Item
1. Business.
Overview
We
are an early stage blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities,
which we refer to throughout this Annual Report as our initial business combination.
Although
we may pursue a business combination opportunity in any business or industry, we focus our efforts on identifying high-growth technology
and tech-enabled businesses in sectors such as e-commerce, software, and digital media. We believe our management team and Board’s
diverse backgrounds and decades of experience gives us unique reach among founders, executives and investors in these sectors, which
gives us a competitive advantage to source, pursue, and successfully close a business combination.
We
believe that we are one of the most diverse special purpose acquisition companies (SPAC) targeting the technology industry and that our
focus on diversity creates advantages in sourcing and pursuit of a business combination. The gender and cultural diversity in our team
enables us to create inbound interest from founders and boards who value diversity or need assistance to improve the diversity of their
teams. In addition, many founders and management teams are themselves from diverse backgrounds and may prefer a partner who values and
reflects that diversity. We also believe that our own diversity provides access to deep networks of professionals with an emphasis on
mentoring and assisting others with similar diverse backgrounds.
At
December 31, 2022, we had not yet commenced operations. All activity through December 31, 2022 relates to the Company’s formation
and its initial public offering, and identifying a target company for our initial business combination.
On
July 27, 2021, the Company consummated its initial public offering of 15,000,000 units (the “units”). Each unit consists
of one share of Class A common stock, $0.0001 par value per share (“Class A common stock”), and one-half of one warrant (“public
warrant”), each whole warrant entitling the holder to purchase one share of Class A common stock at $11.50 per share. The units
were sold at an offering price of $10.00 per unit, generating gross proceeds of $150,000,000. Simultaneously with the consummation of
the initial public offering and the sale of the units, the Company consummated the private placement (“private placement”)
of an aggregate of 550,000 private placement units to our sponsor at a price of $10.00 per private placement unit, generating total proceeds
of $5,500,000.
Following
the closing of the initial public offering on July 27, 2021, an amount of $150,000,000 ($10.00 per Unit) from the net proceeds of the
sale of the units in the initial public offering and the sale of the private placement units was placed in a trust account and were invested
in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended
(the “Investment Company Act”), with a maturity of 185 days or less, or in money market funds meeting certain conditions
under Rule 2a-7 of the Investment Company Act that invest only in direct U.S. government treasury obligations, until the earlier
of: (i) the completion of a business combination and (ii) the distribution of the funds in the trust account to the public
stockholders, as described herein.
On
December 21, 2022, we held a special meeting of our stockholders (the “Special Meeting”). At the Special Meeting, our stockholders
approved an amendment (the “IMTA Amendment”) to the Company’s Investment Management Trust Agreement (the “IMTA”),
dated July 22, 2021, with Continental Stock Transfer & Trust Company (“CST”), as trustee, and an amendment to the
Company’s amended and restated certificate of incorporation, to extend the date by which we must consummate a business combination
transaction from January 27, 2023 to July 27, 2023 (the “Charter Amendment”). In connection with the approval and implementation
of the Charter Amendment, the holders of 10,953,158 shares of our Class A common stock exercised their right to redeem their shares for
cash at a redemption price of approximately $10.087 per share, for an aggregate redemption amount of approximately $110,484,822. Following
such redemptions, 4,596,842 shares of Class A common stock remain outstanding.
In
connection with the Special Meeting, the Company and its sponsor also entered into non-redemption agreements with certain stockholders
(the “Non-Redemption Agreements”). Each Non-Redemption Agreement provides for the allocation of up to 100,000 shares of Class
B common stock in exchange for the investor agreeing to hold and not redeem certain public shares at the Special Meeting. Pursuant
to the Non-Redemption Agreements, a total of 887,237 shares of Class B common stock were allocated to the participating investors by
the sponsor.
Business
Strategy
We
seek to address a large and growing opportunity we have identified in recent years, which we believe our diverse team is uniquely built
to impact: later-stage technology and tech-enabled growth companies, many venture or growth capital backed, who struggle to
get attention from private growth investors because they are not perceived as “sole market winners” or “unicorns.”
These “diamonds in the rough” are strategically well-positioned, high-growth, and with strong management teams, but often
can achieve far stronger results and create substantially more shareholder value if they had better access to capital. They could augment
their executive teams, accelerate investment into growth, and scale more effectively. Additionally, these diamonds in the rough often
represent better investment opportunities because they have been operating under real budget constraints and likely are available at
more reasonable valuations. Because these companies have more limited paths to growth capital or to IPO, SPACs have become attractive
opportunities for them to secure capital and access public markets.
Diamonds
in the rough exist in multiple segments of the market:
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High-growth companies that are looking for capital,
desiring a partner who can roll up their sleeves to help them become a public company and upgrade elements of their management team. |
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Companies that are self-funded or under the radar
and not a part of the flow of Silicon Valley. These companies often are generating cash flow but do not have direct access to funds
to turbocharge their growth. |
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Companies whose growth is enabled by technology but
are perceived and valued as non-tech businesses. Further investment and highlighting the technology story can allow repositioning
of these businesses to the public. |
We
believe there is a large universe of relevant opportunities in these categories. In the pool of venture-backed companies alone,
Crunchbase reports that companies have raised 1,333 funding rounds from VC firms larger than $100M since the beginning of 2019 through
February 23, 2021. They also note that from 2018-2020, there was an annual average of $191B of late-stage VC and tech growth
investment globally. We believe SPACs such as ours have the opportunity to combine the benefits of a late-stage VC funding round
with access to public markets and gain share of this fundraising universe.
We
bring a highly differentiated and diverse set of backgrounds to sourcing transaction opportunities, which matches well with our target
company profile. Our diversity of backgrounds and experiences gives us broad networks in the worlds of VC, start-ups, private equity,
and large technology companies. Our Board includes the CFO of a prominent technology company that went public through a SPAC (Mr. Park),
providing differential perspective on the experience and incentives of our targets. In addition we are developing a “scout network”
consisting of prominent founders, investors and executives to help augment deal flow, and we are partnering with experienced SPAC investors
who can support us in capital markets transactions.
Our
“scout network” broadens our access to potential transaction opportunities outside typical competitive deal sourcing intermediaries.
These founders, investors, and executives are well-connected in our target sectors and typically do not have any pre-existing relationships
with similar SPACs. As such we have the opportunity to be their preferred partner for opportunities that they might think are appropriate
for a SPAC. We have not made any upfront economic arrangements with members of our scout network, but have offered them the opportunity
to earn a transaction-related bonus from our sponsor in cash or founder shares, in its sole discretion, if they provide material
assistance in sourcing or consummating the business combination.
