Item
1. Business.
Overview
We are an early-stage blank check company incorporated
as a Delaware corporation on January 12, 2021 and formed for the purpose of effecting our initial business combination.
While we may pursue an acquisition opportunity
in any business, industry, sector or geography, we have focused and will continue to focus on the sectors that complement our management
team’s and sponsor’s track record and experience in the better-for-you consumer packaged goods industry. We have focused
and will continue to focus our search for an initial business combination target on companies in the food and beverage, health and wellness,
beauty, pet, and personal care sectors in the United States. Our management team is comprised of leaders in each of our respective consumer
verticals making us ideally positioned to identify businesses that stand to benefit from our extensive operational and strategic domain
expertise.
We intend to acquire a growth-oriented company
in the consumer-packaged goods industry with a better-for-you proposition that can benefit from our deep industry domain knowledge
and key stakeholder relationships across the space. Through our management team’s collective decades of investing, we have developed
a set of best practices involving operations, finance, marketing, selling and distribution strategy through (which we can provide the
business we ultimately partner with the tools to accelerate its growth and generate significant shareholder value. Our access to proprietary
deal flow given our collective track record as accomplished investors in the consumer space coupled with our team’s demonstrable
track record of successfully founding and sponsoring special purpose acquisition companies (SPACs) and executing successful business
consummations will be critical to our investment strategy.
Initial Public Offering
On March 23, 2021, we consummated our initial
public offering of 22,400,000 units. Each unit consists of one share of Class A common stock, and one-third of one redeemable warrant
of the Company, with each warrant entitling the holder thereof to purchase one share of Class A common stock for $11.50 per whole share.
The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $224,000,000.
Simultaneously with the closing of the initial
public offering, we completed the private sale of an aggregate of 4,486,667 warrants to our sponsor at a purchase price of $1.50 per
private placement warrant, generating gross proceeds of $6,730,000.
A total of $224,000,000, comprised of $219,520,000
of the proceeds from the initial public offering and $4,480,000 of the proceeds of the sale of the private placement warrants was placed
in the trust account maintained by Continental, acting as trustee.
It is the job of our sponsor and management team
to complete our initial business combination. Our management team is led by Jordan Gaspar, our Chief Executive Officer, and Christopher
Bradley, our Chief Financial Officer. We must complete our initial business combination by March 23, 2023, 24 months from the closing
of our initial public offering. If our initial business combination is not consummated by March 23, 2023, then our existence will terminate,
and we will distribute all amounts in the trust account.
Our Company
AF Acquisition Corp. represents a dynamic partnership
between AF Ventures, Scharf Brothers, LLC and Mistral Equity Partners. Together, these three funds bring decades of collaboration between
such organizations and experience investing across all investment stages in a variety of industries. This partnership is complemented
by a management team and an advisory team comprised of individual executives who bring significant experience across distribution, retail,
marketing, brand building, and data analysis.
AF
Ventures is a venture capital fund that invests in visionary founders building authentic, next generation consumer brands. The
fund manages over 30 portfolio companies across several subsectors of the better-for-you consumer landscape, including food and
beverage, health and wellness, beauty, personal care and pet. AF Ventures has been a pioneer investor in the better-for-you food
and beverage ecosystem, making landmark investments in emerging companies that have capitalized on trends that dominate the industry
today. With a portfolio of brands across numerous subsectors including plant-based, grain-free, non-GMO, keto, functional, and low-sugar,
AF Ventures has cemented itself as one of the most active funds investing in the packaged food and beverage space. AF Ventures’
specialized focus has allowed the fund to develop a deep understanding of key business metrics and growth strategies that indicate a
likelihood for a breakout market leader, and to collect proprietary, operational data from across the platform to inform investment decisions
and grow brands. This advantage, along with the fund’s pattern recognition and entrenched relationships, has allowed AF Ventures
to be a first mover in the consumer space, quickly identifying and building conviction around emerging growth companies addressing shifts
in consumer preferences. As an industry thought leader, AF Ventures has created a reputation as a best-in-class financial partner
of choice for management teams seeking to build and grow companies across better-for-you consumer verticals. The AF Ventures team
leverages its institutional knowledge to assist portfolio companies with brand building by helping companies enhance consumer awareness
and recognition in order to build loyal customer followings.
Scharf Brothers is a privately-held,
family investment firm that invests in both public and private companies, private equity and hedge funds, and real estate. The firm was
founded in 1970 by Michael J. Scharf and its holdings are currently managed by Michael and his son, Andrew Scharf, the firm’s Chief
Investment Officer. Scharf Brothers invests in companies where it can work closely with management to devise highly focused strategic
objectives, identify growth opportunities and improve operating results while mitigating financial risk. Since inception, Scharf Brothers
has acquired, controlled and operated 21 businesses in a variety of industries ranging from fast food to steel processing and manufacturing.
The firm has significant public company operating expertise, including active roles in two SPACs, International Metals Acquisition Corp.
(“IMAC”) and Financial Services Acquisition Corp. (“FSAC”), and their post-business combination operating
companies. IMAC, which became known as Niagara Corporation upon IMAC’s acquisition of Niagara Cold Drawn Steel in 1995, was led
by Chairman & CEO Michael Scharf until its sale to Kohlberg & Co. in 2006. Michael was a director and major shareholder
of FSAC, which became known as Maxcor Financial Group upon FSAC’s acquisition of Eurobrokers in 1996, until it was acquired by
affiliates of Cantor Fitzgerald in 2003. At the time of sale, Niagara was the largest independent steel bar manufacturer in the United States
and Maxcor was a leading inter-dealer brokerage firm.
