Item
1A. Risk Factors.
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Form 10-K, before making a decision to invest in our units. If any of the following events
occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price
of our securities could decline, and you could lose all or part of your investment.
Risk
Factor Summary
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We are a blank check company
with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. |
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Our public stockholders
may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our initial
business combination even though a majority of our public stockholders do not support such a combination. |
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Your only opportunity to
affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem
your shares from us for cash, unless we seek stockholder approval of the business combination. |
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If we seek stockholder
approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote. |
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The ability of our public
stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets,
which may make it difficult for us to enter into a business combination with a target. |
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The ability of our public
stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable
business combination or optimize our capital structure. |
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The requirement that we
complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us
in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination targets,
in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination
on terms that would produce value for our stockholders. |
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Our search for a business
combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected
by the recent COVID-19 outbreak and the status of debt and equity markets. |
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We may not be able to complete
our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose
of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.00
per share, or less than such amount in certain circumstances, and our warrants will expire worthless. |
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If we seek stockholder
approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates may elect
to purchase shares from public stockholders, which may influence a vote on a proposed business combination and reduce the public
“float” of our Class A common stock. |
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If a stockholder fails
to receive notice of our offer to redeem our public shares in connection with our business combination or fails to comply with the
procedures for tendering its shares, such shares may not be redeemed. |
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You will not be entitled
to protections normally afforded to investors of many other blank check companies. |
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Because of our limited
resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our
initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances, and
our warrants will expire worthless. |
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If the net proceeds of
the initial public offering and the sale of the private placement warrants not being held in the trust account are insufficient,
it could limit the amount available to fund our search for a target business or businesses and complete our initial business combination,
and we will depend on loans from our sponsor or management team to fund our search for a business combination, to pay our taxes and
to complete our initial business combination. If we are unable to obtain these loans, we may be unable to complete our initial business
combination. |
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Past performance by our
management team or our advisors is not indicative of future performance of an investment in us. |
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You will not have any rights
or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore,
you may be forced to sell your public shares or warrants, potentially at a loss. |
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Nasdaq may delist our securities
from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to
additional trading restrictions. |
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Our warrants are accounted
for as liabilities and the changes in value of our warrants could have a material effect on our financial results. |
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We have identified a material
weakness in our internal control over financial reporting as of December 31, 2021. This material weakness could continue to adversely
affect our ability to report our results of operations and financial condition accurately and in a timely manner. |
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We may face litigation
and other risks as a result of the material weakness in our internal control over financial reporting. |
Risks
Relating to our Search for, Consummation of, or Inability to Consummate, a Business Combination
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our
initial business combination even though a majority of our public stockholders do not support such a combination.
We
may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder
approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other
legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval of a proposed business combination
or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to
seek stockholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of our public
shares do not approve of the business combination we complete.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your
right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one or more
target businesses. Since our board of directors may complete a business combination without seeking stockholder approval, public stockholders
may not have the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, if we do
not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination may
be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our
tender offer documents mailed to our public stockholders in which we describe our initial business combination.
If
we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such initial
business combination, regardless of how our public stockholders vote.
Our
initial stockholders have agreed to vote their founder shares, as well as any public shares purchased during or after the initial public
offering, in favor of our initial business combination. As a result, in addition to our initial stockholders’ founder shares, we
would need 15,525,001, or 37.5%, of the 41,400,000 public shares sold in the initial public offering to be voted in favor of a transaction
(assuming all outstanding shares are voted) in order to have our initial business combination approved (assuming the over-allotment option
is not exercised). Our initial stockholders owned shares representing 20% of our outstanding shares of common stock immediately following
the completion of the initial public offering. Accordingly, if we seek stockholder approval of our initial business combination, it is
more likely that the necessary stockholder approval will be received than would be the case if our initial stockholders agreed to vote
their founder shares in accordance with the majority of the votes cast by our public stockholders.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not
be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in
no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon consummation
of our initial business combination or such greater amount necessary to satisfy a closing condition as described above, we would not
proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective
targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption
rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase
price or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account
to meet such requirements or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption
than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account
or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable business
combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriter
will not be adjusted for any shares that are redeemed in connection with a business combination. The per-share amount we will distribute
to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such
redemptions, the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting
commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our initial business combination would not be consummated and that you would have to wait for liquidation in order to redeem your
stock.
If
our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price or requires
us to have a minimum amount of cash at closing, the probability that our initial business combination would not be consummated is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate
the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such
time our stock may trade at a discount to the pro rata amount per share in the trust account.
In
either situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or until you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination
targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our business combination
on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination within 24 months from the closing of the initial public offering. Consequently, such target business
may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination
with that particular target business, we may be unable to complete our initial business combination with any target business. This risk
will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may
enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by the recent COVID-19 outbreak and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout
the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public
Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II
declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11,
2020 the World Health Organization characterized the outbreak as a “pandemic.” The COVID-19 outbreak has and a significant
outbreak of other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial
markets worldwide, and the business of any potential target business with which we consummate a business combination could be materially
and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 continue
to restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and
services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts
our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including
new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.
If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate
a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially
adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other events, including as a result of increased market volatility, decreased market liquidity and third-party financing
being unavailable on terms acceptable to us or at all.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only
receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
sponsor, executive officers and directors have agreed that we must complete our initial business combination within 24 months from the
closing of the initial public offering. We may not be able to find a suitable target business and complete our initial business combination
within such time period. If we have not completed our initial business combination within such time period, we will: (i) cease all operations
except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable
law; and (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. In such case, our public stockholders may only receive $10.00 per share, and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of
their shares.
If
we are unable to complete an initial business combination within the 24-month period, we may seek an amendment to our amended and restated
certificate of incorporation to extend the period of time we have to complete an initial business combination beyond 24 months. Our amended
and restated certificate of incorporation will require that such an amendment be approved by holders of 65% of our outstanding common
stock.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates may
elect to purchase shares from public stockholders, which may influence a vote on a proposed business combination and reduce the public
“float” of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated
transactions or in the open market either prior to or following the completion of our initial business combination, although they are
under no obligation to do so. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record
holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event
that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public
stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their
prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of the business combination
and thereby increase the likelihood of obtaining stockholder approval of the business combination, or to satisfy a closing condition
in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our business
combination, where it appears that such requirement would otherwise not be met. This may result in the completion of our business combination
that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our Class A common stock and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities
on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination or fails to
comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business combination.
Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder
may not become aware of the opportunity to redeem its shares. In addition, the proxy solicitation or tender offer materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will indicate the applicable
delivery requirements, which will include the requirement that a beneficial holder must identify itself in order to validly redeem its
shares. For example, 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 initially scheduled
vote on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to the
transfer agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares may not
be redeemed.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of the initial public offering and the sale of the private placement warrants are intended to be used to complete an
initial business combination with a target business that has not been identified, we may be deemed to be a “blank check”
company under the United States securities laws. However, because we have net tangible assets in excess of $5,000,000 and have filed
a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the
SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be afforded the benefits or protections
of those rules. Among other things, this means our units will be immediately tradable and we will have a longer period of time to complete
our business combination than do companies subject to Rule 419. Moreover, if the initial public offering were subject to Rule 419, that
rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the trust
account were released to us in connection with our completion of an initial business combination.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our
warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive
experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various
industries. Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do
and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe there
are numerous target businesses we could potentially acquire with the net proceeds of the initial public offering and the sale of the
private placement warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will
be limited by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition
of certain target businesses. Furthermore, because we are obligated to pay cash for the shares of Class A common stock which our
public stockholders redeem in connection with our initial business combination, target companies will be aware that this may reduce the
resources available to us for our initial business combination.