We
believe our focus on diversity creates advantages in sourcing and pursuit of a business combination. As a diverse SPAC targeting the
technology industry, we can provide a differentiated means of public market access to a diverse set of founders and creators within the
space. The gender and cultural diversity in our team enables us to stand out among the field of SPACs and create inbound interest from
founders and boards who value diversity or need assistance to improve the diversity of their team or board. In addition, many founders
and management teams are themselves from diverse backgrounds and may prefer a partner who values and reflects that diversity. We also
believe that our own diversity provides access to deep networks of professionals with an emphasis on mentoring and assisting others with
similar diverse backgrounds which may be tapped to build a pipeline of potential acquisition targets.
We
also leverage our experience working with a diverse set of pre-IPO companies to offer a toolkit of value-added capabilities
we can provide to a merger partner including executive recruiting, financial readiness, investor relations support, and capital markets
expertise. Our team has hands-on operating experience in start-ups, high growth companies, and mature corporations in both private
and public company settings. As mentioned above, our Board includes multiple executives who led pioneering SPAC transactions in the technology
sector and can provide unique insight on the process to a target company. Our team also brings extensive experience leading capital markets
transactions, including IPOs, large-scale M&A and debt financings. We believe we offer a highly differentiated value proposition
to become the SPAC “partner of choice” to the diamonds in the rough.
Acquisition
Criteria
Our
team and Board have deep experience evaluating investment opportunities in private equity, venture capital, and corporate M&A settings,
with an approach grounded in deep fundamental diligence of the company and sector. We believe our collective experience allows us to
identify and execute on a business combination with an attractive target that will result in highly attractive expected risk-adjusted returns.
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 initial business combination opportunities, but we
may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
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We look for companies that
bring unique value to customers in a sustainably differentiated manner |
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We look for companies operating
in a large market with stable fundamental growth drivers |
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We look for companies whose
growth is driven or accelerated by unique application of technology |
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We look for companies where
we can bring unique impact with our partnership |
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We look for a diversity
of backgrounds in founders and senior management |
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We look for companies with
sufficient scale and management talent to be strong public companies |
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We look for companies whose
success can be accelerated by access to significant additional capital and public markets |
As
described above, we focus our search among late-stage VC-backed companies across the high-growth technology sector that
we call diamonds in the rough. These companies are largely US-based and between $750 million and $1.5 billion in enterprise
value. Subsectors we focus on include, but are not limited to, e-commerce, digital media, software-as-a-service, and consumer technology.
The
above criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our management
team may deem relevant. In the event that we decide to enter into our initial business combination with a target business that does not
meet the above criteria and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder
communications related to our initial business combination, which, as discussed in this Annual Report, would be in the form of proxy
materials or tender offer documents, as applicable, that we would file with the SEC. In evaluating a prospective target business, we
conduct a due diligence review which may encompass, among other things, meetings with incumbent management and employees, document reviews,
interviews of customers and suppliers, inspections of facilities, as well as reviewing financial and other information which will be
made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of, and negotiation with, a prospective target business with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Our
Management Team
Our management team is led by Jennifer Deason,
our Chairman, Peter Saldarriaga, our Chief Executive Officer and Chief Financial Officer, and Joel Washington, our President and Chief
Investment Officer. They are complemented by our diverse and accomplished Board, and our Senior Advisors, Manish Patel and George Arison.
Ms. Deason is an experienced operator in diverse
environments with a particular emphasis on digital transformations and technology’s impact on both start-ups and legacy businesses.
She is a veteran executive who has led both large scale businesses and start-ups. She is currently the CEO of Home Partners of America,
a real estate technology business. She was formerly CFO and Chief Business Officer at the dtx company, where she canvased the DTC
landscape, made venture investments and worked with the team to build out the Flowcode technology platform. She previously worked at The
Weather Company (CFO), and Sotheby’s (EVP of Strategy and Business Development). She currently sits on two public boards, Concentrix
(NASDAQ: CNXC) and DHI (NYSE: DHX), and a private DTC board, Margaux.
Ms. Deason
previously spent nine years at Bain Capital focused on portfolio operations, primarily in media, tech and consumer investments. Her most
extensive experiences were with The Weather Company (sold to IBM and Entertainment Studios), Bright Horizons (IPO), and Consolidated
Container Co. (Interim President, acquired by Loews Corporation). While at Bain Capital she worked with Mr. Saldarriaga on the Weather
Company investment. She worked on the operational side while Mr. Saldarriaga was instrumental in driving a complex transaction involving
a corporate split in the face of rapidly changing underlying business dynamics.
Ms. Deason
began her career at Alex. Brown (Deutsche Bank) and eBay in Silicon Valley before spending four years at McKinsey & Co focused
on media, consumer, technology, and private equity. She received an MBA from Stanford University and a B.A. from Yale University. She
currently lives in New York City with her husband and two children and serves on the Board of MassMoCA.
Mr. Saldarriaga, our Chief Executive Officer
and Chief Financial Officer, is an experienced investor and advisor, with over fifteen years of experience working with companies across
a wide array of industries. Since October 2022, he has served as a Managing Director of Ara Partners, a private equity firm focused on
industrial decarbonization. Prior to co-founding Belong, he spent twelve years as a private equity investor at Bain Capital, where he
was a senior member of the technology, digital media, and industrials investment teams. In these roles he built extensive networks with
executives, advisors, and deal sources across numerous subsectors. Mr. Saldarriaga has led a broad variety of capital markets and
M&A transactions globally while serving as a key advisor to management teams on operations and strategy. He currently sits on the
boards of two private companies in the Ara Partners portfolio, GIDARA Energy and Puraglobe.
At
Bain Capital, Mr. Saldarriaga played key roles in investments in companies including Diversey, BMC Software, Applied Systems, Viewpoint
Construction Software, The Weather Company, TI Fluid Systems (LSE: TIFS), Sensata Technologies (NYSE: ST), and other transactions which
in aggregate represent over $15B in enterprise value. Of particular note, he and Ms. Deason partnered closely during several years
of collaboration on The Weather Company, culminating in the sale of its Product and Technology business to IBM in early 2016.
Passionate
about technology from an early age, Mr. Saldarriaga earned a degree in Computer Science at Harvard College and began his career
as a management consultant with Bain and Company in New York and India, advising clients in the media, technology, financial, and
healthcare sectors on how to focus their strategies on new technological frontiers and move away from legacy business practices. He later
received an MBA from Harvard Business School. He hails originally from Orlando, Florida, and now lives outside Boston with his wife and
three children.