Mistral Equity Partners is a diversified
investment firm focused on private equity and specializing in the consumer, retail, restaurant, media and related technology and services
sectors. Members of Mistral Equity Partner’s management team have recently sponsored four special purpose acquisition companies:
Haymaker I, which completed an initial business combination with global provider of health and wellness products OneSpaWorld in March 2019
(NASDAQ:OSW), Haymaker II, which completed an initial business combination with a leading convenience store operator ARKO Holdings Ltd.
in December 2020 (NASDAQ:ARKO), Tastemaker Acquisition Corp, which completed its initial public offering in January 2021 (NASDAQ:TMKRU),
and Haymaker III, which completed its initial public offering in March 2021.
Industry Opportunity
Better-for-you brands are disrupting the consumer
packaged goods industry as consumers are actively implementing healthier choices into their everyday lifestyles. This cultural awakening
has led to a shift in consumer preferences which has resulted in a large and growing number of compelling private-company business
opportunities that as of 2017, comprised a $4.2 trillion global health and wellness market. The industry segments that we intend to primarily
focus on include health and wellness, personal care and beauty products, pet, and healthy food and nutrition.
Growth in consumer brands is largely attributable
to efficient and expanding distribution capabilities. Consumer brands with traditional brick-and-mortar distribution scale through
broadening retail relationships and expanding into digital platforms. Digitally native brands begin direct-to-consumer and scale
by expanding customer reach and entering into the physical retail channels through implementing omnichannel strategies. The consumer
packaged goods industry is evolving, with many of the leading consumer brands successfully reaching today’s consumers through a
broad set of distribution channels.
We believe that better-for-you consumer packaged
goods will be among the next-generation of category leaders across consumer verticals. There is a committed focus to health and
wellness in today’s consumers, particularly within the Millennial and Gen-Z populations who place significant purchasing decisions
upon a brand’s ability to convey value, convenience, community engagement, sustainability, and corporate accountability. Further,
Baby Boomers are increasingly seeking to implement natural health and wellness alternatives into their daily consumption to supplement
traditional wellness products.
COVID-19 has accelerated the better-for-you health
and wellness sector and has directly impacted how consumers purchase packaged goods. Many consumer categories experienced a significant
migration towards digital platforms and buyers and customers gravitated primarily in two directions: toward heritage brands that they
were familiar with prior to the pandemic; or, to new brands with a focus on innovation and are grounded in instilling better-for-you qualities
in their products. We believe these shifts in consumer behavior will directly impact the demand curve in the health and wellness landscape
which aligns with our expertise in better-for-you consumer packaged goods and our intent to identify and acquire a business within
these target segments.
Accelerating Consumer Trends in our Favor:
| ● | Innovation
being driven off of changing and rapidly adopted consumer preferences |
| ● | Enhanced
focus on the importance of personal health and wellness, including increased demand for functional
food and beverage products and the rise of food as health |
| ● | Increased
demand for self-care products, including personalized and customizable wellness solutions |
| ● | Rise
of conscious consumerism and the desire for products with ethically sourced, clean ingredients |
| ● | Increased
adoption of alternative lifestyle preferences across food and beverage, including the rapid
growth of alternative meat proteins and dairy products |
| ● | Evolution
towards omnichannel distribution, including growing demand for click and collect, direct
to consumer ecommerce, subscription services, and on-demand delivery |
| ● | Surge
of at-home demand with consumers seeking value, convenience, and community engagement |
| ● | Acceleration
of food-delivered-to-the-home, including a surge in demand for grocery delivery and subscription-based meal
solutions |
| ● | Utilization
of closed retail storefronts as reconfigured distribution and fulfillment centers |
Business Strategy
We intend to acquire a growth-oriented company
with a better-for-you proposition in the consumer packaged goods industry that can benefit from the unique capabilities of our management,
directors, and advisory team. Our management team’s history as pioneers and investors in the better-for-you venture ecosystem
provides us with a deep understanding of the industry and we believe it will assist us in identifying and acquiring a differentiated
and attractive target, ultimately driving significant value to all stakeholders.
We believe that digitally native brands, communities,
and platforms with strong customer lifetime value and engagement are incrementally more attractive targets given step changes in digital
interaction. As highlighted by the current environment, we continue to believe that customers will expect and seek a continuum of experiences
and touchpoints as bricks and clicks evolve to include a new “at home” dimension. We believe there exists substantial opportunity
to expand distribution of digitally native brands through omnichannel strategies which our team has decades of experience in successfully
implementing with a multitude of brands.
We also understand that brand building, logistics
and data are critical to successfully scaling a consumer packaged goods business. We are brand builders who understand consumer preferences
and vigorously seek to grow customer awareness and loyalty. Following our acquisition of a suitable target, our team intends to leverage
decades of collective retail distribution and logistics knowledge and relationships to support the target’s existing distribution
channels, including expansion of a brick-and-mortar footprint or to accelerate an omnichannel strategy for digitally native brands.
Through the lens of fortifying distribution expansion, we believe we will be instrumental in helping to accelerate a target’s growth
in key channels by utilizing our proprietary suite of resources.
Our team’s extensive track record and industry
relationships across this ecosystem provides us with a distinguished edge in sourcing, evaluating, and pursuing a broad range of opportunities
in our targeted sectors. The synergistic nature of our team affords us the following differentiated advantages in identifying and acquiring
a target business:
Our Advantages in Identifying and Selecting Targets:
| ● | Established
history as a thought leader in better-for-you emerging trends |
| ● | Actionable,
proprietary deal flow based on highly successful track record and decades of industry relationships |
| ● | Comprehensive
understanding of shifting and sustainable trends within consumer subsectors |
| ● | Proven
sector capabilities cementing preferred partner status with target company leadership teams |
| ● | Frequent
touch points with key industry stakeholders, including retailers, strategics, investment
peers, founder networks, and service providers |
| ● | Access
to high quality operating assets |
| ● | Significant
prior special purpose acquisition company experience, from IPO to business combinations |
| ● | Expertise
structuring complex financial consumer-oriented investments with a deep understanding
of market practices and conventions |
Our Advantages in Partnering with a Target Company:
| ● | Track
record of successfully scaling brick-and-mortar strategies as well as developing omnichannel
strategies for digitally native brands |
| ● | Proven
ability to scale companies through compelling branding and marketing strategies |
| ● | Deep
network of industry resources within retail, distribution and logistics, and omnichannel
strategy implementation |
| ● | Proven
team of investment professionals to complete diligence effectively and efficiently |
Competitive Advantages
We believe that our management team offers distinct
competitive advantages to our stockholders in the pursuit of a target opportunity. Our competitive strengths include the following:
Sophisticated Investment Team. Our
management team has more than sixty years of investment experience combined and have sourced, structured, and invested in successful
investments predominantly focusing on the consumer sector. Our sponsors are established thought leaders and investors across the spectrum
of better-for-you consumer packaged goods and have developed into domain experts across emerging consumer trends. The experience
of our management team is supplemented by our advisors, who are astute, well-connected individuals within our target sectors.