This
may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete our initial
business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust account
and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share upon
our liquidation.
If
the net proceeds of the initial public offering and the sale of the private placement warrants not being held in the trust account are
insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our initial business
combination and we will depend on loans from our sponsor or management team to fund our search for a business combination, to pay our
taxes, and to complete our initial business combination. If we are unable to obtain these loans, we may be unable to complete our initial
business combination.
Of
the net proceeds of the initial public offering, only $1,100,000 were available to us initially outside the trust account to fund our
working capital requirements. We believe that the funds available to us outside of the trust account are sufficient to allow us to operate
for at least until March 4, 2023; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could
use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also
use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger
agreements designed to keep target businesses from “shopping” around for transactions with other companies or investors on
terms more favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any
current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
Prior
to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate
of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights
to seek access to funds in our trust account. If we are unable to complete our initial business combination because we do not have sufficient
funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may
only receive an estimated $10.00 per share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received
by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have
all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other
entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute
such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case
in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management
believes that such third party’s engagement would be significantly more beneficial to us than any alternative. The underwriter
of the initial public offering will not execute an agreement with us waiving such claims to the monies in the trust account.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would
agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption
of our public shares, if we are unable to complete our business combination within the prescribed timeframe, or upon the exercise of
a redemption right in connection with our business combination, we will be required to provide for payment of claims of creditors that
were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption
amount received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of
such creditors. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered
or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the
amount of funds in the trust account to below $10.00 per public share or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of
the interest that may be withdrawn to pay our taxes. This liability will not apply with respect to any claims by a third party who executed
a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriter
of the initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that
an executed waiver is deemed to be unenforceable against a third party, then our sponsor will not be responsible to the extent of any
liability for such third-party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity
obligations and believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve
for such indemnification obligations. Therefore, our sponsor may not be able to satisfy those obligations. As a result, if any such claims
were successfully made against the trust account, the funds available for our initial business combination and redemptions could be reduced
to less than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers will indemnify us for claims
by third parties including, without limitation, claims by vendors and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in
the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share or (ii) such lesser
amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the
trust assets, in each case net of the interest which may be withdrawn to pay our taxes, and our sponsor asserts that it is unable to
satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would
determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so 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. If our independent directors choose not to enforce these
indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced
below $10.00 per share.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be
exposed to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached
its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by
paying public stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our
stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be
reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements
and our activities may be restricted, which may make it difficult for us to complete our business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and |
|
● |
restrictions
on the issuance of securities, each of which may make it difficult for us to complete our
initial business combination.
In
addition, we may have imposed upon us burdensome requirements, including: |
|
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registration
as an investment company with the SEC; |
|
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adoption
of a specific form of corporate structure; and |
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are not subject to. |
In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must
ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities
do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and
complete a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to
buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to
be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held
in the trust account may only be invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust
agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these
instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and
selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company”
within the meaning of the Investment Company Act. The initial public offering is not intended for persons who are seeking a return on
investments in government securities or investment securities. The trust account is intended as a holding place for funds pending the
earliest to occur of: (a) the completion of our initial business combination; (b) the redemption of any public shares properly
tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation (i) to modify the
substance or timing of our obligation to provide holders of our Class A common stock the right to have their shares redeemed in
connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination
within 24 months from the closing of the initial public offering or (ii) with respect to any other provisions relating to the
rights of holders of our Class A common stock, and (c) the redemption of our public shares if we have not consummated our business
combination within 24 months from the closing of the initial public offering, subject to applicable law. If we do not invest the
proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment
Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds
and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results
of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult,
time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and
those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to
comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results
of operations.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination within 24 months of the completion of the initial public offering
may be considered a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280
of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during
which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims
brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
However, it is our intention to redeem our public shares as soon as reasonably possible following the 24th month from the closing of
the initial public offering in the event we do not complete our business combination and, therefore, we do not intend to comply with
the foregoing procedures.
Because
do not comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b)
of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred
after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially
brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata
portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 24 months from the closing of the initial public offering is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute
of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as
in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the
opportunity for our stockholders to elect directors.
In
accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first
fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting
of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent
in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our
initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting.
Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they
may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c)
of the DGCL.
Because
we are not limited to a particular industry, sector or any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business’ operations.
Although
we expect to focus our search for a target business in the industrial sector, we may seek to complete a business combination with an
operating company in any industry or sector. However, we will not, under our amended and restated certificate of incorporation, be permitted
to effectuate our business combination with another blank check company or similar company with nominal operations. Because we have not
yet identified or approached any specific target business with respect to a business combination, there is no basis to evaluate the possible
merits or risks of any particular target business’ operations, results of operations, cash flows, liquidity, financial condition
or prospects. To the extent we complete our business combination, we may be affected by numerous risks inherent in the business operations
with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of
revenues or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development
stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot
assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete
due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances
that those risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove
to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of their
shares. Such stockholders are unlikely to have a remedy for such reduction in value.
We
may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
We
may consider a business combination outside of our management’s area of expertise if a business combination candidate is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our company. Although our management will
endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately
ascertain or assess all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately
prove to be less favorable to investors in the initial public offering than a direct investment, if an opportunity were available, in
a business combination candidate. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise,
our management’s expertise may not be directly applicable to its evaluation or operation, and the information contained in the
initial public offering prospectus regarding the areas of our management’s expertise would not be relevant to an understanding
of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant
risk factors. Accordingly, any stockholders who choose to remain stockholders following our business combination could suffer a reduction
in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target
business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria
and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial
business combination with a target that does not meet some or all of these guidelines, such combination may not be as successful as a
combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective business
combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise their
redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to have a
minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we decide
to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval of
our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete
our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of our trust
account and our warrants will expire worthless.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial
point of view.
Unless
we complete our business combination with an affiliated entity or our board cannot independently determine the fair market value of the
target business or businesses, we are not required to obtain an opinion from an independent investment banking firm or from an independent
accounting firm that the price we are paying is fair to our company from a financial point of view. If no opinion is obtained, our stockholders
will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted
by the financial community. Such standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable,
related to our initial business combination.
We
may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive plan
after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the
Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution
provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders
and likely present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 500,000,000 shares of Class A common stock, par
value $0.0001 per share, 50,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred
stock, par value $0.0001 per share. Immediately after the initial public offering, there were 458,600,000 and 39,650,000 authorized but
unissued shares of Class A common stock and Class B common stock, respectively, available for issuance which amount does not
take into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable upon conversion of the Class B
common stock. The Class B common stock is automatically convertible into Class A common stock concurrently with or immediately
following the consummation of our initial business combination, initially at a one-for-one ratio but subject to adjustment as set forth
herein and in our amended and restated certificate of incorporation. Immediately after the initial public offering, there will be no
shares of preferred stock issued and outstanding.