Initial
Business Combination
Our
initial business combination must occur with one or more target businesses that together have an aggregate fair market value of at least
80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the income earned on
the trust account) at the time of the agreement to enter into the initial business combination. If our Board is not able to independently
determine the fair market value of the target business or businesses, we will obtain an opinion from an independent investment banking
firm that is a member of the Financial Industry Regulatory Authority (“FINRA”) or an independent accounting firm with respect
to the satisfaction of such criteria. Except as required by applicable law, our stockholders may not be provided with a copy of such
opinion, nor will they be able to rely on such opinion.
Any
party may co-invest with us in the target business at the time of our initial business combination, or we could raise additional proceeds
to complete the acquisition by issuing to such parties a class of equity or equity-linked securities. We refer to this potential future
issuance, or a similar issuance to other specified purchasers, as a “specified future issuance.” The amount and other terms
and conditions of any such specified future issuance would be determined at the time thereof. We are not obligated to make any specified
future issuance and may determine not to do so. This is not an offer for any specified future issuance. Pursuant to the anti-dilution
provisions of our Class B common stock, any such specified future issuance would result in an adjustment to the conversion ratio
such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership of founder
shares at 20% of the sum of the total number of all shares of common stock outstanding plus all shares issued in the specified future
issuance, unless the holders of a majority of the then outstanding shares of Class B common stock agreed to waive such adjustment with
respect to the specified future issuance at the time thereof. We cannot determine at this time whether a majority of the holders of our
Class B common stock at the time of any such specified future issuance would agree to waive such adjustment to the conversion ratio.
If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B common
stock, but would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the specified
future issuance would reduce the percentage ownership of holders of both classes of our common stock.
Our
Acquisition Process
We
believe that conducting comprehensive due diligence on prospective investments is particularly important. We will utilize the diligence,
rigor, and expertise of our management and members of our Board to evaluate potential targets’ strengths, weaknesses, and opportunities
to identify the relative risk and return profile of any potential target for our initial business combination. Given our management team’s
extensive tenure investing in technology and tech-enabled businesses, we will often be familiar with the prospective target’s end-market,
competitive landscape and business model.
In
evaluating a prospective initial business combination, we conduct a thorough diligence review that encompasses, among other things, meetings
with incumbent management and employees, document reviews, inspection of assets and facilities and financial analyses, as well as a review
of other information that will be made available to us.
Certain
of our officers and directors are employed by or affiliated with various investment funds. Such funds and individuals are continuously
made aware of potential investment opportunities, one or more of which we may desire to pursue for a business combination.
We
may, at our option, pursue an opportunity with an entity to which an officer or director has a fiduciary or contractual obligation. Any
such entity may co-invest with us in the target business at the time of our initial business combination, or we could raise additional
proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended and restated certificate of
incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one
we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to target businesses. As an existing public company, we
offer a target business an alternative to the traditional initial public offering through a merger or other business combination. In
this situation, the owners of the target business would exchange their shares of stock in the target business for shares of our stock
or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although
there are various costs and obligations associated with being a public company, we believe target businesses will find this method a
more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial public
offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present to the
same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial public
offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could
delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe the target business
would then have greater access to capital and an additional means of providing management incentives consistent with stockholders’
interests. It can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in
attracting talented employees.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such,
we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive
as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other
words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion (as adjusted
for inflation pursuant to SEC rules from time to time), 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 equals or exceeds $700 million as of the prior June 30th, and
(2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of any fiscal year for so long as either (1) the market value of our common
stock held by non-affiliates did not equal or exceed $250 million as of the prior June 30, or (2) our annual revenues did not equal or
exceed $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates did not equal or
exceed $700 million as of the prior June 30.
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 intend
to complete our initial business combination using cash from the proceeds of our initial public offering and the private placement of
the private placement units, our capital stock, debt or a combination of these as the consideration to be paid in our initial business
combination. We may seek to complete our initial business combination with a company or business that may be financially unstable or
in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust account
are used for payment of the consideration in connection with our 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 assets, 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 (which may include a specified future issuance), and we may complete our initial business combination using the
proceeds of such offering rather than using the amounts held in the trust account. Subject to compliance with applicable securities laws,
we would expect to complete such financing only simultaneously with the completion of our business combination. In the case of an initial
business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing
the 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, including pursuant to any specified future issuance,
or through loans in connection with our initial business combination.
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 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.
Sources
of Target Businesses
We
expect to receive a number of proprietary transaction opportunities to originate as a result of the business relationships, direct outreach,
and deal sourcing activities of our officers and directors. In addition to the proprietary deal flow, we anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, including investment banking firms, consultants, accounting
firms, private equity groups, large business enterprises, and other market participants. These sources may also introduce us to target
businesses in which they think we may be interested on an unsolicited basis. 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. Some of our officers or 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 acquisition candidate.
In no event will our sponsor or any of our existing officers or directors, or any entity with which they are affiliated, be paid any
finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate, the completion
of our initial business combination (regardless of the type of transaction that it is). However, in connection with the successful completion
of our initial business combination, we may determine to provide a payment to our sponsor, officers, directors, advisors or our or their
affiliates, which payment would not be made from the proceeds of our initial public offering held in the trust account prior to the completion
of our initial business combination.
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our sponsor,
officers or directors or making the acquisition through a joint venture or other form of shared ownership with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a business combination target that is affiliated
with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm which is a member of FINRA or an independent accounting firm that such an initial business combination is fair to our company
from a financial point of view. We are not required to obtain such an opinion in any other context. If any of our officers or directors
becomes aware of a 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. Any such entity may co-invest with us in the target business at the time of
our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance
to any such entity.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. By completing our business combination with only a single entity, our lack of diversification
may:
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subject us to negative
economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry
in which we operate after our initial business combination, and |
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cause us to depend on the
marketing and sale of a single product or limited number of products or services. |
Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our business
combination with that business, our assessment of the target business’ management may not prove to be correct. In addition, the
future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team or of our Board, if any, in the target business cannot presently be stated with any certainty.
While it is possible that one or more of our directors will remain associated in some capacity with us following our business combination,
it is presently unknown if any of them will devote their full efforts to our affairs subsequent to our business combination. Moreover,
we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations of
the particular target business. The determination as to whether any members of our Board will remain with the combined company will be
made at the time of our initial business combination.
Following
a business combination, to the extent that we deem it necessary, we may seek to recruit additional managers to supplement the incumbent
management team of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional
managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval
if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal
reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether
stockholder approval is currently required under Delaware law for each such transaction.
| Type of Transaction | |
| 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:
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we issue shares of Class
A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding; |
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|
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any of our directors,
officers or substantial stockholders (as defined by NASDAQ rules) has a 5% or greater interest (or such persons collectively
have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present
or potential issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or |
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|
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the issuance or potential
issuance of common stock will result in our undergoing a change of control. |
Permitted
Purchases of Our Securities
In
the event we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares or
public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial
business combination. There is no limit on the number of shares our sponsor, directors, officers, advisors or their affiliates may purchase
in such transactions, subject to compliance with applicable law and the rules of NASDAQ. None of the funds in the trust
account will be used to purchase shares or public warrants in such transactions. If they engage in such transactions, they will not make
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. In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to
revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender
offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under
the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules,
the purchasers will comply with such rules.