Deep Operational Experience. We
bring industry leading distribution expertise, deep supply chain and logistics understanding, and extensive brand-building knowledge
built upon decades of proven experience. Our collective resources provide access to best-in-class operational practices and industry
assets that we pool together from across our investment network. We use these insights to improve operations across our companies through
supply chain optimization, effective brand-building, efficient marketing, and broad distribution relationships. We have repeatedly demonstrated
success in scaling distribution channels and expanding brands’ omnichannel strategies which are driven by our leading logistics
capabilities and deep connectivity with many of the industry’s largest and most influential distribution channels.
Extensive Consumer Pipeline. The
individuals on our management team have each built a reputation as one of a small number of investors of choice for entrepreneurs seeking
to build and grow best in class companies across consumer verticals. Our management team has access to a deep pipeline of actionable,
proprietary deal flow based on a highly successful track record in the better-for-you branded consumer goods industry supported
by decades of industry relationships.
Significant Prior SPAC Experience. Our
management team possesses a strong understanding of the SPAC structure and market from initial public offering, to business combination,
through to target company governance. Andrew Heyer and Christopher Bradley have recently sponsored four special purpose acquisition companies:
Haymaker Acquisition Corp I, which completed an initial business combination with global provider of health and wellness products OneSpaWorld
in March 2019, Haymaker Acquisition Corp II, which completed an initial business combination with a leading convenience store operator
ARKO in December 2020, Tastemaker Acquisition Corp which completed its initial public offering in January 2021, and Haymaker
III, which completed its initial public offering in March 2021. Mr. Bradley, our Chief Financial Officer, is the current Chief Financial
Officer of Tastemaker Acquisition Corp., the current Chief Financial Officer and Secretary of Haymaker III, the former Chief Financial
Officer and Secretary of Haymaker II until its business combination with ARKO in December 2020, and the former Chief Financial Officer
of Haymaker I before its business combination with OneSpaWorld in 2019. Our director, Andrew Heyer, is a director of ARKO (NASDAQ:ARKO)
and previous President of Haymaker II until the consummation of the business combination with ARKO, a director of OneSpaWorld and
the previous President of Haymaker I until the consummation of the business combination with OneSpaWorld, a director of Tastemaker Acquisition
Corp., and President and a director of Haymaker III. Scharf Brothers has played active roles in two successful SPACs. The management
teams of the former two SPACs were led by members of the Scharf Family and went on to acquire businesses in both the metals and financial
services industries, achieving long-term, significant gains for all shareholders.
Uniquely Qualified Board and Advisory Team. Our
board of directors and advisors bring significant investment and operating experience and a broad set of relationships within the food,
beverage, health and wellness universe. Additionally, our board and advisors have deep and proprietary relationships with leading strategic
corporations, investment banks, and financial sponsors that we believe will provide us with a significant competitive advantage relative
to our peers. Our board and advisors also provide their expertise and insights to help identify target companies and assist us to acquire
a target business.
Acquisition Strategy
Consistent with our business strategy, we have
identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses. We
use these criteria and guidelines in evaluating acquisition opportunities. Our primary investment universe is within the better-for-you consumer
packaged goods industry and includes food and beverage, health and wellness, beauty, pet and personal care, and other related industries.
We seek to acquire a company that fits the following criteria:
| ● | Visionary
founders and management teams who challenge the status quo; |
| ● | Companies
with authentic products that appeal to diverse demographics and have a path to grow revenues
and earnings organically and at scale; |
| ● | Existing
industry leaders or companies taking market share with a clear path to becoming a leader; |
| ● | Sustainable,
positive unit economics with strong quality of revenue; |
| ● | Strong
retail velocities and/or e-commerce KPIs that validate consumer demand; |
| ● | Attractive,
high-growth category with durable tailwinds. |
These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that from time to time our management team may deem relevant.
We are not prohibited from pursuing an initial
business combination or subsequent transaction with a company that is affiliated with AF Ventures, Scharf Brothers, Mistral Equity Partners
or our officers or directors. In the event we seek to complete our initial business combination or, subject to certain exceptions, subsequent
material transactions with a company that is affiliated with AF Ventures, Scharf Brothers, Mistral Equity Partners or our officers or
directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm that is a
member of FINRA or another entity that commonly renders valuation opinions that such initial business combination or transaction is fair
to our company from a financial point of view.
Our sponsor or any of our officers or directors
may directly or indirectly own our Class A common stock, Class B common stock and/or private placement warrants following our
initial public offering, and, accordingly, may have a conflict of interest in determining whether a particular target business is an
appropriate business with which to effectuate our initial business combination. Further, each of our officers and directors may have
a conflict of interest with respect to evaluating a particular business combination if the retention or resignation of any such officer
or director is made a condition to any agreement with respect to our initial business combination.
