Item
1.A. 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 Annual Report, including our financial statements and related notes, before making a decision
to invest in our securities. If any of the following events occur, our business, financial condition and operating results may be materially
adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of,
or that we currently believe are not material, may also become important factors that adversely affect our business, financial condition
and operating results.
Risks
Relating to Our Search for, and Consummation of or Inability to Consummate, a Business Combination
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial Business Combination, which means we may complete
our initial Business Combination even though a majority of our public stockholders do not support such a combination.
We
may not hold a stockholder vote to approve our initial Business Combination unless the Business Combination would require stockholder
approval under applicable law or stock exchange rules or if we decide to hold a stockholder vote for business or other reasons. For instance,
Nasdaq listing rules currently allow us to engage in a tender offer in lieu of a stockholder meeting, but would still require us to obtain
stockholder approval if we were seeking to issue more than 20% of our issued and outstanding shares to a target business as consideration
in any Business Combination. Therefore, if we were structuring a Business Combination that required us to issue more than 20% of our
issued and outstanding shares, we would seek stockholder approval of such Business Combination. However, except as required by applicable
law or stock exchange rules, the decision as to whether we will seek stockholder approval of a proposed Business Combination or will
allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a
variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek
stockholder approval. Accordingly, we may consummate our initial Business Combination even if holders of a majority of the issued and
outstanding shares of common stock do not approve of the Business Combination we consummate.
If
we seek stockholder approval of our initial Business Combination, our initial stockholders, directors and officers have agreed to vote
in favor of such initial Business Combination, regardless of how our public stockholders vote.
Unlike
many other blank check companies in which the initial stockholders agree to vote their Founder Shares in accordance with the majority
of the votes cast by the public stockholders in connection with an initial Business Combination, our initial stockholders, directors
and officers have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into with
us, to vote their Founder Shares and any Public Shares held by them in favor of our initial Business Combination. As a result, in addition
to our initial stockholders’ Founder Shares, we would need 9,487,501, or 37.5% (assuming all issued and outstanding shares are
voted), or 1,581,251, or 6.25% (assuming only the minimum number of shares representing a quorum are voted), of the 25,300,000 Public
Shares sold in the Initial Public Offering to be voted in favor of an initial Business Combination in order to have such initial Business
Combination approved. Our directors and officers have also entered into the letter agreement, imposing similar obligations on them with
respect to Public Shares acquired by them, if any. We expect that our initial stockholders and their permitted transferees will own at
least 20% of our issued and outstanding shares of common stock at the time of any such stockholder vote. Accordingly, if we seek stockholder
approval of our initial Business Combination, it is more likely that the necessary stockholder approval will be received than would be
the case if such persons agreed to vote their Founder Shares in accordance with the majority of the votes cast by our public stockholders.
Your
only opportunity to affect the investment decision regarding a potential Business Combination will be limited to the exercise of your
right to redeem your shares from us for cash, unless we seek stockholder approval of such Business Combination.
Since
our board of directors may complete a Business Combination without seeking stockholder approval, public stockholders may not have the
right or opportunity to vote on the Business Combination, unless we seek such stockholder approval. Accordingly, if we do not seek stockholder
approval, your only opportunity to affect the investment decision regarding a potential Business Combination may be limited to exercising
your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed
to our public stockholders in which we describe our initial Business Combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential Business
Combination targets, which may make it difficult for us to enter into a Business Combination with a target.
We
may seek to enter into a Business Combination transaction agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not
be able to meet such closing condition and, as a result, would not be able to proceed with the Business Combination. The amount of the
deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in connection with
a Business Combination and such amount of deferred underwriting discount is not available for us to use as consideration in an initial
Business Combination. If we are able to consummate an initial Business Combination, the per-share value of shares held by non-redeeming stockholders
will reflect our obligation to pay and the payment of the deferred underwriting commissions. Furthermore, in no event will we redeem
our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001 following such redemptions, or any
greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial Business Combination. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 or such greater
amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related Business
Combination and may instead search for an alternate Business Combination (including, potentially, with the same target). Prospective
targets will be aware of these risks and, thus, may be reluctant to enter into a Business Combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable Business Combination or optimize our capital structure.
At
the time we enter into an agreement for our initial Business Combination, we will not know how many stockholders may exercise their redemption
rights and, therefore, we will need to structure the transaction based on our expectations as to the number of shares that will be submitted
for redemption. If our initial Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the
purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the Trust
Account to meet such requirements, or arrange for third-party financing. In addition, if a larger number of shares is submitted
for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the
Trust Account or arrange for third-party financing. Raising additional third-party financing may involve dilutive equity issuances
or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most
desirable Business Combination available to us or optimize our capital structure.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our initial Business Combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If
our initial Business Combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, the probability that our initial Business Combination would be unsuccessful
increases. If our initial Business Combination is unsuccessful, you would not receive your pro rata portion of the Trust Account until
we liquidate the Trust Account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market;
however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust Account. In either situation,
you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate
or you are able to sell your shares in the open market.
The
requirement that we complete our initial Business Combination within the prescribed time frame may give potential target businesses leverage
over us in negotiating a Business Combination and may limit the time we have in which to conduct due diligence on potential Business
Combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial
Business Combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a Business Combination will be aware that we must complete
our initial Business Combination within 24 months from the closing of 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 end of 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. In
July 2021, the SEC charged a SPAC for misleading disclosures, which could have been corrected with more adequate due diligence, and obtained
substantial relief against the SPAC and its Sponsor. Although we will invest in due diligence efforts and commit management time and
resources to such efforts, there can be no assurance that our due diligence will unveil all potential issues with a target business and
that we or our Sponsor will not become subject to regulatory actions related to such efforts.
We
may not be able to complete our initial Business Combination within the prescribed time frame, in which case we would cease all operations
except for the purpose of winding up and we would redeem our Public Shares and liquidate, in which case our public stockholders may receive
only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
amended and restated certificate of incorporation provides 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. Our ability to complete our initial Business Combination may be negatively impacted by general market
conditions, volatility in the equity and debt markets and the other risks described herein, including as a result of terrorist attacks,
natural disasters, global hostilities, or a significant outbreak of infectious diseases. For example, the coronavirus (“COVID-19”) pandemic
continues both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments,
it could limit our ability to complete our initial Business Combination, including as a result of increased market volatility, decreased
market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the COVID-19 pandemic
and other events (such as terrorist attacks, natural disasters, global hostilities or a significant outbreak of other infectious diseases)
may negatively impact businesses we may seek to acquire. It may also have the effect of heightening many of the other risks described
in this ‘‘Risk Factors’’ section, such as those related to the market for our securities and cross-border transactions.
If
we have not completed our initial Business Combination within such time period or during any Extension Period, we will: (1) cease
all operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes
payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any); and (3) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. In such case, our public stockholders may receive only $10.00 per share, or less than $10.00 per share, on the redemption of their
shares, and our warrants will expire worthless. Please see “— If third parties bring claims against us, the proceeds held
in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share”
and other risk factors herein.
Our
search for a Business Combination, and any target business with which we ultimately consummate a Business Combination, may be materially
adversely affected by the COVID-19 pandemic and other events and the status of debt and equity markets.
The
COVID-19 pandemic has resulted in, and a significant outbreak of other infectious diseases could result in, a widespread health
crisis and other events (such as terrorist attacks, or natural disasters) that have, and in the future could, adversely affect the economies
and financial markets worldwide, business operations and the conduct of commerce generally, and the business of any potential target
business with which we may consummate a Business Combination could be and may already have been, materially and adversely affected. Furthermore,
we may be unable to complete an initial Business Combination if concerns relating to COVID-19 or other events restrict travel, limit
the ability to have meetings with potential investors, limit the ability to conduct due diligence or limit the ability of a potential
target company’s personnel, vendors and services providers to negotiate and consummate a transaction in a timely manner. The extent
to which COVID-19 impacts our search for an initial 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 and perceptions to COVID-19 and its
variants and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other
events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) continue for a prolonged
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.
Finally,
the COVID-19 pandemic or other events (such as terrorist attacks, natural disasters, global hostilities or a significant outbreak
of other infectious diseases) may also have the effect of heightening many of the other risks described in this “Risk Factors”
section, such as those related to the market for our securities and cross-border transactions.
If
we seek stockholder approval of our initial Business Combination, our Sponsor, directors, officers, advisors or any of their respective affiliates
may elect to purchase shares or warrants from public stockholders or warrant holders, which may influence a vote on a proposed Business
Combination and reduce the public “float” of our securities.
If
we seek stockholder approval of our initial Business Combination and we do not conduct redemptions in connection with our initial Business
Combination pursuant to the tender offer rules, our Sponsor, directors, officers, advisors or any of their respective affiliates may
purchase Public Shares or warrants in privately negotiated transactions or in the open market either prior to or following the completion
of our initial Business Combination.