The
purpose of any such purchases would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that
requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that
such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the number of public
warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial
business combination. Any such purchases of our securities may result in the completion of our 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 their affiliates anticipate that they may identify the stockholders with whom our sponsor,
officers, directors, advisors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us
directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into a private
purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares
for a pro rata share of the trust account or vote against the business combination. Our sponsor, officers, directors, advisors or their
affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities
laws.
Any
purchases by our sponsor, officers, directors, advisors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under
the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor
from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements
that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors, advisors
and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange
Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers
are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the
completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account as of two business days prior to the consummation of the initial business combination including interest earned on
the funds held in the trust account and not previously released to us to pay our franchise and income taxes as well as expenses relating
to the administration of the trust account, divided by the number of then outstanding public shares, subject to the limitations described
herein. The amount in the trust account is approximately $10.12 per public share (based on the trust account balance as of January 31,
2023). The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting
commissions we will pay to the underwriters. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant
to which they have agreed to waive their redemption rights with respect to any founder shares, any private placement shares and any public
shares held by them in connection with the completion of our business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the
completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business combination
or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or
conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of
the transaction and whether the terms of the transaction would require us to seek stockholder approval under the law or stock exchange
listing requirement. 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 intend to conduct redemptions without a stockholder vote pursuant to the tender
offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder
approval for business or other legal reasons. So long as we 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 legal reasons, we will, pursuant
to our amended and restated certificate of incorporation:
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conduct the
redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
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file tender offer documents
with the SEC prior to completing our initial business combination which contain substantially the same financial and other information
about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies. |
Upon
the public announcement of our business combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1
to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to
comply with Rule 14e-5 under the Exchange Act.
In
the event that we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering
more than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement that
we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon completion of our
initial business combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible
asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders
tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder
approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the
redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation
of proxies, and not pursuant to the tender offer rules, and |
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file proxy materials with
the SEC. |
In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common
stock voted are voted in favor of the 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 sponsor will count toward this quorum and has agreed to vote its
founder shares, private placement shares and any public shares purchased during or after our initial public offering in favor of our
initial business combination. We expect that at the time of any stockholder vote relating to our initial business combination, our sponsor
and its permitted transferees will own at least 52.3% of our outstanding shares of common stock entitled to vote thereon. We intend to
give not less than 10 days nor more than 60 days prior written notice of any such meeting, if required, at which a vote shall be taken
to approve our initial business combination. These quorum and voting thresholds, and the voting agreement of our sponsor, may make it
more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective
of whether they vote for or against the proposed transaction.
Our
amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 (so that we are not subject to the SEC’s “penny stock” rules)
or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
For example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash
to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other
conditions in accordance with the terms of the proposed 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 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 20% of the shares sold in the initial public offering (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 management to purchase
their shares at a significant premium to the then-current market price or on other undesirable terms. Absent this provision, a public
stockholder holding more than an aggregate of 20% of the shares sold in the initial public offering could threaten to exercise its redemption
rights if such holder’s shares are not purchased by us or our management at a premium to the then-current market price or on other
undesirable terms. By limiting our stockholders’ ability to redeem no more than 20% 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 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, our amended and restated certificate of incorporation does not restrict our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our 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 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 Depository Trust Company’s DWAC (Deposit/Withdrawal
At Custodian) System, at the holder’s option. The tender offer or proxy materials, as applicable, that we will furnish to holders
of our public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to
satisfy such delivery requirements. Accordingly, a public stockholder would have from the time we send out our tender offer materials
until the close of the tender offer period, or up to two days prior to the vote on the business combination if we distribute proxy materials,
as applicable, to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period,
it is advisable for stockholders to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through
the DWAC System. The transfer agent will typically charge the tendering broker 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 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 July 27, 2023.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only until July 27, 2023 to complete our initial business
combination. If we are unable to complete our business combination within such prescribed time period, we will: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes as well
as expenses relating to the administration of the trust account (less up to $100,000 of interest released to us to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, 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 business combination within the prescribed time period.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating
distributions from the trust account with respect to any founder shares and private placement shares held by them if we fail to complete
our initial business combination by July 27, 2023. However, if our sponsor, officers or directors acquire public shares in or after our
initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares
if we fail to complete our initial business combination within the prescribed time period.
Our
sponsor, officers and directors have agreed, pursuant to a letter agreement with us (filed as an exhibit to this Annual Report), that
they will not propose any amendment to our amended and restated certificate of incorporation that would modify the substance or timing
of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by July 27, 2023, unless
we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on
the funds held in the trust account and not previously released to us to pay our franchise and income taxes as well as expenses relating
to the administration of the trust account 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 to be less than $5,000,001 upon completion of our initial business combination
(so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with
respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above) we would
not proceed with the amendment or the related redemption of our public shares.
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 proceeds held outside the trust account, 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 franchise and income taxes as well as expenses relating
to the administration of the trust account on interest income earned on the trust account balance, we may request the trustee to release
to us an 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 units, other than the
proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share
redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account
could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders.
We cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00.
Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision
for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make
any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that
we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers (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 and claim of any
kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute
such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including
but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the
enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds
held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party
that has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial
to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute a waiver include
the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior
to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider
willing to execute a waiver.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor
has agreed that it will be liable to us if and to the extent any claims by a third party (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 (i) $10.00 per public share or (ii) such lesser
amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value
of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes as well as expenses relating to the
administration of the trust account, except as to any claims by a third party who executed a waiver of any and all rights to seek access
to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against
a third party, then our sponsor will not be responsible to the extent of any liability for such third party claims We have not independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets
are securities of our company. We have not asked our sponsor to reserve for such indemnification obligations. Therefore, 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 will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets,
in each case net of the amount of interest which may be withdrawn to pay taxes as well as expenses relating to the administration of
the trust account, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against our sponsor
to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf
against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their
business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be
too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have
not asked our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy
those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be less than $10.00 per public share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers (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 underwriters of
our initial public offering against certain liabilities, including liabilities under the Securities Act. We have access to the amounts
held outside of the trust account to pay any such potential claims (including costs and expenses incurred in connection with our liquidation,
currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that
the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims
made by creditors.