Each of our officers and directors presently has,
or may in the future have, fiduciary or contractual obligations to other entities, including other entities similar to us, pursuant to
which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers
or directors becomes aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations to present the opportunity to such entity, he or she will honor his or her fiduciary or contractual obligations
to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers
or directors will not materially affect our ability to complete our initial business combination. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless (i) such
opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company, (ii) such opportunity
is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and (iii) the director
or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our officers, directors and any of their respective
affiliates may sponsor or form, and, in the case of individuals, serve as a director or officer of, other blank check companies similar
to AF Acquisition Corp. 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. However, we do not believe that any such potential conflicts would materially
affect our ability to complete our initial business combination.
Initial Business Combination
Nasdaq rules require that we must complete one
or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held in the trust account
(excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at the time of our signing
a definitive agreement in connection with our initial business combination. Our board of directors will make the determination as to
the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair
market value of our initial business combination, we will obtain an opinion from an independent investment banking firm that is a member
of FINRA or another entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider
it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial
business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if
there is a significant amount of uncertainty as to the value of a target’s assets or prospects, or if we seek to do a transaction
with a company that is affiliated with AF Ventures, Scharf Brothers, Mistral Equity Partners or our officers or directors. Additionally,
pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent directors.
We will structure our initial business combination
either (i) in such a way so that the post-transaction company in which our public stockholders own shares will own or acquire
100% of the equity interests or assets of the target business or businesses, or (ii) in such a way so that the post-transaction company
owns or acquires less than 100% of such interests or assets of the target business in order to meet certain objectives of the target
management team or stockholders, or for other reasons. However, we will only complete an initial business combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction company
owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business
combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the
outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result
of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own
less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests
or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses
that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% of net assets test. If the initial business
combination involves more than one target business, the 80% of net assets test will be based on the aggregate value of all of the transactions,
and we will treat the target businesses together as the initial business combination for purposes of a tender offer or for seeking stockholder
approval, as applicable.
Our Business Combination Process
In evaluating prospective business combinations,
we conduct a thorough due diligence review process that encompasses, among other things, a review of historical and projected financial
and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities and assets, discussion
with customers and suppliers, legal reviews and other reviews as we deem appropriate. We also utilize our expertise analyzing companies
in the food, beverage and wellness sectors in evaluating operating projections, financial projections and determining the appropriate
return expectations given the risk profile of the target business.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our
initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent
directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or another entity that commonly
renders valuation opinions that our initial business combination is fair to our company from a financial point of view.
Our officers and directors indirectly own founder
shares and/or private placement warrants following our initial public offering. Because of this ownership, our officers and directors
may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate
our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating
a particular business combination if the retention or resignation of any such officers and directors were to be included by a target
business as a condition to any agreement with respect to our initial business combination.
Each of our officers and directors presently has,
and any of them in the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities,
including other entities similar to us, pursuant to which such officer or director is or will be required to present a business combination
opportunity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for
one or more entities to which he or she has fiduciary, contractual or other 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.
We do not believe, however, that the fiduciary,
contractual or other obligations or duties of our officers or directors will materially affect our ability to complete our initial business
combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted to undertake and
would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity to us without
violating another legal obligation.
Our sponsor, officers and directors may participate
in the formation of, or become an officer or director of, any other blank check company prior to completion of our initial business combination.
As a result, our sponsor, officers or directors could have conflicts of interest in determining whether to present business combination
opportunities to us or to any other blank check company with which they may become involved.
Our Management Team
Members of our management team are not obligated
to devote any specific number of hours to our matters, but they will devote as much of their time as they deem necessary to our affairs
until we have completed our initial business combination. The amount of time that any member of our management team devote in any time
period varies based on whether a target business has been selected for our initial business combination and the current stage of the
business combination process.
We believe our management team’s operating
and transaction experience and relationships with companies will provide us with a substantial number of potential business combination
targets. Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate
relationships in various industries in connection with food, beverage and wellness investing. This network has grown through the activities
of our management team sourcing, acquiring and financing businesses, our management team’s relationships with sellers, financing
sources and target management teams and the experience of our management team in executing transactions under varying economic and financial
market conditions.
This network has provided our management team
with a flow of referrals that have resulted in numerous transactions in their prior engagements. We believe that the network of contacts
and relationships of our management team will provide us with an important source of acquisition opportunities. In addition, target business
candidates may also be brought to our attention from various unaffiliated sources, including investment bankers, private investment funds
and other intermediaries. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on
an unsolicited basis, since many of these sources will have read our prospectus in connection with our initial public offering or this
Report and know the types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to
our attention target business candidates that they become aware of through their business contacts as a result of formal or informal
inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of
proprietary opportunities that would not otherwise necessarily be available to us as a result of the track record and business relationships
of our officers and directors.
Status as a Public Company
We believe our structure as a public company makes
us an attractive business combination partner to target businesses. As a public company, we offer a target business an alternative to
the traditional initial public offering through a merger or other business combination with us. Following an initial business combination,
we believe the target business would have greater access to capital and additional means of creating management incentives that are better
aligned with stockholders’ interests than it would have as a private company. A target business can further benefit from becoming
a public company by augmenting its profile among potential new customers and vendors and aid in attracting talented employees. In a business
combination transaction with us, the owners of the target business may, for example, exchange their shares of stock in the target business
for our shares of Class A common stock (or shares of a new holding company) or for a combination of our shares of Class A common
stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various costs and obligations
associated with being a public company, we believe target businesses will find this a more expeditious and cost effective method to becoming
a public company than the typical initial public offering. The typical initial public offering process takes a significantly longer period
of time than most business combination transaction processes, and there are significant expenses in the initial public offering process,
including underwriting discounts and commissions, marketing and road show efforts that may not be present to the same extent in connection
with an initial business combination with us. Furthermore, once a proposed initial business combination is completed, the target business
will have effectively become public, whereas an initial public offering is always subject to the underwriter’s ability to complete
the offering, as well as general market conditions, which could delay or prevent the offering from occurring or could have negative valuation
consequences.