We
may issue a substantial number of additional shares of Class A common stock or shares of preferred stock to complete our initial
business combination or under an employee incentive plan after completion of our initial business combination. We may also issue shares
of Class A common stock upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial
business combination as a result of the anti-dilution provisions as set forth therein. However, our amended and restated certificate
of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional shares that
would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares
(a) on any initial business combination or (b) to approve an amendment to our amended and restated certificate of incorporation
to (x) extend the time we have to consummate a business combination beyond 24 months from the closing of the initial public offering
or (y) amend the foregoing provisions. These provisions of our amended and restated certificate of incorporation, like all provisions
of our amended and restated certificate of incorporation, may be amended with a stockholder vote. The issuance of additional shares of
common stock or shares of preferred stock:
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may
significantly dilute the equity interest of investors in the initial public offering; |
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may
subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those
afforded our Class A common stock; |
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could
cause a change in control if a substantial number of shares of Class A common stock is issued, which may affect, among other
things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present
officers and directors; and |
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may
adversely affect prevailing market prices for our units, Class A common stock and/or warrants. |
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to
locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation
of our trust account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the
proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we
may fail to complete our initial business combination for any number of reasons including those beyond our control. Any such event will
result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we are unable to complete our initial business combination, our public stockholders may receive only
approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless.
As
the number of special purpose acquisition companies evaluating targets increases, attractive targets may become scarcer and there may
be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in
our inability to find a target or to consummate an initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an initial business combination, and there are still many special
purpose acquisition companies preparing for an initial public offering, as well as many such companies currently in registration. As
a result, at times, fewer attractive targets may be available to consummate an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with available
targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause targets
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate
targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find
and consummate an initial business combination and may result in our inability to consummate an initial business combination on terms
favorable to our investors altogether.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, officers or directors. Our directors also serve as officers and board members for other entities. Such entities
may compete with us for business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific
opportunities for us to complete our business combination with any entities with which they are affiliated, and there have been no preliminary
discussions concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or
targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity
met our criteria for a business combination and such transaction was approved by a majority of our disinterested directors. Despite our
agreement to obtain an opinion from an independent investment banking firm or from an independent accounting firm, regarding the fairness
to our company from a financial point of view of a business combination with one or more domestic or international businesses affiliated
with our officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms of the
business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since
our sponsor, officers and directors will lose their entire investment in us if our business combination is not completed, a conflict
of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
On
December 9, 2020, our sponsor purchased an aggregate of 8,625,000 founder shares in exchange for a capital contribution of $25,000, or
approximately $0.004 per share. On March 1, 2021, we effected a share capitalization of 1,725,000 shares of Class B common stock, resulting
in the Sponsor holding an aggregate of 10,350,000 founder shares. Prior to the initial investment in the company of $25,000 by the sponsor,
the company had no assets, tangible or intangible. The purchase price of the founder shares was determined by dividing the amount of
cash contributed to the company by the number of founder shares issued. The founder shares will be worthless if we do not complete an
initial business combination. In addition, our sponsor purchased an aggregate of 7,520,000 private placement warrants, each exercisable
for one share of Class A common stock at $11.50 per share, subject to adjustment as described herein, for an aggregate purchase price
of $11,280,000, or $1.50 per warrant, that will also be worthless if we do not complete a business combination. Holders of founder shares
have agreed (A) to vote any shares owned by them in favor of any proposed business combination and (B) not to redeem any founder
shares in connection with a stockholder vote to approve a proposed initial business combination. In addition, we may obtain loans from
our sponsor, affiliates of our sponsor or an officer or director. The personal and financial interests of our officers and directors
may influence their motivation in identifying and selecting a target business combination, completing an initial business combination
and influencing the operation of the business following the initial business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this Annual Report on Form 10-K to issue any notes or other debt securities, or to otherwise
incur outstanding debt following the initial public offering, we may choose to incur substantial debt to complete our business combination.
We have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest
or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount available
for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default
and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt
obligations; |
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acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
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our
immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
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our
inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing
while the debt is outstanding; |
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our
inability to pay dividends on our Class A common stock; |
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends
on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
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limitations
on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
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increased
vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;
and |
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution
of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
We
may only be able to complete one business combination with the proceeds of the initial public offering and the sale of the private placement
warrants, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This
lack of diversification may negatively impact our operations and profitability.
The
net proceeds from the initial public offering and the private placement provided us with $414,000,000 that we may use to complete our
initial business combination (after taking into account the $14,490,000 of deferred underwriting commissions being held in the trust
account).
We
may effectuate our business combination with a single target business or multiple target businesses simultaneously or within a short
period of time. However, we may not be able to effectuate our business combination with more than one target business because of various
factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements
with the SEC that present operating results and the financial condition of several target businesses as if they had been operated on
a combined basis. By completing our initial business combination with only a single business, our lack of diversification may subject
us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit
from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may
be:
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solely
dependent upon the performance of a single business, property or asset, or |
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dependent
upon the development or market acceptance of a single or limited number of products, processes or services. |
This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete
our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which may
result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By
definition, very little public information exists about private companies, and we could be required to make our decision on whether
to pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
a business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event
will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 or any greater net
tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. As a result,
we may be able to complete our business combination even though a substantial majority of our public stockholders do not agree with the
transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct
redemptions in connection with our business combination pursuant to the tender offer rules, have entered into privately negotiated agreements
to sell their shares to our sponsor, officers, directors, Advisors or their affiliates. In the event the aggregate cash consideration
we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required
to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to
us, we will not complete the business combination or redeem any shares, all shares of Class A common stock submitted for redemption will
be returned to the holders thereof, and we instead may search for an alternate business combination.
In
order to effectuate our initial business combination, we may seek to amend our amended and restated certificate of incorporation or governing
instruments in a manner that will make it easier for us to complete our initial business combination but that our stockholders may not
support. In order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of
their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have amended
the definition of business combination, increased redemption thresholds and extended the time to consummate an initial business combination
and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities.
We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial
business combination in order to effectuate our initial business combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding
provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of 65%
of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore,
to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business
combination that some of our stockholders may not support.
Our
amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination activity
(including the requirement to deposit proceeds of the initial public offering and the private placement of warrants into the trust account
and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein) may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding provisions of the
trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock
entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of
a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock
exchange rules. Our initial stockholders, who will collectively beneficially own up to 20% of our common stock upon the closing of the
initial public offering, will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement
and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended and
restated certificate of incorporation which govern our pre-business combination behavior more easily than some other blank check
companies, and this may increase our ability to complete a business combination with which you do not agree. Our stockholders may pursue
remedies against us for any breach of our amended and restated certificate of incorporation.
Our
sponsor, executive officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation to modify the substance or timing of our obligation to provide holders of our
Class A common stock the right to have their shares redeemed in connection with our initial business combination or to redeem 100%
of our public shares if we do not complete our initial business combination within 24 months from the closing of the initial public
offering or with respect to any other provision relating to the rights of holders of our Class A common stock 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 (which
interest shall be net of taxes payable) divided by the number of the then outstanding public shares. These agreements are contained in
a letter agreement that we have entered into with our sponsor, officers and directors. Our stockholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any
breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative action,
subject to applicable law.
Certain
agreements related to the initial public offering may be amended without stockholder approval.