Any
such price per share may be different than the amount per share a public stockholder would receive if it elected to redeem its shares
in connection with our initial Business Combination. Additionally, at any time at or prior to our initial Business Combination, subject
to applicable securities laws (including with respect to material non-public information), our Sponsor, directors, officers, advisors
or any of their respective affiliates may enter into transactions with investors and others to provide them with incentives to acquire
Public Shares, vote their Public Shares in favor of our initial Business Combination or not redeem their Public Shares. However, our
Sponsor, directors, officers, advisors or any of their respective affiliates are under no obligation or duty to do so and they have no
current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such
transactions. The purpose of such purchases could be to vote such shares in favor of our initial Business Combination and thereby increase
the likelihood of obtaining stockholder approval of our initial Business Combination or to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial Business Combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce
the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection
with our initial Business Combination. This may result in the completion of our initial Business Combination that may not otherwise have
been possible.
In
addition, if such purchases are made, the public “float” of our securities and the number of beneficial holders of our securities
may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on a national
securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our Public Shares in connection with our initial Business Combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial Business
Combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable,
such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials,
as applicable, that we will furnish to holders of our Public Shares in connection with our initial Business Combination will describe
the various procedures that must be complied with in order to validly tender or redeem Public Shares. 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 or proxy materials
documents mailed to such holders, or up to two business days prior to the scheduled vote on the proposal to approve the initial Business
Combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event
that a stockholder fails to comply with these procedures, its shares may not be redeemed.
You
are not entitled to certain protections afforded to investors of some other blank check companies.
We
are exempt from certain rules promulgated by the SEC related to certain blank check companies, such as Rule 419. Accordingly, investors
are not afforded the benefits or protections of those rules. Among other things, this means we will have a longer period of time to complete
our initial Business Combination than do companies subject to Rule 419. Moreover, if the Initial Public Offering was subject to
Rule 419, that rule would prohibit the release of any interest earned on funds held in the Trust Account to us unless and until
the funds in the Trust Account were released to us in connection with our completion of an initial Business Combination.
If
we seek stockholder approval of our initial Business Combination and we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold in excess of 15% of 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 redeeming its shares 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 initial Business Combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete
our initial Business Combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market
transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial
Business Combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such
shares, would be required to sell your shares in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for Business Combination opportunities, it may be more difficult for us to complete
our initial Business Combination. If we have not completed our initial Business Combination within the required time period, our public
stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on our redemption of their shares, and
our warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. Additionally, the number of blank check
companies looking for Business Combination targets has increased compared to recent years and many of these blank check companies are
sponsored by entities or persons that have significant experience with completing Business Combinations. 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, in the event we seek stockholder approval of our initial Business Combination and we are obligated to
pay cash for our shares of Class A common stock, it will potentially reduce the resources available to us for our initial Business
Combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a Business Combination.
If we have not completed our initial Business Combination within the required time period, our public stockholders may receive only approximately
$10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless. Please
see “— If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
As
the number of special purpose acquisition companies increases, there may be more competition to find an attractive target for an initial
Business Combination. This could increase the costs associated with completing our initial Business Combination and may result in our
inability to find a suitable target for our initial Business Combination and/or complete our initial Business Combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many companies have
entered into Business Combinations with special purpose acquisition companies, and there are still many special purpose acquisition companies
seeking targets for their initial Business Combination, as well as many additional special purpose acquisition companies currently in
registration. As a result, at times, fewer attractive targets may be available, and it may require more time, effort and resources to
identify a suitable target for an initial Business Combination and/or complete our initial Business Combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial Business Combination with available
targets, the competition for available targets with attractive fundamentals or business models may increase, which could cause target
companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry
sector downturns, geopolitical tensions or increases in the cost of additional capital needed to close Business Combinations or operate
targets post-Business Combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find a
suitable target for and/or complete our initial Business Combination.
If
the funds not being held in the Trust Account are insufficient to allow us to operate for at least the 24 months following the closing
of the Initial Public Offering, we may be unable to complete our initial Business Combination.
The
funds available to us outside of the Trust Account may not be sufficient to allow us to operate for at least the 24 months following
the closing of the Initial Public Offering, assuming that our initial Business Combination is not completed during that time. We expect
to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital through potential
loans from certain of our affiliates are discussed in “Item 7. “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” However, our affiliates are not obligated to make loans to us in the future, and we may not
be able to raise additional financing from unaffiliated parties necessary to fund our expenses. Any such event in the future may negatively
impact the analysis regarding our ability to continue as a going concern at such time.
Of
the funds available to us, we could use a portion of the funds 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 enter 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. If we have not completed
our initial Business Combination within the required time period, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless. Please see “—
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and other risk factors herein.
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and
complete an initial Business Combination.
Recently,
the market for directors and officers liability insurance for special purpose acquisition companies has changed in ways adverse to us
and our management team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged
for such policies have generally increased and the terms of such policies have generally become less favorable. These trends may continue
into the future.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more expensive
for us to negotiate and complete an initial Business Combination. In order to obtain directors and officers liability insurance or modify
its coverage as a result of becoming a public company, the post-Business Combination entity might need to incur greater expense and/or
accept less favorable terms. Furthermore, any failure to obtain adequate directors and officers liability insurance could have an adverse
impact on the post-Business Combination’s ability to attract and retain qualified officers and directors.
In
addition, after completion of any initial Business Combination, our directors and officers could be subject to potential liability from
claims arising from conduct alleged to have occurred prior to such initial Business Combination. As a result, in order to protect our
directors and officers, the post-Business Combination entity may need to purchase additional insurance with respect to any such claims
(“run-off insurance”). The need for run-off insurance would be an added expense for the post-Business Combination
entity and could interfere with or frustrate our ability to consummate an initial Business Combination on terms favorable to our investors.
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 and other
entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the Trust Account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute
such agreements they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case
in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third-party refuses
to execute an agreement waiving such claims to the monies held in the Trust Account, our management will perform an analysis of the alternatives
available to it and will enter into an agreement with a third-party that has not executed a waiver only if management believes that
such third-party’s engagement would be significantly more beneficial to us than any alternative.
Examples
of possible instances where we may engage a third-party that refuses to execute a waiver include the engagement of a third-party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would
agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition, there
is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of
our Public Shares, if we have not completed our initial Business Combination within the required time period, or upon the exercise of
a redemption right in connection with our initial Business Combination, we will be required to provide for payment of claims of creditors
that were not waived that may be brought against us within the ten years following redemption. Accordingly, the per-share redemption
amount received by public stockholders could be less than the $10.00 per Public Share initially held in the Trust Account, due to claims
of such creditors.
Our
Sponsor has agreed that it will be liable to us if and to the extent any claims by a third-party (other than our independent registered
public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed entering
into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) such
lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in
the value of the trust assets, in each case net of interest which may be withdrawn to pay taxes, except as to any claims by a third-party who
executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under our indemnity of the underwriters
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, our Sponsor will not be responsible to the extent of any liability
for such third-party claims. We have not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity
obligations and believe that our Sponsor’s only assets are securities of our Company. Our Sponsor may not have sufficient funds
available to satisfy those obligations. We have not asked our Sponsor to reserve for such obligations, and therefore, no funds are currently
set aside to cover any such obligations. As a result, if any such claims were successfully made against the Trust Account, the funds
available for our initial Business Combination and redemptions could be reduced to less than $10.00 per Public Share. In such event,
we may not be able to complete our initial Business Combination, and you would receive such lesser amount per share in connection with
any redemption of your Public Shares. None of our directors or officers will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in
the Trust Account available for distribution to our public stockholders.
In
the event that the proceeds in the Trust Account are reduced below the lesser of (1) $10.00 per Public Share or (2) such lesser
amount per 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 interest which may be withdrawn to pay taxes, and our Sponsor asserts that it is unable to satisfy
its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible
that our independent directors in exercising their business judgment may choose not to do so in any particular instance. If our independent
directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution
to our public stockholders may be reduced below $10.00 per share.
The
securities in which we invest the funds held in the Trust Account could bear a negative rate of interest, which could reduce the value
of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00 per share.
The
proceeds held in the Trust Account will be invested only in U.S. government treasury obligations with a maturity of 185 days or
less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only
in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive
rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest
rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may
in the future adopt similar policies in the United States. In the event that we are unable to complete our initial Business Combination
or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are entitled to receive
their pro-rata share of the proceeds held in the Trust Account, plus any interest income, net of taxes paid or payable (less, in
the case we are unable to complete our initial Business Combination, $100,000 of interest). Negative interest rates could reduce the
value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00
per share. Negative interest rates could also reduce the amount of funds we have available to complete our initial Business Combination.
If,
after we distribute the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition or an involuntary
winding-up or bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and
the members of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the
members of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition or an involuntary
winding-up or bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. In addition, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public stockholders from
the Trust Account prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If,
before distributing the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition or an involuntary
winding-up or bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority
over the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition or an involuntary
winding-up or bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject
to applicable 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 public stockholders in connection with our liquidation would be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements
and our activities may be restricted, which may make it difficult for us to complete our initial Business Combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
| ● | 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:
| ● | registration
as an investment company with the SEC; |
| ● | adoption
of a specific form of corporate structure; and |
| ● | reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations
that we are currently not subject to. |
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the Trust
Account may be invested by the trustee only in U.S. government treasury bills with a maturity of 185 days or less or in money market
funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act.