While we believe that our structure and our management
team’s backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank
check company, such as our lack of an operating history and our ability to seek stockholder approval of certain proposed initial business
combinations, negatively.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to
take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until
the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of our initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to
be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds
$700 million as of the end of the prior fiscal year’s second fiscal quarter, and (2) the date on which we have issued
more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Financial Position
With funds available for a business combination
in the amount of $216,199,393 as of December 31, 2021, assuming no redemptions and after payment of
$7,840,000 of deferred underwriting fees, and before fees and expenses associated with our initial business combination, we offer a target
business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion
of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete our initial business
combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we
have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged in, and we will not
engage in, any operations until we consummate our initial business combination. We will effectuate our initial business combination using
cash from the proceeds of our initial public offering and the Private Placement, the proceeds of any sale of our shares in connection
with our initial business combination (pursuant to backstop agreements we may enter into following the consummation of our initial public
offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target,
or a combination of the foregoing. We may seek to complete our initial business combination with a company or business that may be financially
unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and
businesses.
If our initial business combination is paid for
using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in
connection with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance of
the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of
the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through
a private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate
our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. In addition,
are targeting businesses larger than we could acquire with the net proceeds of our initial public offering and the sale of the private
placement warrants, and may as a result be required to seek additional financing to complete such proposed initial business combination.
Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion
of our initial business combination. In the case of an initial business combination funded with assets other than the trust account assets,
our proxy materials or tender offer documents disclosing the initial business combination would disclose the terms of the financing and,
only if required by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds
privately or through loans in connection with our initial business combination. At this time, we are not a party to any arrangement or
understanding with any third party with respect to raising any additional funds through the sale of securities or otherwise.
We have not engaged or retained any agent or other
representative to identify or locate any suitable acquisition candidate, to conduct any research or take any measures, directly or indirectly,
to locate or contact a target business. However, we may contact such targets subsequent to the closing of our initial public offering
if we become aware that such targets are interested in a potential initial business combination with us and such transaction would be
attractive to our stockholders. Although our management will assess the risks inherent in a particular target business with which we
may combine, we cannot assure you that this assessment will result in our identifying all risks that a target business may encounter.
Furthermore, some of those risks may be outside of our control, meaning that we can do nothing to control or reduce the chances that
those risks will adversely impact a target business.
The time required to select and evaluate a target
business and to structure and complete our initial business combination, and the costs associated with this process, are not currently
ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target
business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce
the funds we can use to complete another business combination.
Other Sources of Target Businesses
We may engage the services of professional firms
or other individuals that specialize in business acquisitions, in which event we may pay a finder’s fee, consulting fee, advisory
fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will engage
a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be
available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our
best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee
will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors,
or any entity with which our sponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies
in respect of any payment of a loan or other compensation by the company prior to, or in connection with any services rendered for any
services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction
that it is). None of our sponsor, executive officers, advisors or directors, or any of their respective affiliates, will be allowed to
receive any compensation, finder’s fees or consulting fees from a prospective business combination target in connection with a
contemplated initial business combination. We pay affiliates of our sponsor a total of $25,000 per month for office space, utilities
and secretarial and administrative support and will reimburse our sponsor for any out-of-pocket expenses related to identifying,
investigating and completing an initial business combination. Some of our officers and directors may enter into employment or consulting
agreements with the post-transaction company following our initial business combination. The presence or absence of any such fees
or arrangements will not be used as a criterion in our selection process of an initial business combination candidate.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with our sponsor, executive officers or directors, or making the acquisition through
a joint venture or other form of shared ownership with our sponsor, executive officers or directors. In the event we seek to complete
our initial business combination with a company that is affiliated with our sponsor, executive officers or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or another independent
entity that commonly renders valuation opinions that our initial business combination is fair to our company from a financial point of
view.
If any of our officers or directors becomes aware
of an initial business combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary
or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting
such business combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual
obligations that may take priority over their duties to us.
Stockholders May Not Have the Ability to Approve our Initial Business
Combination
We may conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required by applicable law or
stock exchange rule, or we may decide to seek stockholder approval for business or other reasons. Presented in the table below is a graphic
explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required under
Delaware law for each such transaction.
Type of Transaction | |
Whether Stockholder Approval is Required | |
Purchase of assets | |
| No | |
Purchase of stock of target not involving a merger with the company | |
| No | |
Merger of target into a subsidiary of the company | |
| No | |
Merger of the company with a target | |
| Yes | |
Under Nasdaq’s listing rules, stockholder
approval would be required for our initial business combination if, for example:
| ● | we issue
shares of Class A common stock that will be equal to or in excess of 20% of the number
of shares of our Class A common stock then outstanding; |
| ● | any
of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a
5% or greater interest (or such persons collectively have a 10% or greater interest), directly
or indirectly, in the target business or assets to be acquired or otherwise and the present
or potential issuance of common stock could result in an increase in outstanding common shares
or voting power of 5% or more; or |
| ● | the
issuance or potential issuance of common stock will result in our undergoing a change of
control. |
The decision as to whether we will seek stockholder
approval of a proposed business combination in those instances in which stockholder approval is not required by law will be made by us,
solely in our discretion, and will be based on business and legal reasons, which include a variety of factors, including, but not limited
to:
| ● | the
timing of the transaction, including in the event we determine stockholder approval would
require additional time and there is either not enough time to seek stockholder approval
or doing so would place the company at a disadvantage in the transaction or result in other
additional burdens on the company; |
| ● | the
expected cost of holding a stockholder vote; |
| ● | the
risk that the stockholders would fail to approve the proposed business combination; |
| ● | other
time and budget constraints of the company; and |
| ● | additional
legal complexities of a proposed business combination that would be time-consuming and
burdensome to present to stockholders. |
Permitted Purchases of Our Securities
In the event 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 public warrants
or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion of our
initial business combination., although they are under no obligation or other duty to do so. There is no limit on the number of shares
our initial stockholders, directors, officers, advisors or their affiliates or warrants such persons may purchase in such transactions,
or any restriction on the price that they may pay subject to compliance with applicable law and Nasdaq rules. 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. However, they such persons have no current commitments, plans or intentions to engage in such transactions
and have not formulated any terms or conditions for any such transactions. In the event our initial stockholders, sponsor, directors,
officers, advisors or any of their respective affiliates determine to make any such purchases at the time of a stockholder vote relating
to our initial business combination, such purchases could have the effect of influencing the vote necessary to approve such transaction.