Each
of the agreements related to the initial public offering to which we are a party, other than the warrant agreement and the investment
management trust agreement, may be amended without stockholder approval. Such agreements are: the underwriting agreement; the letter
agreement among us and our initial stockholders, sponsor, officers and directors; the registration and stockholder rights agreement among
us and our initial stockholders; the private placement warrants purchase agreement between us and our sponsor; and the administrative
services agreement among us, our sponsor and an affiliate of our sponsor. These agreements contain various provisions that our public
stockholders might deem to be material. For example, our letter agreement and the underwriting agreement contain certain lock-up provisions
with respect to the founder shares, private placement warrants, and other securities held by our initial stockholders, sponsor, officers
and directors. Amendments to such agreements would require the consent of the applicable parties thereto and would need to be approved
by our board of directors, which may do so for a variety of reasons, including to facilitate our initial business combination. While
we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial business combination,
it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve
one or more amendments to any such agreement. Any amendment entered into in connection with the consummation of our initial business
combination will be disclosed in our proxy solicitation or tender offer materials, as applicable, related to such initial business combination,
and any other material amendment to any of our material agreements will be disclosed in a filing with the SEC. Any such amendments would
not require approval from our stockholders, may result in the completion of our initial business combination that may not otherwise have
been possible, and may have an adverse effect on the value of an investment in our securities. For example, amendments to the lock-up
provision discussed above may result in our initial stockholders selling their securities earlier than they would otherwise be permitted,
which may have an adverse effect on the price of our securities.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target
business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of the initial public offering and the sale of the private placement warrants will be sufficient to
allow us to complete our initial business combination, because we have not yet identified any prospective target business, we cannot
ascertain the capital requirements for any particular transaction. If the net proceeds of the initial public offering and the sale of
the private placement warrants prove to be insufficient, either because of the size of our initial business combination, the depletion
of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from
stockholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase
shares in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed
business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure
the transaction or abandon that particular business combination and seek an alternative target business candidate. If we are unable to
complete our initial business combination, our public stockholders may receive only approximately $10.00 per share plus any pro rata
interest earned on the funds held in the trust account and not previously released to us to pay our taxes on the liquidation of our trust
account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our business combination,
we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could
have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders
is required to provide any financing to us in connection with or after our initial business combination. If we are unable to complete
our initial business combination, our public stockholders may only receive approximately $10.00 per share on the liquidation of our trust
account, and our warrants will expire worthless.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not
support.
Our
initial stockholders own 20% of our issued and outstanding common stock. Accordingly, they may exert a substantial influence on actions
requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate
of incorporation and approval of major corporate transactions. If our initial stockholders purchase any additional Class A common
stock in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our initial stockholders
nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional securities, other than as
disclosed in this Annual Report on Form 10-K. Factors that would be considered in making such additional purchases would include consideration
of the current trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our
initial stockholders, is and will be divided into three classes, each of which will generally serve for a term of three years with only
one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to
the completion of our business combination, in which case all of the current directors will continue in office until at least the completion
of the business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only
a minority of the board of directors will be considered for election and our initial stockholders, because of their ownership position,
will have considerable influence regarding the outcome. In addition, prior to the completion of an initial business combination, holders
of a majority of our founder shares may remove a member of the board of directors for any reason. In addition, as long as our sponsor
is controlled by our founders, we have agreed not to enter into a definitive agreement regarding an initial business combination without
the prior consent of our sponsor. Accordingly, our initial stockholders will continue to exert control at least until the completion
of our business combination.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The federal proxy rules require that the proxy
statement with respect to the vote on an initial business combination include historical and pro forma financial statement disclosure.
We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required
under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, GAAP
or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards
of the PCAOB. These financial statement requirements may limit the pool of potential target businesses we may acquire because some targets
may be unable to provide such financial statements in time for us to disclose such statements in accordance with federal proxy rules and
complete our initial business combination within the prescribed time frame.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial business combination, require substantial
financial and management resources, and increase the time and costs of completing an initial acquisition.
Section 404
of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls over financial reporting beginning
with our Annual Report on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large
accelerated filer or an accelerated filer and no longer qualify as an emerging growth company, will we be required to comply with the
independent registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that
we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target company with which we seek to complete our business combination may not be in compliance with
the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control over
financial reporting of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
Our
initial business combination and our structure thereafter may not be tax-efficient to our stockholders and warrant holders. As a result
of our business combination, our tax obligations may be more complex, burdensome and uncertain.
Although
we will attempt to structure our initial business combination in a tax-efficient manner, tax structuring considerations are complex,
the relevant facts and law are uncertain and may change, and we may prioritize commercial and other considerations over tax considerations.
For example, in connection with our initial business combination and subject to any requisite stockholder approval, we may structure
our business combination in a manner that requires stockholders and/or warrant holders to recognize gain or income for tax purposes,
effect a business combination with a target company in another jurisdiction, or reincorporate in a different jurisdiction (including,
but not limited to, the jurisdiction in which the target company or business is located). We do not intend to make any cash distributions
to stockholders or warrant holders to pay taxes in connection with our business combination or thereafter. Accordingly, a stockholder
or a warrant holder may need to satisfy any liability resulting from our initial business combination with cash from its own funds or
by selling all or a portion of the shares received. In addition, stockholders and warrant holders may also be subject to additional income,
withholding or other taxes with respect to their ownership of us after our initial business combination.
In
addition, we may effect a business combination with a target company that has business operations outside of the United States, and possibly,
business operations in multiple jurisdictions. If we effect such a business combination, we could be subject to significant income, withholding
and other tax obligations in a number of jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions.
Due to the complexity of tax obligations and filings in other jurisdictions, we may have a heightened risk related to audits or examinations
by U.S. federal, state, local and non-U.S. taxing authorities. This additional complexity and risk could have an adverse effect on our
after-tax profitability and financial condition.
We
may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us, which may include
acting as financial advisor in connection with an initial business combination or as placement agent in connection with a related financing
transaction. Our underwriters are entitled to receive deferred commissions that will released from the trust only on a completion of
an initial business combination. These financial incentives may cause them to have potential conflicts of interest in rendering any such
additional services to us, including, for example, in connection with the sourcing and consummation of an initial business combination.
We
may engage one or more of our underwriters or one of their respective affiliates to provide additional services to us, including, for
example, identifying potential targets, providing financial advisory services, acting as a placement agent in a private offering or arranging
debt financing. We may pay such underwriter or its affiliate fair and reasonable fees or other compensation that would be determined
at that time in an arm’s length negotiation. The underwriters are also entitled to receive deferred commissions that are conditioned
on the completion of an initial business combination. The underwriters’ or their respective affiliates’ financial interests
tied to the consummation of a business combination transaction may give rise to potential conflicts of interest in providing any such
additional services to us, including potential conflicts of interest in connection with the sourcing and consummation of an initial business
combination.
Risks
Relating to the Post Business Combination Company
Subsequent
to our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price,
which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface
all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later
arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations,
or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain
risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis.
Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges
of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause
us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target
business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain stockholders
following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy
for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors
of a duty of care or other fiduciary duty owed to such stockholders, or if they are able to successfully bring a private claim under
securities laws that the tender offer materials or proxy statement related to our initial business combination contained an actionable
material misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The loss of a business
combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The
role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance
that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We
may structure a business combination so that the post-transaction company in which our public stockholders own shares will own less than
100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not
consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities
of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue
a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial
number of new shares of Class A common stock, our stockholders immediately prior to such transaction could own less than a majority
of our outstanding Class A common stock subsequent to such transaction. In addition, other minority stockholders may subsequently
combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially
acquired. Accordingly, this may make it more likely that our management will not maintain control of the target business.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial business
combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the
target business’ management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who
choose to remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
Our
officers, directors and advisors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial
business combination. Our officers, directors and advisors are not required to, and will not, commit their full time to our affairs,
which may result in a conflict of interest in allocating their time between our operations and our search for a business combination
and their other businesses. We do not intend to have any full-time employees prior to the completion of our initial business combination.
Each of our officers and advisors is engaged in other business endeavors for which he may be entitled to substantial compensation and
our officers and advisors are not obligated to contribute any specific number of hours per week to our affairs. Our directors and advisors
also serve as officers or board members for other entities. If our officers’, directors’ and advisors’ other business
affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit
their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination.