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 business combination by July 27, 2023 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 business combination by July 27, 2023, 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 business combination by July 27, 2023, we will: (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on
the funds held in the trust account and not previously released to us to pay our franchise and income taxes as well as expenses relating
to the administration of the trust account (less up to $100,000 of interest released to us to pay dissolution expenses), divided by the
number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our Board, 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 July 27, 2023 and, therefore, we do not intend
to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such
time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within
the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations 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 will seek to have all vendors, service providers (other than our independent auditors), prospective target
businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any
kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against us are significantly
limited and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor
may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public
share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due
to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable
as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our sponsor will
not be responsible to the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our Board may be
viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our company
to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot
assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public shares
if we do not complete our business combination by July 27, 2023, subject to applicable law, (ii) in connection with a stockholder vote
to approve an amendment to our amended and restated certificate of incorporation (a) to modify the substance or timing of our obligation
to redeem 100% of our public shares if we have not consummated an initial business combination by July 27, 2023 or (b) with respect to
any other provision relating to stockholders’ rights or pre-initial business combination activity, or (iii) our completion of an
initial business combination, and then only in connection with those shares of our common stock that such stockholder properly elected
to redeem, subject to the limitations described in this report. In no other circumstances will a stockholder have any right or interest
of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination,
a stockholder’s voting in connection with the business combination alone will not result in a stockholder’s redeeming its
shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights as
described above.
Competition
In
identifying, evaluating and selecting a target business for our 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, 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 we do. 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.
Employees
We currently have no employees and two officers.
Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much
of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that
any such person will devote in any time period will vary based on whether a target business has been selected for our initial business
combination and the current stage of the business combination process.
Periodic
Reporting and Financial Information
We
have registered our units, Class A common stock and warrants under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual
reports will contain financial statements audited and reported on by our independent registered public accountants. The SEC maintains
an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC at: http://www.sec.gov.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial
statements will need to be prepared in accordance with GAAP. We cannot assure you that any particular target business selected by us
as a potential acquisition 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 GAAP. To the extent that this requirement cannot be met, we may not
be able to acquire the proposed target business. While this may limit the pool of potential acquisition candidates, we do not believe
that this limitation will be material.
We
are required to evaluate our internal control procedures as required by the Sarbanes-Oxley Act. Only in the event we are deemed to be
a large accelerated filer or an accelerated filer will we be required to have our internal control procedures audited. A target company
may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development
of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
Item
1A. Risk Factors.
You
should carefully consider all of the risks described below, together with the other information contained in this Annual Report, including
the financial statements. If any of the following risks occur, our business, financial condition or operating results may be materially
and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
The risk factors described below are not necessarily exhaustive and you are encouraged to perform your own investigation with respect
to us and our business.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete our
initial business combination even though a majority of our public stockholders do not support such a combination.
We
may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder
approval under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other
legal reasons. Except as required by law, the decision as to whether we will seek stockholder approval of a proposed business combination
or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based
on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to
seek stockholder approval. Accordingly, we may complete our initial business combination even if holders of a majority of our public
shares do not approve of the business combination we complete. Please see the section of this report entitled “Business—Stockholders
May Not Have the Ability to Approve our Initial Business Combination” for additional information.
If
we seek stockholder approval of our initial business combination, our sponsor has agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote.
Unlike
many other blank check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority
of the votes cast by the public stockholders in connection with an initial business combination, our sponsor agreed to vote its founder
shares and private placement shares, as well as any public shares purchased during or after the initial public offering, in favor of
our initial business combination. Our sponsor owns shares representing 52.3% of our outstanding shares of common stock as of the date
of this Annual Report and as a result no affirmative votes from other public stockholders would be required to approve our initial business
combination. Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the necessary stockholder
approval will be received than would be the case if our sponsor agreed to vote its founder shares and private placement shares in accordance
with the majority of the votes cast by our public stockholders.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your
right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.
You
may not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our Board may
complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote
on the business combination, unless we seek such stockholder vote. Accordingly, if we do not seek stockholder approval, your only opportunity
to affect the investment decision regarding a potential business combination may be limited to exercising your redemption rights within
the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders
in which we describe our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business
combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition that
we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not
be able to meet such closing condition and, as a result, would not be able to proceed with the business combination. Furthermore, in
no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon completion
of our initial business combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater net
tangible asset or cash requirement that may be contained in the agreement relating to our initial business combination. Consequently,
if accepting all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 upon completion
of our initial business combination or such greater amount necessary to satisfy a closing condition as described above, we would not
proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective
targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete
the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many public stockholders may exercise
their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that
will be submitted for redemption. If our business combination agreement requires us to use a portion of the cash in the trust account
to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash
in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted
for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the
trust account or arrange for third party financing. Raising additional third party financing may involve dilutive equity issuances or
the incurrence of indebtedness at higher than desirable levels. The above considerations may limit our ability to complete the most desirable
business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to
the underwriters will not be adjusted for any shares that are redeemed in connection with a business combination. The per-share amount
we will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission
and after such redemptions, the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred
underwriting commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability
that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
If
our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires
us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased.
If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate
the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such
time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material
loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to
sell your stock in the open market.
The
requirement that we complete our initial business combination by July 27, 2023 may give potential target businesses leverage over us
in negotiating a business combination and may decrease our ability to conduct due diligence on potential business combination targets
as we approach our dissolution deadline, which could undermine our ability to complete our business combination on terms that would produce
value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination by July 27, 2023. Consequently, such target business may obtain leverage over us in negotiating a business
combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable
to complete our initial business combination with any target business. This risk will increase as we get closer to the timeframe described
above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that
we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our initial business combination by July 27, 2023, in which case we would cease all operations except for
the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive
$10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our
amended and restated certificate of incorporation provides that we must complete our initial business combination by July 27, 2023. We
may not be able to find a suitable target business and complete our initial business combination within such time period. Our ability
to complete our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt
markets and the other risks described herein. For example, the coronavirus outbreak continues to grow both in the U.S. and globally and,
while the extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to complete our initial
business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being
unavailable on terms acceptable to us or at all. Additionally, the outbreak of COVID-19 may negatively impact businesses we may seek
to acquire. If we have not completed our initial business combination within such time period, we will: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes as well
as expenses relating to the administration of the trust account (less up to $100,000 of interest released to us to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly
as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. In such case, our public stockholders may only receive $10.00 per share, and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share on the redemption of their shares.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates may
elect to purchase shares or public warrants from public stockholders or public warrant holders, which may influence a vote on a
proposed business combination and reduce the public “float” of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares 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 to do so. Such a purchase may include a contractual acknowledgement
that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees
not to exercise its redemption rights. There is no limit on the number of shares our sponsor, directors, officers, advisors or their
affiliates may purchase in such transactions, subject to compliance with applicable law and the rules of NASDAQ. None of the funds
in the trust account will be used to purchase shares or public warrants in such transactions. In the event that our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already
elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their
shares. The purpose of any such purchases of shares could be to vote such shares in favor of the business combination and thereby increase
the likelihood of obtaining stockholder approval of the business combination or to satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it
appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce the
number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant holders for approval in connection
with our initial business combination. Any such purchases of our securities may result in the completion of our business combination
that may not otherwise have been possible. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange
Act to the extent the purchasers are subject to such reporting requirements.