None of the funds in the trust account will be used to purchase public shares or public warrants in such transactions.
If they engage in such transactions, they will
be subject to restrictions in making any such purchases when they are in possession of any material non-public information not disclosed
to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement
that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof and therefore agrees
not to exercise its redemption rights. We have adopted an insider trading policy which will require insiders to (1) refrain from purchasing
securities when they are in possession of any material non-public information and (2) to clear all trades with our compliance personnel
or legal counsel prior to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan,
as it will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such
circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is
not necessary.
In the event that our sponsor, directors, officers,
advisors or any of their respective affiliates purchase public shares in privately negotiated transactions from public stockholders who
have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business combination, such
selling stockholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial
business combination. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act;
however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will
comply with such rules.
The purpose of such purchases could be to vote
such shares in favor of the 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. 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 common stock may be reduced and the number of beneficial holders of our securities may be reduced, which may
make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our sponsor, officers, directors, advisors and/or
any of their respective affiliates may identify the stockholders with whom our sponsor, officers, directors, advisors or any of their
respective affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of
redemption requests submitted by stockholders following our mailing of proxy materials in connection with our initial business combination.
To the extent that our sponsor, officers, directors, advisors or any of their respective affiliates enter into a private purchase, they
would identify and contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata
share of the trust account or vote against our initial business combination. Such persons would select the stockholders from whom to
acquire shares based on the number of shares available, the negotiated price per share and such other factors as any such person may
deem relevant at the time of purchase. The price per share paid in any such transaction 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. Our sponsor,
officers, directors, advisors or any of their respective affiliates will purchase shares only if such purchases comply with Regulation
M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers, directors
and/or any of their respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only
be made to the extent such purchases are made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation
under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that
must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or any of their
respective affiliates will be restricted from making purchases of common stock if such purchases would violate Section 9(a)(2) or
Rule 10b-5 of the Exchange Act.
Redemption Rights for Public Stockholders Upon Completion of our
Initial Business Combination
We will provide our public stockholders with the opportunity
to redeem all or a portion of their public shares upon the completion of our initial business combination at a per share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial
business combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes,
divided by the number of then outstanding public shares, subject to the limitations described herein. As of December 31, 2021, the amount
in the trust account was $10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares
will not be reduced by the deferred underwriting commissions we will pay to the underwriter. The redemption right will include the requirement
that any beneficial owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares.
Each public stockholder may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for
or against the proposed transaction. There will be no redemption rights upon the completion of our initial business combination with respect
to our warrants. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed
to waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion
of our initial business combination.
Manner of Conducting Redemptions
We will provide our public stockholders with the
opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination
either: (1) in connection with a stockholder meeting called to approve the business combination; or (2) by means of a tender
offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a tender offer will
be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether
the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing requirement.
Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend
our amended and restated certificate of incorporation would require stockholder approval. If we structure a business combination transaction
with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder
vote to approve the proposed business combination. We currently intend to conduct redemptions pursuant to a stockholder vote unless stockholder
approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions pursuant to the
tender offer rules of the SEC for business or other reasons. So long as we obtain and maintain a listing for our securities on Nasdaq,
we will be required to comply with such rules.
If a stockholder vote is not required and we do
not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
| ● | conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange
Act, which regulate issuer tender offers; and |
| ● | file
tender offer documents with the SEC prior to completing our initial business combination
which contain substantially the same financial and other information about the initial business
combination and the redemption rights as is required under Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies. |
Upon the public announcement of our initial business
combination, we and our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our
Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under
the Exchange Act.
In the event we conduct redemptions pursuant to
the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under
the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer
period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public
shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible
assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to
the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the
agreement relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we
will withdraw the tender offer and not complete such initial business combination.
If, however, stockholder approval of the transaction
is required by applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other
reasons, we will, pursuant to our amended and restated certificate of incorporation:
| ● | conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A
of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the
tender offer rules; and |
| ● | file
proxy materials with the SEC. |
We expect that a final proxy statement would be
mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft proxy statement would
be made available to such stockholders well in advance of such time, providing additional notice of redemption if we conduct redemptions
in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply with the substantive and
procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able to maintain our Nasdaq
listing or Exchange Act registration.
In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, unless otherwise
required by applicable law, regulation or stock exchange rules, we will complete our initial business combination only if a majority
of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting will consist
of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting
power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders, officers
and directors will count towards this quorum and have agreed to vote any founder shares and any public shares held by them in favor of
our initial business combination. These quorum and voting thresholds and agreements, may make it more likely that we will consummate
our initial business combination. Each public stockholder may elect to redeem its public shares without voting, and if they do vote,
irrespective of whether they vote for or against the proposed transaction. In addition, our sponsor, officers and directors have entered
into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares
and any public shares held by them in connection with the completion of a business combination.
Our amended and restated certificate of incorporation
provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets, after payment of the
deferred underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny
stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement pursuant
to an agreement relating to our initial business combination. For example, the proposed business combination may require: (1) cash
consideration to be paid to the target or its owners; (2) cash to be transferred to the target for working capital or other general
corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business
combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that
are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed 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.