Risks
Relating to Acquiring and Operating a Business in Foreign Countries
If
we effect our initial business combination with a company located outside of the United States, we would be subject to a variety of additional
risks that may adversely affect us.
If
we pursue a target company with operations or opportunities outside of the United States for our initial business combination, we may
face additional burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect
such initial business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If
we pursue a target a company with operations or opportunities outside of the United States for our initial business combination, we would
be subject to risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing
our initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments,
regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
|
● |
costs
and difficulties inherent in managing cross-border business operations; |
|
● |
rules
and regulations regarding currency redemption; |
|
● |
complex
corporate withholding taxes on individuals; |
|
● |
laws
governing the manner in which future business combinations may be affected; |
|
● |
exchange
listing and/or delisting requirements; |
|
● |
tariffs
and trade barriers; |
|
● |
regulations
related to customs and import/export matters; |
|
● |
local
or regional economic policies and market conditions; |
|
● |
unexpected
changes in regulatory requirements; |
|
● |
challenges
in managing and staffing international operations; |
|
● |
tax
issues, such as tax law changes and variations in tax laws as compared to the United States; |
|
● |
currency
fluctuations and exchange controls; |
|
● |
challenges
in collecting accounts receivable; |
|
● |
cultural
and language differences; |
|
● |
employment
regulations; |
|
● |
underdeveloped
or unpredictable legal or regulatory systems; |
|
● |
protection
of intellectual property; |
|
● |
social
unrest, crime, strikes, riots and civil disturbances; |
|
● |
regime
changes and political upheaval; |
|
● |
terrorist
attacks and wars, including the conflict in Ukraine and the surrounding region; and |
|
● |
deterioration
of political relations with the United States. |
We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business
combination, or, if we complete such initial business combination, our operations might suffer, either of which may adversely impact
our business, financial condition and results of operations.
After our initial business combination, substantially
all of our assets may be located in a foreign country and substantially all of our revenue will be derived from our operations in such
country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and
legal policies, developments and conditions in the country in which we operate.
The economic, political and social conditions,
as well as government policies, of the country in which our operations are located could affect our business. Economic growth could be
uneven, both geographically and among various sectors of the economy and such growth may not be sustained in the future. If in the future
such country’s economy experiences a downturn or grows at a slower rate than expected, there may be less demand for spending in
certain industries. A decrease in demand for spending in certain industries could materially and adversely affect our ability to find
an attractive target business with which to consummate our initial business combination and if we effect our initial business combination,
the ability of that target business to become profitable.
We are currently operating in a period of economic
uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military
conflict between Russia and Ukraine. Our business, financial condition and results of operations may be materially and adversely affected
by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.
Russian military actions and the resulting sanctions
could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially
making it more difficult for us to obtain additional funds.
Any of the above mentioned factors could affect our
business, prospects, financial condition, and operating results. The extent and duration of the military action, sanctions and resulting
market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks
described in this Form 10-K.
Risks
Relating to Our Sponsor and Management Team
We are dependent upon our executive officers and directors and their loss could adversely
affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe
that our success depends on the continued service of our officers and directors, at least until we have completed our initial business
combination. In addition, our executive officers and directors are not required to commit any specified amount of time to our affairs
and, accordingly, will have conflicts of interest in allocating their time among various business activities, including identifying potential
business combinations and monitoring the related due diligence. We do not have an employment agreement with, or key-man insurance on
the life of, any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive
officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts
of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our business combination is dependent upon the efforts of our key personnel. The role of our key personnel
in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business
in senior management or advisory positions following our business combination, it is likely that some or all of the management of the
target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination,
we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the
requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become
familiar with such requirements.
In
addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The
departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our
post-combination business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business combination.
These agreements may provide for them to receive compensation following our business combination and as a result, may cause them to have
conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our business combination only if they are able to negotiate
employment or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with
the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the business combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the
ability of such individuals to remain with us after the completion of our business combination will not be the determining factor in
our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of
our key personnel will remain with us after the completion of our business combination. We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain
with us will be made at the time of our initial business combination. In addition, pursuant to an agreement to be entered into concurrently
with the issuance and sale of the securities in the initial public offering, our sponsor, upon consummation of an initial business combination,
will be entitled to nominate three individuals for election to our board of directors.
Our
executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial
business combination.
Our
executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict
of interest in allocating their time between our operations and our search for a business combination and their other businesses. We
do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our executive officers
is engaged in several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are
not obligated to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and
board members for other entities. If our executive officers’ and directors’ other business affairs require them to devote
substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time
to our affairs which may have a negative impact on our ability to complete our initial business combination.
Our
officers and directors presently have, and any of them in the future may have additional, fiduciary or contractual obligations to other
entities and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be
presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses.
Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity to
such entity. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should
be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior
to its presentation to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of the company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without
violating another legal obligation. In addition, our sponsor and our officers and directors may sponsor or form other special purpose
acquisition companies similar to ours or may pursue other business or investment ventures during the period in which we are seeking an
initial business combination. Each of our officers and directors presently has, and any of them in the future may have additional, fiduciary
or contractual obligations to another entity pursuant to which such officer or director is or will be required to present a business
combination opportunity to such entity. Our amended and restated certificate of incorporation provides that we renounce our interest
in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in
his or her capacity as a director or officer of the company and 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. Accordingly, if any of our officers or directors becomes aware of a business combination
opportunity which is suitable for an entity to which he or she has then current fiduciary or contractual obligations, he or she will
honor his or her fiduciary or contractual obligations to present such business combination opportunity to such other entity. We do not
believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our ability
to complete our initial business combination.
In
addition, our sponsor and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours
or may pursue other business or investment ventures during the period in which we are seeking an initial business combination. Any such
companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our
interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or
have an interest. In fact, we may enter into a business combination with a target business that is affiliated with our sponsor, our directors
or officers, although we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for
their own account in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between
their interests and ours.
The
personal and financial interests of our directors and officers may influence their motivation in timely identifying and selecting a target
business and completing a business combination. Consequently, our directors’ and officers’ discretion in identifying and
selecting a suitable target business may result in a conflict of interest when determining whether the terms, conditions and timing of
a particular business combination are appropriate and, in our stockholders’ best interest. If this were the case, it would be a
breach of their fiduciary duties to us as a matter of Delaware law and we or our stockholders might have a claim against such individuals
for infringing on our stockholders’ rights. However, we might not ultimately be successful in any claim we may make against them
for such reason.
We
may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We
have agreed to indemnify our officers and directors to the fullest extent permitted by law. However, our officers and directors have
agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against
the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we
have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify
our officers and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their
fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and
directors, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s
investment may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors
pursuant to these indemnification provisions.
Risks
Relating to our Securities
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (a) the completion
of our initial business combination, (b) the redemption of any public shares properly tendered in connection with a stockholder
vote to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide
holders of our Class A common stock the right to have their shares redeemed in connection with our initial business combination
or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing
of the initial public offering or (ii) with respect to any other provisions relating to the rights of holders of our Class A
common stock, and (c) the redemption of our public shares if we have not consummated our business combination within 24 months
from the closing of the initial public offering, subject to applicable law and as further described herein. In addition, if we are unable
to complete an initial business combination within 24 months from the closing of the initial public offering for any reason, compliance
with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution
of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond 24 months from the closing
of the initial public offering before they receive funds from our trust account. In no other circumstances will a public stockholder
have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your
public shares or warrants, potentially at a loss.
