50,000 of interest to
pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),
subject to applicable law, and (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. There will be no redemption rights
or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business
combination by December 11, 2021 (or up to June 11, 2022).
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our
initial business combination by December 11, 2021 (or by June 11, 2022, if we extend in full the period of time to consummate
a business combination). However, if our sponsor, officers or directors acquire public shares in or after our initial public offering,
they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete
our initial business combination by December 11, 2021 (or up to June 11, 2022).
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by December 11, 2021 (or up to June 11, 2022
if we extend the period of time to consummate a business combination) or (ii) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with
the opportunity to redeem their shares of 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 franchise and income taxes divided by the number of then outstanding
public shares. However, we will only redeem our public shares so long as (after such redemption) our net tangible assets will
be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of underwriters’ fees and commissions (so that we are not 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 (described above), we would not proceed with the amendment or the related redemption of our public
shares at such time.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts remaining out of the approximately $500,000 of proceeds held outside the trust account, although we
cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on
the proceeds held in the trust account to pay any franchise and income tax obligations we may owe. However, if those funds are
not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there
is any interest accrued in the trust account not required to pay franchise and income taxes on interest income earned on the trust
account balance, we may request the trustee to release to us an additional amount of up to $50,000 of such accrued interest to
pay those costs and expenses.
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 approximately $10.00. The proceeds
deposited in the trust account could, however, become subject to the claims of our creditors, which would have higher priority
than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount received by
stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide
for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient
assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders.
While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all
creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including, but not limited to, fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to
be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. Marcum, our independent registered public accounting firm, and the underwriters
of our initial public offering, did not execute agreements with us waiving such claims to the monies held in the trust account.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services
rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent,
confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the trust account to below
the lesser of (i) $10.10 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 $10.10 per share due to reductions in the value of the trust assets,
less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business
who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable)
nor will it apply to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities,
including liabilities under the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations,
nor have we independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and 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 (i) $10.10 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 which may be withdrawn to pay taxes, and our sponsor asserts that
it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular
claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification
obligations. While we currently expect that our independent directors would take legal action on our behalf against our sponsor
to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment
may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative
to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked
our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy
those obligations. 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 $10.10 per public share.
We
seek to reduce the possibility that our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to
have all vendors, service providers (other than our independent auditor), 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 have access to up to approximately
$406,380.90 from the proceeds held outside of the trust account (as of December 31, 2020) 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
$50,000). 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. Because the offering expenses
were less than our estimate of $700,000, the amount of funds we hold outside the trust account has increased by a corresponding
amount.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination by December 11, 2021 (or by June 11, 2022,
if we extend in full the period of time to consummate a business combination) may be considered a liquidating distribution under
Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure
that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an
additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or
the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of
the dissolution.
Furthermore, if the pro rata portion of our trust
account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business
combination by December 11, 2021 (or by June 11, 2022, if we extend in full the period of time to consummate a business combination),
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 are unable to complete our initial business
combination by December 11, 2021 (or by June 11, 2022, if we extend in full the period of time to consummate a business combination),
we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more
than ten business days thereafter, redeem 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 franchise and income taxes (less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (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 December 11, 2021 (or up to the 21st
month following our IPO) and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend
well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known
to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought
against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company,
and our operations are limited to searching for prospective target businesses to acquire, the only likely claims to arise would
be from our vendors (such as lawyers, investment bankers and auditors) or prospective target businesses. As described above, pursuant
to the obligation contained in our underwriting agreement, we have sought and will continue to seek to have all vendors, service
providers (other than our independent auditor), prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. As a
result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim
that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent
necessary to ensure that the amounts in the trust account are not reduced below (i) $10.10 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 $10.10 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, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against
us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (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 any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing
of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by December 11, 2021
(or by June 11, 2022, if we extend in full the period of time to consummate a business combination) or (B) with respect to
any other provision relating to stockholders’ rights or pre-initial business combination activity, and (iii) the
redemption of all of our public shares if we are unable to complete our business combination by December 11, 2021 (or by June
11, 2022, if we extend in full the period of time to consummate a business combination), subject to applicable law. In no other
circumstances will a stockholder have any right or interest of any kind to or in the trust account. 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 as 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 have encountered, and may continue
to encounter, intense competition from other entities having a business objective similar to ours, including other blank check
companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic business combinations.
Many of these entities are well established and have extensive experience identifying and effecting business combinations directly
or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than
we do. Our ability to acquire larger target businesses is limited by our available financial resources. This inherent limitation
gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay
cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us
for our initial business combination and our outstanding rights, warrants and unit purchase option, and the future dilution they
potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive
disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have two officers. These individuals are not obligated to devote any specific number of hours to our matters but they
devote as much of their time as they deem necessary to our affairs and they intend to continue doing so until we have completed
our initial business combination. The amount of time they devote in any time period will vary based on whether a target business
has been selected for our initial business combination and the stage of the initial business combination process we are in. We
do not intend to have any full-time employees prior to the completion of our initial business combination.
Periodic
Reporting and Financial Information
Our
units, Class A common stock and warrants are registered under the Exchange Act and we 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 Amendment 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 tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these
financial statements will need to be prepared in accordance with, or reconciled to, 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 targets we may conduct an initial business combination with because some
targets may be unable to provide such statements in time for us to disclose such statements in accordance with federal proxy rules
and complete our initial business combination by December 11, 2021 (or by June 11, 2022, if we extend in full the period of time
to consummate a business combination). We cannot assure you that any particular target business identified by us as a potential
business combination candidate will have financial statements prepared in accordance with GAAP or that the potential target business
will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent that these
requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential
business combination candidates, we do not believe that this limitation will be material.
We are required to evaluate and report on 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 be required to have our internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following September 11,
2025, (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.
BUSINESS