Limitation on Redemption Upon Completion of our Initial Business
Combination if we Seek Stockholder Approval
Notwithstanding the foregoing, if we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any
affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined
under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate
of 15% of the shares sold in our initial public offering, without our prior consent, which we refer to as the “Excess Shares.”
We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders
to use their ability to exercise their redemption rights against a proposed business combination as a means to force us or our affiliates
to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision,
a public stockholder holding more than an aggregate of 15% of the shares sold in our initial public offering could threaten to exercise
its redemption rights if such holder’s shares are not purchased by us or our affiliates at a premium to the then-current market
price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our
initial public offering, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability
to complete our initial business combination, particularly in connection with a business combination with a target that requires as a
closing condition that we have a minimum net worth or a certain amount of cash.
However, we would not be restricting our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection with a Tender Offer
or Redemption Rights
We may require our public stockholders seeking
to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender
their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials mailed to such
holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute
proxy materials or to deliver their shares to the transfer agent electronically using the DWAC System, rather than simply voting against
the initial business combination at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish
to holders of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders
to satisfy such delivery requirements, which will include the requirement that any beneficial owner on whose behalf a redemption right
is being exercised must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would have from the
time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior to the vote
on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to exercise its
redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and, in the case
of a stockholder vote, a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder
vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing
additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise
period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated with the above-referenced tendering
process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge
the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming holder. However, this
fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender their shares. The
need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures
used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many blank
check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a holder could
simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking to exercise
his or her redemption rights. After the business combination was approved, the company would contact such stockholder to arrange for
him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window”
after the completion of the business combination during which he or she could monitor the price of the company’s stock in the market.
If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his
or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit
before the stockholder meeting, would become “option” rights surviving past the completion of the business combination until
the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that
a redeeming holder’s election to redeem is irrevocable once the business combination is approved.
Any request to redeem such shares, once made,
may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set forth
in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election
of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply
request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed
to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of our initial business
combination.
If our initial business combination is not approved
or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be entitled to redeem
their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates delivered
by public holders who elected to redeem their shares.
If our initial proposed business combination is
not completed, we may continue to try to complete a business combination with a different target until the end of the completion window.
Redemption of Public Shares and Liquidation if no Initial Business
Combination
Our amended and restated certificate of incorporation
provides that we will have only the time of the completion window to complete our initial business combination. If we are unable to complete
our initial business combination within such 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 earned on the funds held in the trust
account (net of taxes payable by us and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to
receive further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in
each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There
will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete
our initial business combination within the completion window.
Our initial stockholders, officers and directors
have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust
account with respect to any founder shares held by them if we fail to complete our initial business combination within the completion
window. However, if our sponsor or any of our officers and directors acquires public shares after our initial public offering, it will
be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial
business combination within the completion window.
Our sponsor, officers and directors have agreed,
pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation
(i) to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial
business combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion
window or (ii) with respect to any other material provisions relating to the rights of holders of our Class A Common Stock prior to our
initial business combination or pre-initial business combination business activity, unless we provide our public stockholders with
the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the funds held in the trust
account (net of taxes payable by us and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets, after payment of the
deferred underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to the SEC’s “penny
stock” rules).
If we do not consummate our initial business combination
by the deadline set forth in our second amended and restated certificate of incorporation, we expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts held outside the trust account
as of December 31, 2021, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds
are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is
any interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional amount
of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of
our initial public offering and the sale of the private placement warrants, other than the proceeds deposited in the trust account, and
without taking into account interest, if any, earned on the trust account and any tax payments or expenses for the dissolution of the
trust, the per share redemption amount received by stockholders upon our dissolution would be $10.00. The proceeds deposited in the trust
account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public
stockholders. We cannot assure you that the actual per share redemption amount received by stockholders will not be substantially less
than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full
or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided
for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot
assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we seek to have all vendors, service
providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust
account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case
in order to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third
party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management
believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible
instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose
particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree
to execute a waiver or in cases where 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. In order to protect the amounts
held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (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) the actual amount per public share held in the trust account as of the date of the liquidation of the trust
account, if less than $10.00 per share due to reductions in the value of the trust assets, in each case net of taxes payable by us, except
as to any claims by a third party that executed a waiver of any and all rights to the monies held in the trust account (whether any such
waiver is enforceable) and except as to any claims under our indemnity of the underwriter of our initial public offering against certain
liabilities, including liabilities under the Securities Act. 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 and, therefore, our
sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such obligations. Therefore, we cannot
assure you that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against
the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per
public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount
per share in connection with any redemption of your public shares. None of our officers or directors are required to indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account
are reduced below: (1) $10.00 per public share; or (2) the actual amount per public share held in the trust account as of the
date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, in each
case net of taxes payable by us, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has
no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action
against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal
action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors
in exercising their business judgment may choose not to do so in certain instances. For example, the cost of such legal action may be
deemed by the independent directors to be too high relative to the amount recoverable or the independent directors may determine that
a favorable outcome is not likely. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per share
redemption price will not be substantially less than $10.00 per share.
We seek to reduce the possibility that our sponsor
will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers (other than
our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will
also not be liable as to any claims under our indemnity of the underwriter of our initial public offering against certain liabilities,
including liabilities under the Securities Act. In the event that we liquidate and it is subsequently determined that the reserve for
claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors.
Under the DGCL, stockholders may be held liable
for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion
of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within the completion window may be considered a liquidating distribution under Delaware law. If the
corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision
for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the
corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust
account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business
combination within the completion window, 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. If we
are unable to complete our initial business combination within the completion window, 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
earned on the funds held in the trust account (net of taxes payable by us and up to $100,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (3) as
promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following our 24th month
and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third
anniversary of such date.