Because the investment of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the exemption
provided in Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company
Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may
hinder our ability to complete a Business Combination. If we have not completed our initial Business Combination within the required
time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation
of our Trust Account and our warrants will expire worthless.
Changes
in laws or regulations or how such laws or regulations are interpreted or applied, or a failure to comply with any laws or regulations,
may adversely affect our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply
with certain SEC and other legal requirements, our Business Combination may be contingent on our ability to comply with certain laws
and regulations and any post-Business Combination company may be subject to additional laws and regulations. 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, including as a result of changes in economic, political, social and government policies,
and those changes could have a material adverse effect on our business, including our ability to negotiate and complete our initial Business
Combination, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted
and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial Business
Combination, and results of operations.
If
we have not completed our initial Business Combination within 24 months of the closing of the Initial Public Offering or during any Extension
Period, our public stockholders may be forced to wait beyond such 24 months before redemption from our Trust Account.
If
we have not completed our initial Business Combination within 24 months from the closing of the Initial Public Offering or during
any Extension Period, we will distribute the aggregate amount then on deposit in the Trust Account, including interest (less up to $100,000
of interest to pay dissolution expenses and which interest shall be net of taxes payable), pro rata to our public stockholders by way
of redemption and cease all operations except for the purposes of winding up of our affairs, as further described herein. Any redemption
of public stockholders from the Trust Account shall be effected automatically by function of our amended and restated certificate of
incorporation prior to any voluntary winding up. If we are required to windup, liquidate the Trust Account and distribute such amount
therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and distribution are
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. In that case, investors may be forced to wait beyond the initial 24 months before the redemption proceeds of our Trust Account
become available to them and they receive the return of their pro rata portion of the proceeds from our Trust Account. We have no obligation
to return funds to investors prior to the date of our redemption or liquidation unless, prior thereto, we consummate our initial Business
Combination or amend certain provisions of our amended and restated certificate of incorporation and then only in cases where investors
have properly sought to redeem their shares of Class A common stock. Only upon our redemption or any liquidation will public stockholders
be entitled to distributions if we have not completed our initial Business Combination within the required time period and do not amend
certain provisions of our amended and restated certificate of incorporation prior thereto.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the Delaware General Corporation Law (the “DGCL”), stockholders may be held liable for claims by third parties against a
corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our Trust Account distributed to
our public stockholders upon the redemption of our Public Shares in the event we do not complete our initial Business Combination within
the required time period 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 (or the end of any Extension Period) in the event we do not complete our initial Business Combination
and, therefore, we do not intend to comply with the foregoing procedures.
Because
we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to
us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the ten years following our dissolution. However, because we are a blank check company, rather than an operating company, and
our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from
our vendors (such as lawyers, investment bankers, consultants, etc.) or prospective target businesses. If our plan of distribution complies
with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that
may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore,
if the pro rata portion of our Trust Account distributed to our public stockholders upon the redemption of our Public Shares in the event
we do not complete our initial Business Combination within the required time period 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 stockholder meeting until after the consummation of our initial Business Combination. Our public stockholders
will not have the right to elect or remove directors prior to the consummation of our initial Business Combination.
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. We may not hold an annual meeting of stockholders until after we consummate our initial
Business Combination and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders
be held for the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written consent
in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our 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. Until we hold an annual meeting of stockholders, public stockholders may not be afforded the opportunity
to discuss Company affairs with management. In addition, prior to our initial Business Combination, (a) as holders of our Class A
common stock, our public stockholders will not have the right to vote on the election of our directors, and (b) holders of a majority
of the issued and outstanding shares of our Class B common stock may remove a member of our board of directors for any reason.
The
grant of registration rights to our initial stockholders and their permitted transferees may make it more difficult to complete our initial
Business Combination, and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant
to a registration rights agreement entered into in connection with the Initial Public Offering, att or after the time of our initial
Business Combination, our initial stockholders and their permitted transferees can demand that we register the resale of their Founder
Shares after those shares convert to shares of our Class A common stock. In addition, our Sponsor and its permitted transferees
can demand that we register the resale of the Private Placement Warrants and the shares of Class A common stock issuable upon exercise
of the Private Placement Warrants, and holders of warrants that may be issued upon conversion of working capital loans may demand that
we register the resale of such warrants or the shares of 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 shares of common stock owned by our initial
stockholders or their permitted transferees, our Private Placement Warrants or warrants issued in connection with working capital loans
are registered for resale.
Because
we are not limited to a particular industry, sector or geography or any specific target businesses with which to pursue our initial Business
Combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
We
may seek to complete a Business Combination with an operating company of any size (subject to our satisfaction of the 80% fair market
value test) and in any industry, sector or geography. However, we will not, under our amended and restated certificate of incorporation,
be permitted to effectuate our initial Business Combination solely with another blank check company or similar company with nominal operations.
To the extent we complete our initial Business Combination, we may be affected by numerous risks inherent in the business operations
with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of
sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or development stage
entity. Although our directors and officers will endeavor to evaluate the risks inherent in a particular target business, we cannot assure
you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due
diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances
that those risks will adversely impact a target business. We also cannot assure you that an investment in our securities will not ultimately
prove to be less favorable to our investors than a direct investment, if such opportunity were available, in a Business Combination target.
Accordingly, any stockholder or warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial
Business Combination could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to
have a remedy for such reduction in value.
We
may seek acquisition opportunities in acquisition targets that may be outside of our management’s areas of expertise.
We
will consider a Business Combination outside of our management’s areas of expertise if such Business Combination candidate is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our Company. 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 our management’s expertise would not be relevant to an understanding of the business that we
elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant risk factors relevant
to such acquisition. Accordingly, any stockholders or warrant holders who choose to remain a stockholder or warrant holder following
our initial Business Combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders are
unlikely to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial Business Combination with a target that does not meet such criteria and guidelines, and as a result, the target
business with which we enter into our initial Business Combination may not have attributes entirely consistent with our general criteria
and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our initial Business Combination will not have all of these positive attributes. If we complete our initial
Business Combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful
as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective
Business Combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise
their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to
have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by applicable
law or stock exchange listing requirements, or we decide to obtain stockholder approval for business or other reasons, it may be more
difficult for us to attain stockholder approval of our initial Business Combination if the target business does not meet our general
criteria and guidelines. If we have not completed our initial Business Combination within the required time period, our public stockholders
may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and our warrants
will expire worthless.
We
may seek acquisition opportunities with an early-stage company, a financially unstable business or an entity lacking an established record
of revenue or earnings.
To
the extent we complete our initial Business Combination with an early-stage company, a financially unstable business or an entity
lacking an established record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with
which we combine. These risks include investing in a business without a proven business model and with limited historical financial data,
volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel. Although our directors
and officers will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or
assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks
may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a
target business.
We
may engage the underwriters from our Initial Public Offering or any of their affiliates to provide additional services to us. The underwriters
are entitled to receive deferred commissions that will be released from the trust only on a completion of an initial Business Combination.
These financial incentives may cause the underwriters to have potential conflicts of interest in rendering any such additional services
to us after the Initial Public Offering.
We
may engage the underwriters from our Initial Public Offering or any of their 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 the underwriters or any of their affiliates 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 fact that the underwriters or any of their affiliates’
financial interests are 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.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm regarding fairness.
Consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our Company
from a financial point of view.
Unless
we complete our initial Business Combination with an affiliated entity, we are not required to obtain an opinion that the price we are
paying is fair to our Company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment
of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such
standards used will be disclosed in our tender offer documents or proxy solicitation materials, as applicable, related to our initial
Business Combination.
We
may issue additional shares of Class A common stock or preferred stock to complete our initial Business Combination or under an
employee incentive plan after completion of our initial Business Combination. 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 80,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares
of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of undesignated preferred stock, par value $0.0001
per share. As of December 31, 2021, there were 54,700,000 and 13,675,000 authorized but unissued shares of Class A and Class B
common stock, respectively, available for issuance, which amount takes into account shares reserved for issuance upon exercise of outstanding
warrants but not upon conversion of the Class B common stock. Shares of Class B common stock are convertible into shares of
our Class A common stock, initially at a one-for-one ratio but subject to adjustment as set forth herein. As of December 31,
2021, there were no preferred shares issued and outstanding.