The
securities in which we invest the proceeds held in the trust account could bear a negative rate of interest, which could reduce the interest
income available for payment of taxes or reduce the value of the assets held in trust such that the per share redemption amount received
by stockholders may be less than $10.00 per share.
The
net proceeds of the initial public offering and certain proceeds from the sale of the private placement warrants, in the amount of $414,000,000,
are held in an interest-bearing trust account. The proceeds held in the trust account may only be invested in direct U.S. Treasury obligations
having a maturity of 185 days or less, or in certain money market funds which invest only in direct U.S. Treasury obligations. While
short-term U.S. Treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in
recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the
Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event
of very low or negative yields, the amount of interest income (which we may withdraw to pay income taxes, if any) would be reduced. In
the event that we are unable to complete our initial business combination, our public stockholders are entitled to receive their pro-rata
share of the proceeds held in the trust account, plus any interest income. If the balance of the trust account is reduced below $414,000,000
as a result of negative interest rates, the amount of funds in the trust account available for distribution to our public stockholders
may be reduced below $10.00 per share.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
We
cannot assure you that our securities will be, or will continue to be, listed on Nasdaq in the future or prior to our initial business
combination. In order to continue listing our securities on the Nasdaq prior to our initial business combination, we must maintain certain
financial, distribution and share price levels. Generally, we must maintain a minimum average global market capitalization and a minimum
number of holders of our securities. Additionally, in connection with our initial business combination, we will be required to demonstrate
compliance with Nasdaq’s initial listing requirements, which are more rigorous than Nasdaq’s continued listing requirements,
in order to continue to maintain the listing of our securities on Nasdaq. For instance, our share price would generally be required to
be at least $4.00 per share, our global market capitalization would be required to be at least $150 million, the aggregate market
value of our publicly held shares would be required to be at least $40 million, and we would be required to have a minimum of 400
round lot holders and 1,100,000 publicly held shares. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If
Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material
adverse consequences, including:
|
● |
a
limited availability of market quotations for our securities; |
|
● |
reduced
liquidity for our securities; |
|
● |
a
determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A
common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading
market for our securities; |
|
● |
a
limited amount of news and analyst coverage; and |
|
● |
a
decreased ability to issue additional securities or obtain additional financing in the future. |
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because we expect that our units and eventually
our Class A common stock and warrants will be listed on Nasdaq, our units, Class A common stock and warrants will qualify as
covered securities under the statute. Although the states are preempted from regulating the sale of our securities, the federal statute
does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then
the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these
powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of
securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify
as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose
the ability to redeem all such shares in excess of 15% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an
aggregate of 15% of the shares sold in the initial public offering, which we refer to as the “Excess Shares,” without our
prior consent. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete
our business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions.
Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our business combination.
And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required
to sell your stock in open market transactions, potentially at a loss.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. These provisions include a staggered board of directors and the ability of the board of directors
to designate the terms of and issue new series of preferred stock, which may make more difficult the removal of management and may discourage
transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions
may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over
prevailing market prices for our securities.
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 50% of the
then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened
and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all without your
approval.
Our
warrants will be issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as
warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder
for the purpose of (i) curing any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement
to the description of the terms of the warrants and the warrant agreement set forth in this prospectus, or defective provision, (ii) amending
the provisions relating to cash dividends on shares of common stock as contemplated by and in accordance with the warrant agreement or
(iii) adding or changing any provisions with respect to matters or questions arising under the warrant agreement as the parties
to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered
holders of the warrants, provided that the approval by the holders of at least 50% of the then-outstanding public warrants is required
to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms
of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of
such amendment and, solely with respect to any amendment to the terms of the private placement warrants or any provision of the warrant
agreement with respect to the private placement warrants, 50% of the number of the then outstanding private placement warrants. Although
our ability to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited,
examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, shorten the exercise
period or decrease the number of shares of our Class A common stock purchasable upon exercise of a warrant.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District of New
York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our warrants, which
could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating
in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New
York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction,
which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by
the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and
to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope of
the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States District
Court for the Southern District of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall
be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in
connection with any action brought in any such court to enforce the forum provisions (an “enforcement action”), and (y) having
service of process made upon such warrant holder in any such enforcement action by service upon such warrant holder’s counsel in
the foreign action as agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement
inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs
associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition
and results of operations and result in a diversion of the time and resources of our management and board of directors.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a price of
$0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share for
any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice
of such redemption and provided certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our
redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities
laws. Redemption of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at
a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you
might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants
are called for redemption, is likely to be substantially less than the market value of your warrants.
In
addition, we may redeem your warrants after they become exercisable for $0.10 per warrant upon a minimum of 30 days’ prior
written notice of redemption provided that holders will be able to exercise their warrants prior to redemption for a number of Class A
common stock determined based on the redemption date and the fair market value of our Class A common stock if, and only if, the
closing price of our Class A common stock equals or exceeds $10.00 per public share. The value received upon exercise of the warrants
(1) may be less than the value the holders would have received if they had exercised their warrants at a later time where the underlying
share price is higher and (2) may not compensate the holders for the value of the warrants, including because the number of shares
of common stock received is capped at 0.361 shares of Class A common stock per warrant (subject to adjustment) irrespective
of the remaining life of the warrants.
None
of the private placement warrants will be redeemable by us so long as they are held by our sponsor or its permitted transferees.
You
will not be permitted to exercise your warrants unless we register and qualify the underlying Class A common stock or certain exemptions
are available.
If
the issuance of the Class A common stock upon exercise of the warrants is not registered, qualified or exempt from registration
or qualification under the Securities Act and applicable state securities laws, holders of warrants will not be entitled to exercise
such warrants and such warrants may have no value and expire worthless. In such event, holders who acquired their warrants as part of
a purchase of units will have paid the full unit purchase price solely for the Class A common stock included in the units.
We
are not registering the Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time. However, under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later
than 15 business days, after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration
statement covering the registration under the Securities Act of the Class A common stock issuable upon exercise of the warrants
and thereafter will use our best efforts to cause the same to become effective within 60 business days following our initial business
combination and to maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants until
the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able
to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration
statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC
issues a stop order.
If
the shares of Class A common stock issuable upon exercise of the warrants are not registered under the Securities Act, under the
terms of the warrant agreement, holders of warrants who seek to exercise their warrants will not be permitted to do so for cash and,
instead, will be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In
no event will warrants be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking
to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws
of the state of the exercising holder, or an exemption from registration or qualification is available.
If
our shares of Class A common stock are at the time of any exercise of a warrant not listed on a national securities exchange such
that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act, we may, at our
option, not permit holders of warrants who seek to exercise their warrants to do so for cash and, instead, require them to do so on a
cashless basis in accordance with Section 3(a)(9) of the Securities Act; in the event we so elect, we will not be required to file
or maintain in effect a registration statement or register or qualify the shares underlying the warrants under applicable state securities
laws, and in the event we do not so elect, we will use our best efforts to register or qualify the shares underlying the warrants under
applicable state securities laws to the extent an exemption is not available.
In
no event will we be required to net cash settle any warrant, or issue securities (other than upon a cashless exercise as described above)
or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants
under the Securities Act or applicable state securities laws.
The
grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination, and
the future exercise of such rights may adversely affect the market price of our Class A common stock.
Our
initial stockholders and their permitted transferees can demand that we register the private placement warrants and the shares of Class A
common stock issuable upon exercise of the founder shares and the private placement warrants held by them and holders of warrants that
may be issued upon conversion of working capital loans may demand that we register such warrants or the Class A common stock issuable
upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant
number of securities for trading in the public market may have an adverse effect on the market price of our Class A common stock.