Because we will not be complying with Section 280,
Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment
of all existing and pending claims or claims that may be potentially brought against us within the subsequent ten years. However, because
we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target
businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective
target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we have all vendors, service
providers (other than our independent registered public accounting firm), prospective target businesses or other entities with which
we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust
account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any
claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the extent
necessary to ensure that the amounts in the trust account are not reduced below: (1) $10.00 per public share; or (2) the actual
amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share
due to reductions in value of the trust assets, in each case net of taxes payable by us, and will not be liable as to any claims under
our indemnity of the underwriter of our initial public offering against certain liabilities, including liabilities under the Securities
Act.
If we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims
of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.00
per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could
seek to recover some or all amounts received by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary
duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages,
by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will
not be brought against us for these reasons.
Our public stockholders will be entitled to receive
funds from the trust account only in the event of the redemption of our public shares if we do not complete our initial business combination
within the completion window or if they redeem their respective shares for cash upon the completion of the initial business combination.
In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection
with our initial business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro
rata share of the trust account. Such stockholder must have also exercised its redemption rights described above. In no other circumstances
will a stockholder have any right or interest of any kind to or in the trust account except as described below in connection with certain
amendments to our Amended and Restated Certificate of Incorporation.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate of incorporation
contains certain requirements and restrictions relating to our initial public offering that will apply to us until the consummation of
our initial business combination. If we seek to amend any provisions of our amended and restated certificate of incorporation (i) to
modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business
combination or to redeem 100% of our public shares if we do not complete our initial business combination within the completion window
or (ii) with respect to any other material provisions relating to the rights of holders of our Class A Common Stock prior to our initial
business combination or pre-initial business combination business activity, we will provide public stockholders with the opportunity
to redeem their public shares in connection with any such vote. Our initial stockholders, officers and directors have agreed to waive
any redemption rights with respect to any founder shares and any public shares held by them in connection with the completion of our
initial business combination. Specifically, our amended and restated certificate of incorporation will provide, among other things, that:
| ● | prior
to the consummation of our initial business combination, we shall either: (1) seek stockholder
approval of our initial business combination at a meeting called for such purpose at which
stockholders may seek to redeem their shares, regardless of whether they vote for or against,
or abstain from voting on, the proposed business combination, into their pro rata share of
the aggregate amount on deposit in the trust account as of two business days prior to the
consummation of our initial business combination, including interest earned on the funds
held in the trust account (net of taxes payable); or (2) provide our public stockholders
with the opportunity to tender their shares to us by means of a tender offer (and thereby
avoid the need for a stockholder vote) for an amount equal to their pro rata share of the
aggregate amount on deposit in the trust account as of two business days prior to the consummation
of our initial business combination, including interest earned on the funds held in the trust
account (net of taxes payable), in each case subject to the limitations described herein; |
| ● | we will
consummate our initial business combination only if we have net tangible assets of at least
$5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority
of the outstanding shares of common stock voted are voted in favor of the business combination
at a duly held stockholders meeting; |
| ● | if our
initial business combination is not consummated within the completion window, then our existence
will terminate and we will distribute all amounts in the trust account; and |
| ● | 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 on any initial business combination. |
These provisions cannot be amended without the
approval of holders of 65% of our common stock. In the event we seek stockholder approval in connection with our initial business combination,
our amended and restated certificate of incorporation will provide that, unless otherwise required by applicable law or stock exchange
rules, we may consummate our initial business combination only if approved by a majority of the shares of common stock voted by our stockholders
at a duly held stockholders meeting.
Competition
In identifying, evaluating and selecting a target
business for our initial business combination, we may encounter intense competition from other entities having a business objective similar
to ours, including other blank check companies, private equity groups and leveraged buyout funds, public companies and operating businesses
seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying and effecting business
combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other
resources than us. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent
limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection
with our public stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination
and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses.
Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Sponsor Indemnity
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) the actual amount per public share held
in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value
of the trust assets, in each case, net of taxes payable, except as to any claims by a third party that executed a waiver of any and all
rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under our indemnity
of the underwriter of our initial public offering against certain liabilities, including liabilities under the Securities Act. 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 and, therefore, our sponsor may not be able to satisfy those obligations. We have not asked
our sponsor to reserve for such obligations. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
We believe the likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor to have all vendors
and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of
any kind in or to monies held in the trust account.
Employees
We currently have three officers (including our
President, Chief Executive Officer and Chief Financial Officer). These individuals are not obligated to devote any specific number of
hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our
initial business combination. The amount of time they will devote in any time period will vary based on whether a target business has
been selected for our initial business combination and the stage of the initial business combination process we are in, but we expect
that Mr. Scharf and Ms. Gaspar will devote a substantial portion of their professional time to our affairs. We do not intend
to have any full-time employees prior to the completion of our initial business combination.
Periodic Reporting and Financial Information
Our units, Class A common stock and warrants
are registered under the Exchange Act, and as a result, we have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports, including this
Report, contain financial statements audited and reported on by our independent registered public accounting firm.
We will provide stockholders with audited financial
statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders
to assist them in assessing the target business. These financial statements may be required to be prepared in accordance with, or be
reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in
accordance with the 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 completion window. We cannot assure you that any particular
target business identified by us as a potential business combination candidate will have financial statements prepared in accordance
with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the requirements
outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business. While
this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate our internal control
procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act. Only in the event we are deemed
to be a large accelerated filer or an accelerated filer and no longer an emerging growth company will we be required to have our internal
control procedures audited. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such acquisition.
We have filed a registration statement on Form 8-A with
the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are subject to the rules and
regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other
obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market
for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company”
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to
take advantage of the benefits of this extended transition period.
We will remain an emerging growth company until
the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of our initial public
offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to
be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million
as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion
in non-convertible debt during the prior three-year period. References herein to “emerging growth company” shall
have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller reporting
company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds
$250 million as of the end of the prior fiscal year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of
the end of the prior fiscal year’s second fiscal quarter.