We
may issue a substantial number of additional shares of Class A common stock, and may issue shares of preferred stock, in order to
complete our initial Business Combination or under an employee incentive plan after completion of our initial Business Combination. We
may also issue shares of Class A common stock to redeem the warrants or 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 contained
in our amended and restated certificate of incorporation. However, our amended and restated certificate of incorporation provides, among
other things, that prior to our initial Business Combination, we may not issue additional shares of capital stock that would entitle
the holders thereof to (1) receive funds from the Trust Account or (2) vote pursuant to our amended and restated certificate
of incorporation on any initial Business Combination or any amendments to our amended and restated certificate of incorporation. The
issuance of additional shares of common or preferred stock:
| ● | may
significantly dilute the equity interest of public investors, which dilution would increase
if the anti-dilution provisions in the Class B common stock resulted in the issuance
of shares of Class A common stock on a greater than one-to-one basis upon conversion
of the Class B common stock; |
| ● | may
subordinate the rights of holders of common stock if shares of preferred stock are issued
with rights senior to those afforded our common stock; |
| ● | could
cause a change of control if a substantial number of shares of our common stock is issued,
which may affect, among other things, our ability to use our net operating loss carry forwards,
if any, and could result in the resignation or removal of our present directors and officers; |
| ● | may
have the effect of delaying or preventing a change of control of us by diluting the stock
ownership or voting rights of a person seeking to obtain control of us; |
| ● | may
adversely affect prevailing market prices for our Units, Class A common stock and/or
warrants; and |
| ● | may
not result in adjustment to the exercise price of our warrants. |
We
may reincorporate in another jurisdiction in connection with our initial Business Combination and such reincorporation may result in
taxes imposed on stockholders.
We
may effect a Business Combination with a target company in another jurisdiction, reincorporate in the jurisdiction in which the target
company or business is located, or reincorporate in another jurisdiction. Such transactions may result in tax liability for a stockholder
in the jurisdiction in which the stockholder is a tax resident (or in which its members are resident if it is a tax transparent entity),
in which the target company is located, or in which we reincorporate. We do not intend to make any cash distributions to stockholders
to pay such taxes. Stockholders may be subject to withholding taxes or other taxes with respect to their ownership of us after the reincorporation.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we have not completed our initial Business Combination within the required time period,
our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation
of our Trust Account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial Business Combination, the costs incurred up to that point for the
proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we
may fail to complete our initial Business Combination for any number of reasons including those beyond our control. Any such event will
result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire
or merge with another business. If we have not completed our initial Business Combination within the required time period, our public
stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account
and our warrants will expire worthless.
We
may engage in a Business Combination with one or more target businesses that have relationships with entities that may be affiliated
with our Sponsor, directors or officers which may raise potential conflicts of interest.
In
light of the involvement of our Sponsor, directors and officers with other entities, we may decide to acquire one or more businesses
affiliated with our Sponsor, directors and officers. Certain of our directors and officers also serve as officers and board members for
other entities, including those described under “Item 10. Directors, Executive Officers and Corporate Governance — Conflicts
of Interest.” Such entities may compete with us for Business Combination opportunities. Although we will not be specifically focusing
on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated
entity met our criteria and guidelines for a Business Combination and such transaction was approved by a majority of our independent
and disinterested directors. Despite our agreement that we, or a committee of independent and disinterested directors, will obtain an
opinion from an independent investment banking firm or another valuation or appraisal firm that regularly renders fairness opinions on
the type of target business we are seeking to acquire, regarding the fairness to our Company from a financial point of view of a Business
Combination with one or more businesses affiliated with our Sponsor, directors or officers, potential conflicts of interest still may
exist and, as a result, the terms of the Business Combination may not be as advantageous to our public stockholders as they would be
absent any conflicts of interest.
Since
our initial stockholders will lose their entire investment in us if our initial Business Combination is not completed, a conflict of
interest may arise in determining whether a particular Business Combination target is appropriate for our initial Business Combination.
Our
initial stockholders hold 6,325,000 Founder Shares as of the date of this Annual Report, including 6,325,000 held by our Sponsor. The
Founder Shares will be worthless if we do not complete an initial Business Combination.
In
addition, our Sponsor purchased an aggregate of 4,706,667 Private Placement Warrants, each exercisable for one share of our Class A
common stock, for a purchase price of $7,060,000 in the aggregate or $1.50 per warrant, that will also be worthless if we do not complete
a Business Combination. Each Private Placement Warrant may be exercised for one share of our Class A common stock at a price of
$11.50 per share, subject to adjustment.
The
Founder Shares are identical to the shares of Class A common stock included in the Units except that: (1) prior to our initial
Business Combination, only holders of our Class B common stock have the right to vote on the election of directors and holders of
a majority of our outstanding shares of Class B common stock may remove a member of our board of directors for any reason; (2) the
Founder Shares are subject to certain transfer restrictions contained in a letter agreement that our initial stockholders, directors
and officers have entered into with us; (3) pursuant to such letter agreement, our initial stockholders, directors and officers
have agreed to waive: (i) their redemption rights with respect to any Founder Shares and Public Shares held by them, as applicable,
in connection with the completion of our initial Business Combination; (ii) their redemption rights with respect to any Founder
Shares and Public Shares held by them in connection with a stockholder vote to amend our amended and restated certificate of incorporation
(A) to modify the substance or timing of our obligation to allow redemption in connection with our initial Business Combination
or to redeem 100% of our Public Shares if we do not complete our initial Business Combination within 24 months from the closing
of the Initial Public Offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business
Combination activity; and (iii) their rights to liquidating distributions from the Trust Account with respect to any Founder Shares
they hold if we fail to complete our initial Business Combination within 24 months from the closing of the Initial Public Offering
or during any Extension Period (although they will be entitled to liquidating distributions from the Trust Account with respect to any
Public Shares they hold if we fail to complete our initial Business Combination within the prescribed time frame); (4) the Founder Shares
will automatically convert into shares of our Class A common stock at the time of our initial Business Combination, or earlier at
the option of the holder, on a one-for-one basis, subject to adjustment pursuant to certain anti-dilution rights, as described
herein; and (5) the Founder Shares are entitled to registration rights. If we submit our initial Business Combination to our public
stockholders for a vote, our initial stockholders have agreed (and their permitted transferees will agree), pursuant to the terms of
a letter agreement entered into with us, to vote their Founder Shares and any Public Shares held by them purchased during or after the
Initial Public Offering in favor of our initial Business Combination. While we do not expect our board of directors to approve any amendment
to or waiver of the letter agreement or registration rights agreement prior to our initial Business Combination, it may be possible that
our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments
to or waivers of such agreements in connection with the consummation of our initial Business Combination. Any such amendments or waivers
would not require approval from our stockholders, may result in the completion of our initial Business Combination that may not otherwise
have been possible, and may have an adverse effect on the value of an investment in our securities.
The
personal and financial interests of our Sponsor, directors and officers may influence their motivation in identifying and selecting a
target Business Combination, completing an initial Business Combination and influencing the operation of the business following the initial
Business Combination. This risk may become more acute as the deadline for completing our initial Business Combination nears.
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.
We
may choose to incur substantial debt to complete our initial 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:
| ● | default
and foreclosure on our assets if our operating revenues after an initial Business Combination
are insufficient to repay our debt obligations; |
| ● | 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; |
| ● | our
immediate payment of all principal and accrued interest, if any, if the debt is payable on
demand; |
| ● | our
inability to obtain necessary additional financing if the debt contains covenants restricting
our ability to obtain such financing while the debt is outstanding; |
| ● | our
inability to pay dividends on our common stock; |
| ● | 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 common stock if declared, expenses, capital
expenditures, acquisitions and other general corporate purposes; |
| ● | limitations
on our flexibility in planning for and reacting to changes in our business and in the industry
in which we operate; |
| ● | increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and |
| ● | 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 be able to complete only 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.
We
may effectuate our initial Business Combination with a single target business or multiple target businesses simultaneously or within
a short period of time. However, we may not be able to effectuate our initial Business Combination with more than one target business
because of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if they
had been operated on a combined basis. By completing our initial Business Combination with only a single entity our lack of diversification
may subject us to numerous financial, economic, competitive and regulatory risks. Further, we would not be able to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete
several Business Combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success
may be:
| ● | solely
dependent upon the performance of a single business, property or asset; or |
| ● | 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 financial, economic, competitive and regulatory risks, any or all of which may have
a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial Business Combination.
We
may attempt to simultaneously complete Business Combinations with multiple prospective targets, which may hinder our ability to complete
our initial Business Combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other Business Combinations, which may make
it more difficult for us, and delay our ability, to complete our initial Business Combination. With multiple Business Combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial Business Combination with a private company about which little information is available, which may
result in a Business Combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial Business Combination with a privately held company. Very little
public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial Business Combination on the basis of limited information, which may result in a Business Combination with a company that is not
as profitable as we suspected, if at all.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
a Business Combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event
will we redeem our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001 following such redemptions,
or any greater net tangible asset or cash requirement that may be contained in the agreement relating to our initial Business Combination.
As a result, we may be able to complete our initial Business Combination even though a substantial majority of our public stockholders
do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial Business Combination
and do not conduct redemptions in connection with our initial Business Combination pursuant to the tender offer rules, have entered into
privately negotiated agreements to sell their shares to our Sponsor, directors, officers, advisors or any of their respective affiliates.