In
addition, if such purchases are made, the public “float” of our Class A common stock and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities
on a national securities exchange.
If
a stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination, or fails
to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business combination.
Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder
may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents or proxy materials, as applicable,
that we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly tender or redeem public shares. For example, we may require our public stockholders seeking
to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either tender
their certificates to our transfer agent prior to the date set forth in the tender offer 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. In the event that a stockholder fails to comply with
these or any other procedures, its shares may not be redeemed. See the section of this Annual Report entitled “Business—Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination—Tendering Stock Certificates in Connection with
a Tender Offer or Redemption Rights.”
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your
investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion of
an initial business combination, and then only in connection with those shares of our common stock that such stockholder properly elected
to redeem, subject to the limitations described in this report, (ii) the redemption of any public shares properly submitted in connection
with a stockholder vote to amend our amended and restated certificate of incorporation (a) to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our initial business combination by July 27, 2023 or (b) with respect to any
other provision relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of our
public shares if we are unable to complete an initial business combination by July 27, 2023, subject to applicable law and as further
described herein. In addition, if we are unable to complete an initial business combination by July 27, 2023 for any reason, compliance
with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders for approval prior to the distribution
of the proceeds held in our trust account. In that case, public stockholders may be forced to wait beyond July 27, 2023 before they receive
funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the trust
account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
stockholders will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement units are intended to be used to complete an initial
business combination with a target business that has not been selected, we may be deemed to be a “blank check” company under
the United States securities laws. However, because we currently have net tangible assets in excess of $5,000,000, we are exempt from
rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors will not be
afforded the benefits or protections of those rules. Among other things, this means our units are tradable and we have a longer period
of time to complete our business combination than do companies subject to Rule 419. Moreover, that rule would prohibit the release of
any interest earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection
with our completion of an initial business combination.
Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially
adversely affected by the recent COVID-19 outbreak and the status of debt and equity markets.
The
COVID-19 outbreak has and a significant outbreak of other infectious diseases could result in a widespread health crisis that could adversely
affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business
combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued
concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s
personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to
which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot
be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat
its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of
time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a
business combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted
by COVID-19 and other related events could have a material adverse effect on our ability to raise adequate financing, including as a
result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to
us or at all.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our
warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international, competing
for the types of businesses we intend to acquire. Many of these individuals and entities are well-established and have extensive experience
in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing services to various industries.
Many of these competitors possess greater technical, human and other resources or more local industry knowledge than we do and our financial
resources will be relatively limited when contrasted with those of many of these competitors. While we believe there are numerous target
businesses we could potentially acquire with the net proceeds of our initial public offering and the sale of the private placement units,
our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available
financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses.
Furthermore,
because we are obligated to pay cash for the shares of Class A common stock that our public stockholders redeem in connection with our
initial business combination, target companies will be aware that this may reduce the resources available to us for our initial business
combination. This may place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to
complete our initial business combination, our public stockholders may receive only approximately $10.12 per share (based on the trust
account balance as of January 31, 2023) on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share upon our liquidation.
If
the net proceeds of our initial public offering and the sale of the private placement units not being held in the trust account are insufficient
to allow us to operate until July 27, 2023, we may be unable to complete our initial business combination, in which case our public stockholders
may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate until July 27, 2023, assuming that our
initial business combination is not completed during that time. We cannot assure you that the funds available to us outside of the trust
account will be sufficient to allow us to operate until July 27, 2023. We plan to use a portion of the funds available to us to pay fees
to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund
a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping”
around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed
business combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement
where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether
as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with
respect to, a target business. If we are unable to complete our initial business combination, our public stockholders may receive only
approximately $10.12 per share (based on the trust account balance as of January 31, 2023) on the liquidation of our trust account and
our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share upon our
liquidation.
If
funds available to us outside of the trust account are insufficient, it could limit the amount available to fund our search for a target
business or businesses and complete our initial business combination and we will depend on loans from our sponsor or management team
to fund our search for a business combination, to pay our taxes and to complete our initial business combination. If we are unable to
obtain these loans, we may be unable to complete our initial business combination.
As
of December 31, 2022, we had approximately $780,672 held outside the trust account available to us. If we are required to seek additional
capital, we would need to withdraw interest from the trust account as described elsewhere in this Annual Report (i.e. for our franchise
and income taxes as well as expenses relating to the administration of the trust account) and/or borrow funds from our sponsor, management
team or other third parties to operate, or we may be forced to liquidate. None of our sponsor, members of our management team nor any
of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from
funds held outside the trust account or from funds released to us upon completion of our initial business combination. We do not expect
to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to
loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we are unable to obtain
these loans, we may be unable to complete our initial business combination. If we are unable to complete our initial business combination
because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently,
our public stockholders may only receive approximately $10.00 per share on our redemption of our public shares, and our warrants will
expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation.
Subsequent
to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on our financial condition, results of operations and our stock price,
which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will surface
all material issues that may be present inside a particular target business, that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later
arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment
or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected
risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though
these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature
could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate
net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue
of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain stockholders following the business
combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction
in value.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received
by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to have all
vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account for the benefit of our public stockholders, such parties may not execute such agreements, or even if they execute
such agreements they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case
in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if management
believes that such third party’s engagement would be significantly more beneficial to us than any alternative. Making such a request
of potential target businesses may make our acquisition proposal less attractive to them and, to the extent prospective target businesses
refuse to execute such a waiver, it may limit the field of potential target businesses that we might pursue.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party consultant
whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would
agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption
of our public shares, if we are unable to complete our business combination within the prescribed timeframe, or upon the exercise of
a redemption right in connection with our business combination, we will be required to provide for payment of claims of creditors that
were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount
received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of such creditors.