In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude.
This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or ask for more
cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the securities
owned by our initial stockholders or holders of working capital loans or their respective permitted transferees are registered.
Our
warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult
to effectuate our business combination.
We
issued warrants to purchase 10,350,000 shares of our Class A common stock as part of the units offered by the initial public
offering prospectus and, simultaneously with the closing of the initial public offering, issued in a private placement warrants to purchase
7,520,000 shares of Class A common stock at $11.50 per share. Prior to the initial public offering, our sponsor paid an aggregate
of $25,000 to cover certain offering costs and expenses on behalf of us in exchange for issuance of 10,350,000 founder shares, or $0.002
per share. The founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment
as set forth herein. In addition, if our sponsor makes any working capital loans, up to $2,250,000 of such loans may be converted into
warrants, at the price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the private placement warrants,
including as to exercise price, exercisability and exercise period. Our public warrants are also redeemable by us for Class A common
stock.
To
the extent we issue shares of Class A common stock to effectuate a business combination, the potential for the issuance of a
substantial number of additional shares of Class A common stock upon exercise of these warrants and conversion rights could
make us a less attractive acquisition vehicle to a target business. Any such issuance will increase the number of issued and
outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to
complete the business combination. Therefore, our warrants and founder shares may make it more difficult to effectuate a business
combination or increase the cost of acquiring the target business. The private placement warrants are identical to the warrants sold
as part of the units in the initial public offering except that, so long as they are held by our sponsor or its permitted
transferees, (i) they will not be redeemable by us, except as otherwise set forth herein, (ii) they (including the
Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred,
assigned or sold by our sponsor until 30 days after the completion of our initial business combination and (iii) they may
be exercised by the holders on a cashless basis.
Because
each unit contains one-quarter of one warrant and only a whole warrant may be exercised, the units may be worth less than units of other
blank check companies.
Each
unit contains one-quarter of one warrant. Because, pursuant to the warrant agreement, the warrants may only be exercised for a whole
number of shares, only a whole warrant may be exercised at any given time. This is different from other offerings similar to ours whose
units include one share of common stock and one whole warrant to purchase one share. We have established the components of the units
in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination since the warrants will
be exercisable in the aggregate for one-quarter of the number of shares compared to units that each contain a warrant to purchase
one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this unit structure
may cause our units to be worth less than if they included a warrant to purchase one whole share.
General
Risk Factors
Our independent registered public accounting
firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going
concern.”
In connection with the Company’s assessment
of going concern considerations accordance with Financial Accounting Standard Board’s Accounting Standards Update 2014-15, we have
determined that if the Company is unable to complete a business combination by March 4, 2023, then the Company will cease all operations
except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution raise substantial doubt about the
Company’s ability to continue as a going concern. The financial statements contained elsewhere in this Form 10-K do not include
any adjustments that might result from our inability to continue as a going concern.
Our
warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
Included on our balance sheet as of December 31, 2021
contained elsewhere in this Annual Report are derivative liabilities related to embedded features contained within our warrants. Accounting
Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the remeasurement of the fair value of such
derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized
in earnings in the statement of operations. As a result of the recurring fair value measurement, our financial statements and results
of operations may fluctuate quarterly, based on factors which are outside of our control. Due to the recurring fair value measurement,
we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount of such gains or losses
could be material.
We
have identified a material weakness in our internal control over financial reporting as of December 31, 2021. This material weakness
could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely
manner.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose
any changes and material weaknesses identified through such evaluation of those internal controls. A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Our
management and our audit committee concluded that it was appropriate to restate previously issued and audited financial statements. Our
management and our audit committee concluded that the Company’s previously issued (i) audited balance sheet as of March 4, 2021,
as previously revised in the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with
the U.S. Securities and Exchange Commission (the “SEC”) on May 24, 2021 (the “Q1 Form 10-Q”), (ii) unaudited
interim financial statements included in the Q1 Form 10-Q and (iii) unaudited interim financial statements included in the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021, filed with the SEC on August 12, 2021 (collectively, the
“Affected Periods”), should be restated to report all public shares as temporary equity and should no longer be relied upon.
As such, the Company restated its financial statements for the Affected Periods in Amendment No. 1 to the Company’s Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2021, filed by it with the SEC on February 17, 2021 (the “Q3 Form 10-Q”).
As
described elsewhere in the Q3 Form 10-Q, we identified a material weakness in our internal control over financial reporting related to
the Company’s application of ASC 480-10-S99-3A to its accounting classification of the redeemable Class A common stock, par value
$0.0001 per share (the “Public Shares”). As a result of this material weakness, our management concluded that our internal
control over financial reporting was not effective as of December 31, 2020. Historically, a portion of the Public Shares was classified
as permanent equity to maintain stockholders’ equity greater than $5 million on the basis that the Company will not redeem its
Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described in the Company’s amended
and restated certificate of incorporation (the “Charter”). Pursuant to the Company’s re-evaluation of the Company’s
application of ASC 480-10-S99-3A to its accounting classification of the Public Shares, the Company’s management has determined
that the Public Shares include certain provisions that require classification of all of the Public Shares as temporary equity regardless
of the net tangible assets redemption limitation contained in the Charter.
As
described in Item 9A. “Controls and Procedures,” we have concluded that our internal control over financial reporting was
ineffective as of December 31, 2021 because material weaknesses existed in our internal control over financial reporting. We have taken
a number of measures to remediate the material weaknesses described therein; however, if we are unable to remediate our material weaknesses
in a timely manner or we identify additional material weaknesses, we may be unable to provide required financial information in a timely
and reliable manner and we may incorrectly report financial information. Likewise, if our financial statements are not filed on a timely
basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is listed, the SEC or other
regulatory authorities. Failure to timely file will cause us to be ineligible to utilize short form registration statements on Form S-3
or Form S-4, which may impair our ability to obtain capital in a timely fashion to execute our business strategies of issue shares to
effect an acquisition. In either case, there could result a material adverse effect on our business. The existence of material weaknesses
or significant deficiencies in internal control over financial reporting could adversely affect our reputation or investor perceptions
of us, which could have a negative effect on the trading price of our stock. In addition, we will incur additional costs to remediate
material weaknesses in our internal control over financial reporting, as described in Item 9A. “Controls and Procedures”.
We
can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified
or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement
and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful
in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify
irregularities or errors or to facilitate the fair presentation of our financial statements.
Effective
internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate
the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will
ultimately have the intended effects.
If
we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent
or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial
statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic
reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our
stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the
future, will be sufficient to avoid potential future material weaknesses.
We
may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
Our
management and our audit committee concluded that it was appropriate to restate our previously issued financial statements for the Affected
Periods. See “—We have identified a material weakness in our internal control over financial reporting as of December 31,
2021. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition
accurately and in a timely manner.” As part of the restatement, we identified a material weakness in our internal controls over
financial reporting.
As a result of the material weakness, the restatement
and the change in the classification of all of the Public Shares as temporary equity, we face potential for litigation or other disputes
which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from
the restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements.
As of the date of this Annual Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that
such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material
adverse effect on our business, results of operations and financial condition or our ability to complete a business combination.
We
are a newly formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve
our business objective.
We
are a newly formed company with no operating results, and we will not commence operations until obtaining funding through the initial
public offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective
of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings with
any prospective target business concerning a business combination and may be unable to complete our business combination. If we fail
to complete our business combination, we will never generate any operating revenues.