In the event the aggregate cash consideration we would be required to pay for all Public Shares that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed Business Combination exceed the aggregate amount
of cash available to us, we will not complete the Business Combination or redeem any shares, and all shares of Class A common stock
submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate Business Combination (including,
potentially, with the same target).
In
order to effectuate an initial Business Combination, blank check companies have, in the past, amended various provisions of their charters
and modified governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended
and restated certificate of incorporation or governing instruments, including our warrant agreement, in a manner that will make it easier
for us to complete our initial Business Combination that some of our stockholders or warrant holders may not support.
In
order to effectuate an initial Business Combination, blank check companies have, in the past, amended various provisions of their charters
and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition
of Business Combination, increased redemption thresholds, extended the time to consummate an initial Business Combination and, with respect
to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. We cannot
assure you that we will not seek to amend our charter or governing instruments, including the warrant agreement, or extend the time to
consummate an initial Business Combination in order to effectuate our initial Business Combination. To the extent any such amendment
would be deemed to fundamentally change the nature of any of the securities offered through our registration statement, we would register,
or seek an exemption from registration for, the affected securities.
Certain
provisions of our amended and restated certificate of incorporation that relate to our pre-Business Combination activity (and corresponding
provisions of the agreement governing the release of funds from our Trust Account) may be amended with the approval of holders of at
least 65% of our outstanding common stock, which is a lower amendment threshold than that of some other blank check companies. It may
be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the
completion of an initial Business Combination that some of our stockholders may not support.
Our
amended and restated certificate of incorporation provides that any of its provisions (other than amendments relating to the election
or removal of directors prior to our initial Business Combination, which require the approval by holders of a majority of at least 90%
of the issued and outstanding shares of our common stock voting at a stockholder meeting) related to pre-Business Combination activity
(including the requirement to deposit proceeds of the Initial Public Offering and the sale of the Private Placement 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 at least 65% of our issued and outstanding common stock, and corresponding
provisions of the trust agreement governing the release of funds from our Trust Account may be amended if approved by holders of at least
65% of our issued and outstanding common stock. Unless specified in our amended and restated certificate of incorporation or bylaws,
or as required by applicable law or stock exchange rules, the affirmative vote of a majority of the issued and outstanding shares of
our common stock that are voted is required to approve any such matter voted on by our stockholders, and, prior to our initial Business
Combination, the affirmative vote of holders of a majority of the issued and outstanding shares of our Class B common stock is required
to approve the election or removal of directors. We may not issue additional securities that can vote pursuant to our amended and restated
certificate of incorporation on any initial Business Combination or any amendments to our amended and restated certificate of incorporation.
Our initial stockholders, who beneficially own 20% of our common stock, may participate in any vote to amend our amended and restated
certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may
be able to amend the provisions of our amended and restated certificate of incorporation which will govern our pre-Business Combination
behavior more easily than some other blank check companies, and this may increase our ability to complete our initial Business Combination
with which you do not agree.
Our
initial stockholders have agreed, pursuant to a written agreement, that they will not propose any amendment to our amended and restated
certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemptions 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 (B) with respect to any other provision relating to stockholders’ rights
or pre-initial Business Combination activity, unless we provide our public stockholders with the opportunity to redeem their shares
of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the number of then
issued and outstanding Public Shares. These agreements are contained in a letter agreement that we have entered into with our Sponsor,
directors and officers. Our public stockholders are not parties to, or third-party beneficiaries of, this agreement and, as a result,
will not have the ability to pursue remedies against our Sponsor, directors or officers for any breach of these agreements. As a result,
in the event of a breach, our public stockholders would need to pursue a stockholder derivative action, subject to applicable law.
We
may be unable to obtain additional financing to complete our initial Business Combination or to fund the operations and growth of a target
business, which could compel us to restructure or abandon a particular Business Combination.
If
the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants available to us prove to be insufficient,
either because of the size of our initial Business Combination, the depletion of the available net proceeds in search of a target business,
the obligation to redeem for cash a significant number of shares from stockholders who elect redemption in connection with our initial
Business Combination or the terms of negotiated transactions to purchase shares in connection with our initial Business Combination,
we may be required to seek additional financing or to abandon the proposed Business Combination. We cannot assure you that such financing
will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete
our initial Business Combination, we would be compelled to either restructure the transaction or abandon that particular Business Combination
and seek an alternative target business candidate.
In
addition, even if we do not need additional financing to complete our initial Business Combination, we may require such financing to
fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect
on the continued development or growth of the target business. None of our directors, officers or stockholders is required to provide
any financing to us in connection with or after our initial Business Combination. If we have not completed our initial Business Combination
within the required time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances,
on the liquidation of our Trust Account, and our warrants will expire worthless.
Our
initial stockholders will control the election of our board of directors until consummation of our initial Business Combination and will
hold a substantial interest in us. As a result, they will elect all of our directors prior to our initial Business Combination and may
exert a substantial influence on actions requiring stockholder vote, potentially in a manner that you do not support.
Our
initial stockholders own 20% of our issued and outstanding shares of common stock. In addition, prior to our initial Business Combination,
holders of the Founder Shares will have the right to elect all of our directors and may remove members of our board of directors for
any reason. Holders of our Public Shares will have no right to vote on the election of directors during such time. These provisions of
our amended and restated certificate of incorporation may only be amended by holders of a majority of at least 90% of the issued and
outstanding shares of our common stock voting at a stockholder meeting. As a result, you will not have any influence over the election
of directors prior to our initial Business Combination.
In
addition, as a result of their substantial ownership in our Company, our initial stockholders may exert a substantial influence on other
actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated
certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase any additional shares
of Class A common stock in the open market or in privately negotiated transactions, this would increase their influence over these
actions. Accordingly, our initial stockholders will exert significant influence over actions requiring a stockholder vote at least until
the completion of our initial Business Combination.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial Business Combination.
Unlike
some blank check companies, if
| ● | we
issue additional shares of Class A common stock or equity-linked securities for
capital raising purposes in connection with the closing of our initial Business Combination
at an issue price or effective issue price of less than $9.20 per share of Class A common
stock (with such issue price or effective issue price to be determined in good faith by our
board of directors and, in the case of any such issuance to the Sponsor or its affiliates,
without taking into account any Founder Shares held by the Sponsor or such affiliates, as
applicable, prior to such issuance) (the “Newly Issued Price”), |
| ● | the
aggregate gross proceeds from such issuances represent more than 60% of the total equity
proceeds, and interest thereon, available for the funding of our initial Business Combination
on the date of the completion of our initial Business Combination (net of redemptions), and |
| ● | the
volume weighted average trading price of our shares of Class A common stock during the 20
trading day period starting on the trading day prior to the day on which we consummate our
initial Business Combination (such price, the “Market Value”) is below $9.20
per share, costs and difficulties inherent in managing cross-border business operations
and complying with commercial and legal requirements of overseas markets; |
then
the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued Price,
and the $18.00 and $10.00 per share redemption trigger prices applicable to our warrants and our Class A common stock will be adjusted
(to the nearest cent) to be equal to 180% and 100%, respectively, of the higher of the Market Value and the Newly Issued Price, and the
$10.00 per share redemption trigger price applicable to our warrants will be adjusted (to the nearest cent) to be equal to the higher
of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate an initial Business Combination
with a target business.
Our
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 initial Business Combination.
We
have issued warrants to purchase 8,433,333 shares of Class A common stock, at a price of $11.50 per whole share (subject to
adjustment), as part of the Units and, simultaneously with the closing of the Initial Public Offering, we issued in a Private Placement
an aggregate of 4,706,667 Private Placement Warrants, each exercisable to purchase one share of Class A common stock at a price
of $11.50 per share, subject to adjustment. Our initial stockholders currently hold 6,325,000 shares of Class B common stock.
The shares of Class B common stock 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, an affiliate of our Sponsor or certain of our directors and officers
make any working capital loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.50 per warrant at the
option of the lender. Such warrants would be identical to the Private Placement Warrants. To the extent we issue shares of 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 or conversion rights could make us a less attractive acquisition vehicle to a target business.
Any such issuance will increase the number of issued and outstanding shares of Class A common stock and reduce the value of the
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 except that, so long as they are held by our Sponsor
or its permitted transferees: (1) they will not be redeemable by us (except under certain limited exceptions); (2) they (including
the shares of Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be
transferred, assigned or sold by our Sponsor until 30 days after the completion of our initial Business Combination; (3) they
may be exercised by the holders on a cashless basis; and (4) they (including the shares of Class A common stock issuable upon
exercise of these warrants) are entitled to registration rights.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial Business Combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a Business Combination meeting certain financial significance
tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement
disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial
statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States
of America, or U.S. GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or
IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards
of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the
pool of potential target businesses we may acquire because some targets may be unable to provide such financial statements in time for
us to disclose such financial statements in accordance with federal proxy rules and complete our initial Business Combination within
the prescribed time frame.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial Business Combination, require substantial
financial and management resources, and increase the time and costs of completing an acquisition.