Our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold
to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds
in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of
the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest
which may be withdrawn to pay taxes as well as expenses relating to administration of the trust account. This liability will not apply
with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except
as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, then our
sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether
our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities
of our company. We have not asked our sponsor to reserve for such indemnification obligations. Therefore, 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 will indemnify us for claims by third parties including, without limitation,
claims by vendors and prospective target businesses.
Our
independent directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount
of funds in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.00 per public share or (ii) such lesser amount
per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust
assets, in each case net of the interest which may be withdrawn to pay taxes as well as expenses relating to administration of the trust
account, and our sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to
a particular claim, our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification
obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for
example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if
the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce these
indemnification obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced
below $10.00 per share.
We
may not have sufficient funds to satisfy indemnification claims of our directors and executive officers.
We
have agreed to indemnify our directors and executive officers to the fullest extent permitted by law. However, our directors and executive
officers have agreed to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek
recourse against the trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied
by us only if: (i) we have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation
to indemnify our directors and executive officers may discourage stockholders from bringing a lawsuit against our directors and executive
officers for breach of their fiduciary duties. These provisions also may have the effect of reducing the likelihood of derivative litigation
against our directors and executive officers, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards
against our directors and executive officers pursuant to these indemnification provisions.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board may be
exposed to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our Board may be viewed as having breached
its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by
paying public stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our
stockholders and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be
reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders.
To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination by July 27, 2023 may be considered a liquidating distribution
under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it
makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought
against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our
public shares as soon as reasonably possible following July 27, 2023 in the event we do not complete our business combination and, therefore,
we do not intend to comply with the foregoing procedures.
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 10 years following our dissolution. However, because we are a blank check company, rather than an operating company, and our operations
are limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such
as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the
DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after
the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought
against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but
no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion
of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination by July 27, 2023 is not considered a liquidating distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could
then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay the
opportunity for our stockholders to elect directors.
In
accordance with NASDAQ corporate governance requirements, we are not required to hold an annual meeting until no later than the end of
the fiscal year immediately after the first fiscal year for which we filed full year financial statements with the SEC following our
listing on NASDAQ. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes
of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may
not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and
thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want
us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one
by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. Even if an annual meeting
was held for the purpose of electing directors prior to the consummation of a business combination, only holders of Class B common stock
would be entitled to notice of such meeting and to vote at such meeting.
Because
we are not limited to a particular industry, sector or any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business’ operations.
Although
we focus our search for high-growth technology and tech-enabled businesses in sectors such as e-commerce, software and digital media,
we may seek to complete a business combination with an operating company in any industry or sector. However, we are not, under our amended
and restated certificate of incorporation, permitted to complete our business combination with another blank check company or similar
company with nominal operations. There is no basis to evaluate the possible merits or risks of any particular target business’s
operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our business combination,
we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of revenues or earnings, we may be affected by the risks inherent in the
business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to
evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all the significant
risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control
and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot
assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such
opportunity were available, in a business combination target. Accordingly, any stockholders who choose to remain stockholders following
the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such
reduction in value.
We
may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of expertise.
We
will consider a business combination outside of our management’s area of expertise if a business combination candidate is presented
to us and we determine that such candidate offers an attractive acquisition opportunity for our company. Although our management will
endeavor to evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately
ascertain or assess all the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove
to be less favorable to investors in our initial public offering than a direct investment, if an opportunity were available, in a business
combination candidate. In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Annual Report regarding
the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As
a result, our management may not be able to adequately ascertain or assess all the significant risk factors. Accordingly, any stockholders
who choose to remain stockholders following our business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses, we may
enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result, the target
business with which we enter into our initial business combination may not have attributes entirely consistent with our general criteria
and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target business
with which we enter into our initial business combination will not have all of these positive attributes. If we complete our initial
business combination with a target that does not meet some or all of these criteria and guidelines, such combination may not be as successful
as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce a prospective
business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders may exercise
their redemption rights, which may make it difficult for us to meet any closing condition with a target business that requires us to
have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or
we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult for us to attain stockholder approval
of our initial business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete
our initial business combination, our public stockholders may receive only approximately $10.12 per share (based on the trust account
balance as of January 31, 2023) on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share upon on liquidation.
We
may seek acquisition opportunities with an early stage company, a financially unstable business or an entity lacking an established record
of revenue or earnings, which could subject us to volatile revenues or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with an early stage company, a financially unstable business or an entity lacking
an established record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which
we combine. These risks include investing in a business without a proven business model and with limited historical financial data, volatile
revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to
evaluate the risks inherent in a particular target business, we may not be able to properly ascertain or assess all the significant risk
factors and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and
leave us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and consequently,
you may have no assurance from an independent source that the price we are paying for the business is fair to our company from a financial
point of view.
Unless
we complete our business combination with an affiliated entity or our Board cannot independently determine the fair market value of the
target business or businesses, we are not required to obtain an opinion from an independent investment banking firm that is a member
of FINRA or from an independent accounting firm that the price we are paying is fair to our company from a financial point of view. If
no opinion is obtained, our stockholders will be relying on the judgment of our Board, who will determine fair market value based on
standards generally accepted by the financial community. Such standards used will be disclosed in our proxy solicitation or tender offer
materials, as applicable, related to our initial business combination.
Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate
and acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may
receive only approximately $10.12 per share, or less than such amount in certain circumstances, on the liquidation of our trust account
and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. The cost incurred up to the point that we decide not to complete a specific initial business combination likely
would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial
business combination for any number of reasons including those beyond our control. Any such event will result in a loss to us of the
related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.12 per share
(based on the trust account balance as of January 31, 2023) on the liquidation of our trust account and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to complete
a business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no event
will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon completion of
our initial business combination (such that we are not subject to the SEC’s “penny stock” rules). As a result, we may
be able to complete our business combination even though a substantial majority of our public stockholders do not agree with the transaction
and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions
in connection with our business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to
sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we
would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus any amount required to
satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us,
we will not complete the business combination or redeem any shares, all shares of Class A common stock submitted for redemption will
be returned to the holders thereof, and we instead may search for an alternate business combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may complete our initial business
combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company,
which could, in turn, negatively impact the value of our stockholders’ investment in us.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess the
target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities
we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary to manage a public company,
the operations and profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose
to remain stockholders following the business combination could suffer a reduction in the value of their shares. Such stockholders are
unlikely to have a remedy for such reduction in value.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure of a
business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be ascertained
at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain associated
with the acquisition candidate following our initial business combination, it is possible that members of the management of an acquisition
candidate will not wish to remain in place.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our business combination. We have agreed that we will not incur any indebtedness
unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust
account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless,
the incurrence of debt could have a variety of negative effects, including:
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default and
foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
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acceleration of our obligations
to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require
the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
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our immediate payment
of all principal and accrued interest, if any, if the debt security is payable on demand; |
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our inability to obtain
necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the
debt security is outstanding; |
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our inability to pay dividends
on our common stock; |
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using a substantial portion
of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock
if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; |
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limitations on our flexibility
in planning for and reacting to changes in our business and in the industry in which we operate; |
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increased vulnerability
to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
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limitations on our ability
to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy;
and |
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other disadvantages compared
to our competitors who have less debt. |
We
may only be able to complete one business combination with the proceeds of our initial public offering, and the sale of the private placement
units, which will cause us to be solely dependent on a single business which may have a limited number of products or services. This
lack of diversification may negatively impact our operations and profitability.