Past
performance by our management team or our advisors is not indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with, our management team or our advisors, is presented for informational purposes
only. Any past experience and performance of our management team or our advisors is not a guarantee either: (1) that we will be
able to successfully identify a suitable candidate for our initial business combination; or (2) of any results with respect to any
initial business combination we may consummate. You should not rely on the historical record of the performance of our management team
or our advisors as being indicative of the future performance of an investment in us or the returns we will, or are likely to, generate
going forward.
Cyber
incidents or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We
depend on digital technologies, including information systems, infrastructure and cloud applications and services, including those of
third parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure,
or the systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary
information and sensitive or confidential data. As an early-stage company without significant investments in data security protection,
we may not be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or
to investigate and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of
them, could have adverse consequences on our business and lead to financial loss.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of
certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make
our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of
Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and
proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information
they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that
status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds $700 million as of
the end of a prior fiscal year’s second fiscal quarter before that time, in which case we would no longer be an emerging growth
company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will
rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the
trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities
and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates exceeds $250 million as of the end of the prior fiscal year’s second fiscal quarter,
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 end of the prior fiscal year’s second fiscal quarter. To the extent
we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies
difficult or impossible.
Our
amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive
forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’
ability to obtain a favorable judicial forum for disputes with our company or our company’s directors, officers or other employees.
Our
amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum,
the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any
(1) derivative action or proceeding brought on behalf of our company, (2) action asserting a claim of breach of a fiduciary
duty owed by any director, officer, employee or agent of our company to our company or our stockholders, or any claim for aiding and
abetting any such alleged breach, (3) action asserting a claim against our company or any director, or officer or employee of our
company arising pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or our bylaws or (4) action
asserting a claim against us or any director, or officer or employee of our company governed by the internal affairs doctrine except
for, as to each of (1) through (4) above, any claim (a) as to which the Court of Chancery determines that there is an
indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal
jurisdiction of the Court of Chancery within ten days following such determination), (b) which is vested in the exclusive jurisdiction
of a court or forum other than the Court of Chancery, or (c) arising under the federal securities laws, including the Securities
Act. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits brought to enforce any liability or duty
created by the Exchange Act or any other claim for which the federal district courts of the United States of America shall be the
sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any shares of our capital stock shall
be deemed to have notice of and to have consented to the forum provisions in our amended and restated certificate of incorporation. If
any action the subject matter of which is within the scope the forum provisions is filed in a court other than a court located within
the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder shall be deemed to have consented
to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action
brought in any such court to enforce the forum provisions (an “enforcement action”); and (y) having service of process
made upon such stockholder in any such enforcement action by service upon such stockholder’s counsel in the foreign action as agent
for such stockholder.
This
choice-of-forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with our company or its directors, officers or other employees, which may discourage such lawsuits. Alternatively, if a court
were to find this provision of our amended and restated certificate of incorporation inapplicable or unenforceable with respect to one
or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other
jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in
a diversion of the time and resources of our management and board of directors.
If
the net proceeds of the initial public offering and the sale of the private placement warrants not being held in the trust account are
insufficient to allow us to operate for at least 24 months following the closing of the initial public offering, we may be unable to
complete our initial business combination, in which case our public stockholders may only receive $10.00 per share, or less than such
amount in certain circumstances, and our warrants will expire worthless.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate for at least 24 months following
the closing of the initial public offering, assuming that our initial business combination is not completed during that time. We believe
that, upon the closing of the initial public offering, the funds available to us outside of the trust account will be sufficient to allow
us to operate for at least 24 months following the closing of the initial public offering; however, we cannot assure you that our
estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to
assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop”
provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions with
other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination, although
we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive exclusivity
from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might
not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. If we are unable to
complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation
of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than
$10.00 per share upon our liquidation.
Holders
of Class A common stock will not be entitled to vote on any election of directors we hold prior to our initial business combination.
Prior
to our initial business combination, only holders of our founder shares will have the right to vote on the election of directors. Holders
of our public shares will not be entitled to vote on the election of directors during such time. In addition, prior to the completion
of an initial business combination, holders of a majority of our founder shares may remove a member of the board of directors for any
reason. Accordingly, you may not have any say in the management of our company prior to the consummation of an initial business combination.
We
are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state
securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding
such investor from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We
are not registering the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state
securities laws at this time. However, under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in
no event later than twenty business days after the closing of our initial business combination, we will use our commercially reasonable
efforts to file with the SEC a registration statement covering the issuance of such shares, and we will use our commercially reasonable
efforts to cause the same to become effective within 60 business days after the closing of our initial business combination and to maintain
the effectiveness of such registration statement and a current prospectus relating to those shares until the warrants expire or are redeemed.
We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in
the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference
therein are not current, complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are
not registered under the Securities Act in accordance with the above requirements, we will be required to permit holders to exercise
their warrants on a cashless basis, in which case, the number of shares of Class A common stock that you will receive upon cashless
exercise will be based on a formula subject to a maximum amount of shares equal to 0.361 shares per warrant (subject to adjustment).
However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities
laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if our Class A
common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition
of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public
warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will be required
to use our commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange
for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities
laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified
or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant
may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid
the full unit purchase price solely for the shares of Class A common stock included in the units. There may be a circumstance where
an exemption from registration exists for holders of our private placement warrants to exercise their warrants while a corresponding
exemption does not exist for holders of the public warrants included as part of units sold in the initial public offering. In such an
instance, our sponsor and its permitted transferees (which may include our directors and officers) would be able to exercise their warrants
and sell the shares of common stock underlying their warrants while holders of our public warrants would not be able to exercise their
warrants and sell the underlying shares of common stock. If and when the warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying shares of Class A common stock for sale under all applicable state
securities laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise their
warrants.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of revenue or earnings,
which could subject us to volatile revenues or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established record
of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These
risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all
of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be
outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target
business.
Since
only holders of our founder shares will have the right to vote on the election of directors, upon the listing of our shares on Nasdaq,
Nasdaq may consider us to be a “controlled company” within the meaning of Nasdaq rules and, as a result, we may qualify for
exemptions from certain corporate governance requirements.
Only
holders of our founder shares have the right to vote on the election of directors. As a result, Nasdaq may consider us to be a “controlled
company” within the meaning of Nasdaq corporate governance standards. Under Nasdaq corporate governance standards, a company of
which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and
may elect not to comply with certain corporate governance requirements, including the requirements that:
| ● | we
have a board that includes a majority of “independent directors,” as defined under the rules of Nasdaq; |
| ● | we
have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing the
committee’s purpose and responsibilities; and |
| ● | we
have a nominating and corporate governance committee of our board that is comprised entirely of independent directors with a written
charter addressing the committee’s purpose and responsibilities. |
We
do not intend to utilize these exemptions and intend to comply with the corporate governance requirements of Nasdaq, subject to applicable
phase-in rules. However, if we determine in the future to utilize some or all of these exemptions, you will not have the same protections
afforded to stockholders of companies that are subject to all of Nasdaq corporate governance requirements.
Changes
in our effective tax rate or exposure to additional income tax liabilities could adversely affect our financial results.
Taxation
and tax policy changes, tax rate changes, new tax laws, revised tax law interpretations, and changes in accounting standards and guidance
related to tax matters may cause fluctuations in our effective tax rate. Our effective tax rate may also be impacted by changes in the
geographic mix of our earnings. In addition, the amount of income taxes we pay is subject to ongoing audits by U.S. federal, state and
local tax authorities and by non-U.S. tax authorities. If these audits result in assessments different from amounts recorded, our future
financial results may include unfavorable tax adjustments.