Section 404
of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or
an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company
makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies
because a target business with which we seek to complete our initial Business Combination may not be in compliance with the provisions
of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial Business Combination,
we may face additional burdens in connection with investigating, agreeing to and completing such combination, and if we effect such initial
Business Combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial Business Combination,
we would be subject to risks associated with cross-border Business Combinations, including in connection with investigating, agreeing
to and completing our initial Business Combination, conducting due diligence in a foreign market, having such transaction approved by
any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If
we effect our initial Business Combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
| ● | costs
and difficulties inherent in managing cross-border business operations and complying
with commercial and legal requirements of overseas markets; |
| ● | rules
and regulations regarding currency redemption; |
| ● | complex
corporate withholding taxes on individuals; |
| ● | laws
governing the manner in which future Business Combinations may be effected; |
| ● | tariffs
and trade barriers; |
| ● | regulations
related to customs and import/export matters; |
| ● | changes
in local regulations as part of a response to the COVID-19 outbreak; |
| ● | tax
consequences, such as tax law changes, including termination or reduction of tax and other
incentives that the applicable government provides to domestic companies, and variations
in tax laws as compared to the United States; |
| ● | currency
fluctuations and exchange controls, including devaluations and other exchange rate movements; |
| ● | rates
of inflation, price instability and interest rate fluctuations; |
| ● | liquidity
of domestic capital and lending markets; |
| ● | challenges
in collecting accounts receivable; |
| ● | cultural
and language differences; |
| ● | crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters, wars and other
forms of social instability; |
| ● | deterioration
of political relations with the United States; |
| ● | obligatory
military service by personnel; and |
| ● | government
appropriation of assets. |
We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such combination
or, if we complete such combination, our operations might suffer, either of which may adversely impact our results of operations and
financial condition.
Rosecliff
Venture is not under any obligation to source any potential opportunities for our initial Business Combination or refer any such opportunities
to our Company or provide any other services to our Company.
Rosecliff
Venture may become aware of a potential Business Combination opportunity that may be an attractive opportunity for our Company. However,
Rosecliff Venture is not under any obligation to source any potential opportunities for our initial Business Combination or refer any
such opportunities to our Company or provide any other services to our Company. Rosecliff Venture’s role with respect to our Company
is expected to be primarily passive and advisory in nature. Rosecliff Venture may have fiduciary and/or contractual duties to its investment
vehicles and to companies in which Rosecliff Venture has invested. As a result, Rosecliff Venture may have a duty to offer Business Combination
opportunities to certain Rosecliff Venture funds, other investment vehicles or other entities before other parties, including our Company.
Additionally, certain companies in which Rosecliff Venture has invested may enter into transactions with, provide goods or services to,
or receive goods or services from an entity with which we seek to complete our initial Business Combination. Transactions of these types
may present a conflict of interest because Rosecliff Venture may directly or indirectly receive a financial benefit as a result of such
transaction.
Risks
Relating to the Post-Business Combination Company
We
may face risks related to tech-enabled companies and companies in the technology industry.
Business
Combinations with tech-enabled companies and companies in the technology industry entail special considerations and risks. If we
are successful in completing a Business Combination with such a target business, we may be subject to, and possibly adversely affected
by, the following risks:
| ● | if
we do not develop successful new products or improve existing ones, our business will suffer; |
| ● | we
may invest in new lines of business that could fail to attract or retain users or generate
revenue; |
| ● | we
will face significant competition and if we are not able to maintain or improve our market
share, our business could suffer; |
| ● | the
loss of one or more members of our management team, or our failure to attract and retain
other highly qualified personnel in the future, could seriously harm our business; |
| ● | if
our security is compromised or if our platform is subjected to attacks that frustrate or
thwart our users’ ability to access our products and services, our users, advertisers,
and partners may cut back on or stop using our products and services altogether, which could
seriously harm our business; |
| ● | mobile
malware, viruses, hacking and phishing attacks, spamming, and improper or illegal use of
our products could seriously harm our business and reputation; |
| ● | if
we are unable to successfully grow our user base and further monetize our products, our business
will suffer; |
| ● | if
we are unable to protect our intellectual property, the value of our brand and other intangible
assets may be diminished, and our business may be seriously harmed; |
| ● | we
may be subject to regulatory investigations and proceedings in the future, which could cause
us to incur substantial costs or require us to change our business practices in a way that
could seriously harm our business; |
| ● | components
used in our products may fail as a result of a manufacturing, design, or other defect over
which we have no control, and render our devices inoperable; |
| ● | an
inability to manage rapid change, increasing consumer expectations and growth; |
| ● | an
inability to build strong brand identity and improve subscriber or customer satisfaction
and loyalty; |
| ● | an
inability to deal with our subscribers’ or customers’ privacy concerns; |
| ● | an
inability to license or enforce intellectual property rights on which our business may depend; |
| ● | an
inability by us, or a refusal by third parties, to license content to us upon acceptable
terms; |
| ● | potential
liability for negligence, copyright, or trademark infringement or other claims based on the
nature and content of materials that we may distribute; |
| ● | competition
for the leisure and entertainment time and discretionary spending of subscribers or customers,
which may intensify in part due to advances in technology and changes in consumer expectations
and behavior; and |
| ● | disruption
or failure of our networks, systems or technology as a result of misappropriation of data
or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental
releases of information or similar events. |
Any
of the foregoing could have an adverse impact on our operations following a Business Combination. However, our efforts in identifying
prospective target businesses will not be limited to tech-enabled businesses or the technology industry. Accordingly, if we acquire
a target business in another industry, we will be subject to risks attendant with the specific industry in which we operate or target
business which we acquire, which may or may not be different than those risks listed above.
Subsequent
to our completion of our initial Business Combination, we may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on our financial condition, results of operations and the price of our
securities, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify
all material issues that may be present with a particular target business, that it would be possible to uncover all material issues through
a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise.
As a result of these factors, we may be forced to later write down or write off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though
these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature
could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate
net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by
virtue of our obtaining post-combination debt financing. Accordingly, any stockholder or warrant holder who chooses to remain a
stockholder or warrant holder, respectively, following our initial Business Combination could suffer a reduction in the value of their
securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in value.
After
our initial Business Combination, our results of operations and prospects could be subject, to a significant extent, to the economic,
political, social and government policies, developments and conditions in the country in which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located could affect
our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be
sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected,
there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our initial Business Combination and
if we effect our initial Business Combination, the ability of that target business to become profitable.
Our
management may not be able to maintain control of a target business after our initial Business Combination. We cannot provide assurance
that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We
may structure our initial Business Combination so that the post-transaction company in which our public stockholders own shares
will own less than 100% of the equity interests or assets of a target business, but we will complete such Business Combination only if
the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise
acquires a controlling interest in the target business sufficient for us not to be required to register as an investment company under
the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company
owns 50% or more of the voting securities of the target, our stockholders prior to our initial Business Combination may collectively
own a minority interest in the post Business Combination company, depending on valuations ascribed to the target and us in our initial
Business Combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of
common stock in exchange for all of the issued and outstanding capital stock, shares or other equity securities of a target or issue
a substantial number of new shares to third-parties in connection with financing our initial Business Combination. In this case,
we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common
stock, our stockholders immediately prior to such transaction could own less than a majority of our issued and outstanding common stock
subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single
person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make it more
likely that our management will not be able to maintain our control of the target business.
We
may have limited ability to assess the management of a prospective target business and, as a result, may complete 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 completing our initial Business Combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholder or warrant
holder who chooses to remain a stockholder or warrant holder, respectively, following our initial Business Combination could suffer a
reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in
value.
The
directors and officers of an acquisition candidate may resign upon completion of our initial Business Combination. The departure of a
Business Combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the completion of our initial Business Combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial Business Combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place.
Our
letter agreements with our initial stockholders, officers and directors may be amended without stockholder approval.
Our
letter agreements with our initial stockholders, officers and directors contains provisions relating to, among other things, restrictions
on transfer of our Founder Shares and Private Placement Warrants, indemnification of the Trust Account, waiver of redemption rights and
participation in liquidating distributions from the Trust Account. The letter agreement may be amended without stockholder approval.
While we do not expect our board of directors to approve any amendment to the letter agreement prior to our initial Business Combination,
it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties, chooses to approve
one or more amendments to the letter agreements. Any such amendments to the letter agreement would not require approval from our stockholders
and may have an adverse effect on the value of an investment in our securities.
If
our management following our initial Business Combination is unfamiliar with U.S. securities laws, they may have to expend time and resources
becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial Business Combination, any or all of our management could resign from their positions as officers of the Company, and the
management of the target business at the time of the Business Combination could remain in place. Management of the target business may
not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have to expend time and
resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues
which may adversely affect our operations.
Risks
Relating to Our Management Team
We
are dependent upon our directors and officers and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals. We believe that our success depends on the continued service of
our directors and officers, at least until we have completed our initial Business Combination. In addition, our directors and officers
are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating
their time among various business endeavors, including identifying potential Business Combinations and monitoring the related due diligence.
For a discussion of certain of our officers’ and directors’ other business endeavors, please see “Item 10. Directors,
Executive Officer and Corporate Governance.” We do not have an employment agreement with, or key-man insurance on the life
of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental
effect on us.
Our
ability to successfully effect our initial Business Combination and to be successful thereafter will be dependent upon the efforts of
our key personnel, some of whom may join us following our initial Business Combination. The loss of our or a target’s key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial Business Combination is dependent upon the efforts of our key personnel. The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target
business in senior management or advisory positions following our initial Business Combination, it is likely that some or all of the
management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial
Business Combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be
unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources
helping them become familiar with such requirements.
In
addition, the directors and officers of an acquisition candidate may resign upon completion of our initial Business Combination. The
departure of a Business Combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the completion of our initial Business Combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial Business Combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our
post-combination business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular Business Combination.
These agreements may provide for them to receive compensation following our initial Business Combination and as a result, may cause them
to have conflicts of interest in determining whether a particular Business Combination is the most advantageous.
Our
key personnel may be able to remain with our Company after the completion of our initial Business Combination only if they are able to
negotiate employment or consulting agreements in connection with the Business Combination. Such negotiations would take place simultaneously
with the negotiation of the Business Combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the Business Combination. Such negotiations also could
make such key personnel’s retention or resignation a condition to any such agreement. The personal and financial interests of such
individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such individuals
to remain with us after the completion of our initial Business Combination will not be the determining factor in our decision as to whether
or not we will proceed with any potential Business Combination, as we do not expect that any of our key personnel will remain with us
after the completion of our initial Business Combination. The determination as to whether any of our key personnel will remain with us
will be made at the time of our initial Business Combination.
Our
directors and officers will allocate their time to other businesses thereby causing conflicts of interest in their determination as to
how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial
Business Combination.
Our
directors and officers are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a Business Combination and their other responsibilities. We do not
intend to have any full-time employees prior to the completion of our Business Combination. Each of our directors and officers is
engaged in several other business endeavors for which he or she may be entitled to substantial compensation and our directors and officers
are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors will also serve as officers
and/or board members for other entities. If our directors’ and officers’ 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. Please see “Item 10. Directors,
Executive Officers and Corporate Governance.” for a discussion of our officers’ and directors’ other business affairs.
Each
of our directors and officers are now, and all of them may in the future become, affiliated with entities engaged in business activities
similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity should be presented.
Until
we consummate our initial Business Combination, we intend to engage in the business of identifying and combining with one or more businesses.
Our Sponsor and directors and officers are, or may in the future become, affiliated with entities that are engaged in a similar business.
Our Sponsor and directors and officers are also not prohibited from sponsoring, or otherwise becoming involved with, any other blank
check companies including in connection with their initial Business Combinations, prior to us completing our initial Business Combination,
and any such involvement may result in conflicts of interests as described herein. Moreover, entities in which our directors and officers
are affiliated with may enter into agreements or other arrangements with businesses, which agreements or arrangements may limit or restrict
our ability to enter into a Business Combination with such business.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary, contractual or other interests,
obligations or duties to one or more other entities pursuant to which such officer or director is or will be required to present a Business
Combination opportunity to such entities. Our directors and officers also may become aware of business opportunities which may be appropriate
for presentation to us and the other entities to which they owe certain fiduciary or contraction duties or otherwise have an interest
in, including Rosecliff Venture and any other special purpose acquisition company in which they may become involved with. Accordingly,
if any of our officers or directors becomes aware of a Business Combination opportunity which is suitable for one or more entities to
which he or she has fiduciary, contractual or other interests, obligations or duties, he or she will honor these obligations and duties
to present such Business Combination opportunity to such entities first, and only present it to us if such entities reject the opportunity
and he or she determines to present the opportunity to us. 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 our Company and such opportunity is one reasonable for us to
pursue.
For
a complete discussion of our officers’ and directors’ business affiliations and the potential conflicts of interest that
you should be aware of, please see “Item 10. Directors, Executive Officers and Corporate Governance.” “Item
10. Directors, Executive Officers and Corporate Governance — Conflicts of Interest” and “Item 13. Certain
Relationships and Related Party Transactions — Support Services Agreement.”
Our
directors, officers, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our
interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or 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. 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.
In
particular, affiliates of our Sponsor have invested in a diverse set of industries. As a result, there may be substantial overlap between
companies that would be a suitable Business Combination for us and companies that would make an attractive target for such other affiliates.
In
addition, our officers or directors may be investors, or have other direct or indirect interests, in a business with which we may enter
into a Business Combination agreement and/or in certain funds or other persons that may purchase shares of our Class A common stock.
Our
Sponsor, officers, directors and any of their respective affiliates may sponsor or form, or, in the case of individuals, serve as a director
or officer of, other blank check companies similar to ours during the period in which we are seeking an initial Business Combination.
Any such companies may present additional conflicts of interest in pursuing an acquisition target.
Members
of our management team and board of directors have significant experience as founders, board members, officers, executives or employees
of other companies. Certain of those persons have been, may be, or may become, involved in litigation, investigations or other proceedings,
including related to those companies or otherwise. This may have an adverse effect on us, which may impede our ability to consummate
an initial Business Combination.
During
the course of their careers, members of our management team and board of directors have had significant experience as founders, board
members, officers, executives or employees of other companies. Certain of those persons have been, may be or may in the future become
involved in litigation, investigations or other proceedings, including relating to the business affairs of such companies, transactions
entered into by such companies, or otherwise, including Michael P. Murphy, our Chief Executive Officer and a director, who in 2020 was
fined $20,000 by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and suspended for six months from association
with any FINRA member, as a result of not timely updating his broker-dealer registration form (Form U4) to disclose personal
tax matters. FINRA’s decision in the matter included findings of willful violations, which Mr. Murphy had denied and contested.
The Form U4 was updated, the personal tax matters have been satisfied, the status of the matter as reported by FINRA is final and
the suspension ended as of January 19, 2021.
Any
litigation, investigations or other proceedings may divert the attention and resources of our management team and board of directors
away from identifying and selecting a target business or businesses for our initial Business Combination and may negatively affect our
reputation, which may impede our ability to complete an initial Business Combination.
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 and/or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (1) our completion
of an initial Business Combination, and then only in connection with those shares of Class A common stock that such stockholder
properly elected to redeem, subject to the limitations described herein; (2) the redemption of any Public Shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to allow redemption in connection with our initial Business Combination or to redeem 100% of our Public Shares
if we do not complete our initial Business Combination within 24 months from the closing of the Initial Public Offering or (B) with
respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity; and (3) the
redemption of our Public Shares if we have not completed an initial Business Combination within 24 months from the closing of the
Initial Public Offering, subject to applicable law. In no other circumstances will a stockholder have any right or interest of any kind
to or in the Trust Account. Holders of warrants will not have any right to the proceeds held in the Trust Account with respect to the
warrants. Accordingly, to liquidate your investment, you may be forced to sell your Public Shares and/or warrants, potentially at a loss.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
We
cannot assure you that our securities will continue to be listed on Nasdaq. In order to continue listing our securities on Nasdaq prior
to our initial Business Combination, we must maintain certain financial, distribution and share price levels. In general, we must maintain
a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum of 300 public holders. Additionally, in connection
with our initial Business Combination, we will be required to demonstrate compliance with the applicable exchange’s initial listing
requirements, which are more rigorous than continued listing requirements, in order to continue to maintain the listing of our securities.
We cannot assure you that we will be able to meet those initial listing requirements at that time.
If
any of our securities are delisted from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
| ● | a
limited availability of market quotations for our securities; |
| ● | reduced
liquidity for our securities; |
| ● | a
determination that our Class A common stock are a “penny stock” which will
require brokers trading in our Class A common stock to adhere to more stringent rules
and possibly result in a reduced level of trading activity in the secondary trading market
for our securities; |
| ● | 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 pre-empts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Our Units, Class A common stock and warrants
currently qualify as covered securities under such statute. Although the states are pre-empted from regulating the sale of covered securities,
the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent
activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state
having used these powers to prohibit or restrict the sale of securities issued by 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 such statute and we would be subject to regulation in each state in which we offer our
securities, which may negatively impact our ability to consummate our initial Business Combination.
You
will not be permitted to exercise your warrants unless we register and qualify the issuance of the underlying shares of Class A
common stock or certain exemptions are available.
Pursuant
to terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days after the
closing of our initial Business Combination, we will use our commercially reasonable efforts to file a registration statement covering
the issuance of such shares, and we will use our commercially reasonable efforts to cause the same to become effective within 60 business
days after the closing of our initial Business Combination and to maintain the effectiveness of such registration statement and a current
prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. We cannot assure you that
we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth
in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current,
complete or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the
Securities Act in accordance with the above requirements, we will be required to permit holders to exercise their warrants on a cashless
basis, in which case, the number of shares of Class A common stock that you will receive upon cashless exercise will be based on
a formula subject to a maximum amount of shares equal to 0.361 shares of Class A common stock per warrant (subject to adjustment).
However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities
laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the above, if 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 a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option,
require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9)
of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement,
but we will use our commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an
exemption is not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation
in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable
state securities laws and no exemption is available. If the issuance of the shares upon exercise of the warrants is not so registered
or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant
and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of
Units will have paid the full Unit purchase price solely for the shares of 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 that were included as part of the Units. In such an
instance, our Sponsor and its permitted transferees (which may include our directors and executive officers) would be able to exercise
their warrants and sell the shares of Class A 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 Class A 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 amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of
at least 65% of the then outstanding public warrants. 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 the prospectus related to the Initial Public Offering,
or defective provision or (ii) adding or changing any provisions with respect to matters or questions arising under the warrant
agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect the
interest of the registered holders of the warrants, provided that the approval by the holders of at least 65% 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 65% 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, 65% 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 65% of the then outstanding public
warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants,
convert the warrants into cash, shorten the exercise period or decrease the number of shares of our Class A common stock purchasable
upon exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem the outstanding warrants at any time after they become exercisable and prior to their expiration, at a price
of $0.01 per warrant if, among other things, the last reported sale price of shares of Class A common stock for any 20 trading days within
a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the
warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted). If and when the warrants become
redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale
under all applicable state securities laws. As a result, we may redeem the warrants as set forth above even if the holders are otherwise
unable to exercise the warrants. Redemption of the outstanding warrants as described above could force you to: (1) exercise your
warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so; (2) sell your warrants at
the then-current market price when you might otherwise wish to hold your warrants; or (3) accept the nominal redemption price
which, at the time the outstanding warrants are called for redemption, we expect would be substantially less than the market value of
your warrants.
In
addition, we have the ability to redeem the outstanding warrants at any time after they become exercisable and prior to their expiration,
at a price of $0.10 per warrant if, among other things, the Reference Value equals or exceeds $10.00 per share (as adjusted). In such
a case, the holders will be able to exercise their warrants prior to redemption for a number of shares of Class A common stock determined
based on the redemption date and the fair market value of our Class A common stock. Any such redemption may have similar consequences
to a cash redemption described above. In addition, such redemption may occur at a time when the warrants are “out-of-the-money,”
in which case you would lose any potential embedded value from a subsequent increase in the value of the Class A common stock had
your warrants remained outstanding. 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 Class A 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.
Because
each unit contains one-third of one redeemable warrant and only a whole warrant may be exercised, the Units may be worth less than Units
of other blank check companies.
Each
Unit contains one-third of one redeemable warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon
separation of the Units, and only whole warrants will trade. This is different from other offerings similar to ours whose units include
one share of Class A common stock and one whole warrant or a greater fraction of one whole warrant to purchase one share. We have
established the components of the Units in this way in order to reduce the dilutive effect of the warrants upon completion of a Business
Combination since the warrants will be exercisable in the aggregate for a third of the number of shares compared to units that each contain
a whole warrant to purchase one whole share, thus making us, we believe, a more attractive Business Combination partner for target businesses.
Nevertheless, this Unit structure may cause our Units to be worth less than if they included one whole warrant or a greater fraction
of one whole warrant to purchase one whole share.
Our
management’s ability to require holders of our public warrants to exercise such public warrants on a cashless basis will cause
holders to receive fewer shares of Class A common stock upon their exercise of the public warrants than they would have received had
they been able to exercise their public warrants for cash.
If
we call our public warrants for redemption after the redemption criteria described elsewhere in this Annual Report have been satisfied,
our management will have the option to require any holder that wishes to exercise its warrant (including any warrants held by our Sponsor,
officers, directors or their permitted transferees) to do so on a “cashless basis.” If our management chooses to require
holders to exercise their warrants on a cashless basis, the number of shares of Class A common stock received by a holder upon exercise
will be fewer than it would have been had such holder exercised his, her or its warrant for cash. This will have the effect of reducing
the potential “upside” of the holder’s investment in our Company.
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 do not apply to suits brought to enforce any liability or duty created by the
Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and exclusive
forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and
to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which is within the scope the
forum provisions of the warrant agreement, is filed in a court other than a court of the State of New York or the United States
District Court for the Southern District of New York (a “NY 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 (a “NY enforcement action”),
and (y) having service of process made upon such warrant holder in any such NY enforcement action by service upon such warrant holder’s
counsel in the NY foreign action as agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with our Company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant
agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional
costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial
condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
Provisions
in our amended and restated certificate of incorporation 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 will contain provisions that may discourage unsolicited takeover proposals that stockholders
may consider to be in their best interests. These provisions include the ability of the board of directors to designate the terms of
and issue new series of preferred stock, and the fact that prior to the completion of our initial Business Combination only holders of
our shares of Class B common stock, which are held by our initial stockholders, are entitled to vote on the election of directors,
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 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.
General
Risk Factors
We
are a newly incorporated company with no operating history and no operating revenues, and you have no basis on which to evaluate our
ability to achieve our business objective.
We
are a newly incorporated company with no operating results. Because we lack an operating history, you have no basis upon which to evaluate
our ability to achieve our business objective of completing our initial Business Combination with one or more target businesses. We have
no plans, arrangements or understandings with any prospective target business concerning a Business Combination and may be unable to
complete our initial Business Combination. If we fail to complete our initial Business Combination, we will never generate any operating
revenues.
Past
performance by any member or members of our management team, any of their respective affiliates, or Rosecliff may not be indicative of
future performance of an investment in the Company.
Information
regarding performance by our management team and their respective affiliates, including Rosecliff Venture, or any of its funds, investments
or portfolio companies, or our Sponsor or directors is presented for informational purposes only. Not all of the companies in which our
team has invested have achieved the same level of value creation. Past performance by any member or members of our management team, any
of their respective affiliates, including Rosecliff Venture, or any of its funds, investments or portfolio companies, or our Sponsor
or directors is not a guarantee either (1) that we will be able to identify a suitable candidate for our initial Business Combination
or (2) of success with respect to any Business Combination we may consummate. You should not rely on the historical record of any
member or members of our management team, any of their respective affiliates, including Rosecliff Venture, or any of its funds, investments
or portfolio companies, or our Sponsor or directors or any of the foregoing’s related investment’s performance, as indicative
of the future performance of an investment in the Company or the returns the Company will, or is likely to, generate going forward.
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 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 common stock held by non-affiliates equals or exceeds $700 million as of the
end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal
year. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some
investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may
be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities
may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective
or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such
extended transition period which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of
the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates equals or exceeds $250 million as of the end of that year’s second fiscal quarter,
or (2) our annual revenues equalled or exceeded $100 million during such completed fiscal year or the market value of our common
stock held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter. To the
extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public
companies difficult or impossible.
Our
amended and restated certificate of incorporation will designate 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, 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, 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) for which the Court of Chancery does not have subject matter jurisdiction. In addition,
our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative
forum, the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the exclusive
forum for the resolution of any complaint asserting a cause of action arising under the Securities Act against us or our directors, officers,
other employees or agents. Although we believe this provision benefits us by providing increased consistency in the application of Delaware
law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is
enforceable, the provision may have the effect of discouraging lawsuits against our directors, officers, other employees or stockholders,
although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations
thereunder.
Notwithstanding
the foregoing, our amended and restated certificate of incorporation provides that the exclusive forum provision will not apply to suits
brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created
by the Exchange Act or the rules and regulations thereunder. Although we believe this provision benefits us by providing increased consistency
in the application of Delaware law in the types of lawsuits to which it applies, the provision may limit our stockholders’ ability
to obtain a favorable judicial forum for disputes with us and may have the effect of discouraging lawsuits against our directors and
officers. 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 of 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.
Our
warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
On
April 12, 2021, the staff of the SEC issued a public statement regarding the accounting and reporting considerations for warrants issued
by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued
by Special Purpose Acquisition Companies (‘SPACs’)” (the “SEC Statement”). Specifically, the SEC Statement
focused on certain settlement terms and provisions related to certain tender offers following a Business Combination, which terms are
similar to those contained in the warrant agreement governing our Warrants. As a result of the SEC Statement, we reevaluated the accounting
treatment of our 8,433,333 Public Warrants and 4,706,667 Private Placement Warrants, and determined to classify the Warrants as derivative
liabilities measured at fair value, with changes in fair value each period reported in earnings.
As
a result, included on our condensed 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,”
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 consolidated 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. The impact of changes in fair value on
earnings may have an adverse effect on the market price of our securities.
We
have identified a material weakness in our internal control over financial reporting. If we are unable to develop and maintain an effective
system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner,
which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
We
have identified a material weakness in our internal control over financial reporting related to the accounting for complex financial
instruments as described herein. 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 and corrected on a timely basis. As a result of these material weaknesses, our management has concluded
that our internal control over financial reporting was not effective as of December 31, 2021.
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.
As
a result of such material weakness described herein, certain restatements of our prior financials, and other matters raised or that may
in the future be raised by the SEC, 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 material weaknesses in our internal control
over financial reporting and the preparation of our financial statements. As of the date of this Annual Report on Form 10-K, 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.