As of January 31, 2023, approximately $40.8 million
is available in our trust account for completing our business combination and paying related fees and expenses (which includes up to approximately
$5.25 million for the payment of deferred underwriting commissions).
We
may complete our business combination with a single target business or multiple target businesses simultaneously or within a short period
of time. However, we may not be able to complete our business combination with more than one target business because of various factors,
including the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with
the SEC that present operating results and the financial condition of several target businesses as if they had been operated on a combined
basis. By completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous
economic, competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible
spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations
in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:
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solely dependent
upon the performance of a single business, property or asset; or |
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dependent upon the development
or market acceptance of a single or limited number of products, processes or services. |
This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete
our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which may make
it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business combinations, we
could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence
investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations
and services or products of the acquired companies in a single operating business. If we are unable to adequately address these risks,
it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which may
result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to complete our initial business combination with a privately held company. Very little
public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial business combination on the basis of limited information, which may result in a business combination with a company that is not
as profitable as we suspected, if at all.
Risks
Relating to our Sponsor and Management Team
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance
that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We
may structure a business combination so that the post-transaction company in which our public stockholders own shares will own less than
100% of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires an interest in the target
sufficient for the post-transaction company not to be required to register as an investment company under the Investment Company Act.
We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business
combination company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could
pursue a transaction in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding
capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial
number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding
shares of common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings
resulting in a single person or group obtaining a larger share of the company’s stock than we initially acquired. Accordingly,
this may make it more likely that our management will not be able to maintain our control of the target business. We cannot provide assurance
that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably
operate such business.
We
are dependent upon our officers and directors, and their loss could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our officers and directors. We believe that
our success depends on the continued service of our officers and directors, at least until we have completed our initial business combination.
In addition, our officers and directors are not required to commit any specified amount of time to our affairs and, accordingly, will
have conflicts of interest in allocating their time among various business activities, including identifying potential business combinations
and monitoring the related due diligence.
We
do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss
of the services of one or more of our directors or officers could have a detrimental effect on us.
Our
ability to successfully complete our initial business combination and to be successful thereafter will be totally dependent upon the
efforts of members of our management team, some of whom may not join us following our initial business combination. The loss of such
people could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully complete our business combination is dependent upon the efforts of members of our management team. The role of
members of our management team in the target business, however, cannot presently be ascertained. Although some members of our management
team may remain with the target business in senior management or advisory positions following our business combination, it is likely
that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals
we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct.
These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to
expend time and resources helping them become familiar with such requirements.
In
addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The
departure of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot be
ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team will remain
associated with the acquisition candidate following our initial business combination, it is possible that members of the management of
an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Members
of our management team may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our business combination and as a result, may cause
them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Members
of our management team may be able to remain with the company after the completion of our business combination only if they are able
to negotiate employment or consulting agreements in connection with the business combination. Such negotiations could take place simultaneously
with the negotiation of the business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us after the completion of the business combination. The personal and financial
interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the
ability of such individuals to remain with us after the completion of our business combination will not be the determining factor in
our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any members
of our management team will remain with us after the completion of our business combination. We cannot assure you that any members of
our management team will remain in senior management or advisory positions with us. The determination as to whether any members of our
management team will remain with us will be made at the time of our initial business combination.
Our
officers and directors may allocate their time to other businesses, thereby causing conflicts of interest in their determination as to
how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial
business combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest
in allocating their time between our operations and our search for a business combination and their other businesses. Each of our officers
is engaged in several other business endeavors for which he or she may be entitled to substantial compensation and our officers are not
obligated to contribute any specific number of hours per week to our affairs. If our officers’ and directors’ other business
affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit
their ability to devote time to our affairs, which may have a negative impact on our ability to complete our initial business combination.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities
similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining
to which entity a particular business opportunity should be presented.
We
are engaged in the business of identifying and combining with one or more businesses. Our sponsor and officers and directors are, and
may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar
business.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the other
entities in the future to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in
determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and
a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated certificate
of incorporation provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one
we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with our
interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect
pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or
have an interest. In fact (subject to certain approvals and consents) we may enter into a business combination with a target business
that is affiliated with our sponsor, our directors or officers, although we do not intend to do so. We do not have a policy that expressly
prohibits any such persons from engaging for their own account in business activities of the types conducted by us. Accordingly, such
persons or entities may have a conflict between their interests and ours.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our sponsor, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, officers or directors. Our directors also serve as officers and board members for other entities. Such entities
may compete with us for business combination opportunities. Although we will not be specifically focusing on, or targeting, any transaction
with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for a
business combination and such transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain
an opinion from an independent investment banking firm that is a member of FINRA, or from an independent accounting firm, regarding the
fairness to our company from a financial point of view of a business combination with one or more domestic or international businesses
affiliated with our officers, directors or existing holders, potential conflicts of interest still may exist and, as a result, the terms
of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest.
Since
our sponsor will lose its entire investment in us if our business combination is not completed and our officers and directors may have
differing personal and financial interests than you, a conflict of interest may arise in determining whether a particular business combination
target is appropriate for our initial business combination.
As
of the date of this Annual Report, our sponsor owns an aggregate of 3,887,500 shares of Class B common stock, which it acquired for an
aggregate purchase price of $25,000. Such founder shares will be worthless if we do not complete an initial business combination. In
addition, our sponsor purchased 550,000 private placement units for a purchase price of $5,500,000 or $10.00 per unit, which will also
be worthless if we do not complete a business combination. Our sponsor has agreed (A) to vote any shares owned by it in favor of any
proposed business combination and (B) not to redeem any founder shares and any private placement shares in connection with a stockholder
vote to approve a proposed initial business combination. In addition, we may obtain loans from our sponsor, affiliates of our sponsor
or an officer or director. The personal and financial interests of our officers and directors may influence their motivation in identifying
and selecting a target business combination, completing an initial business combination and influencing the operation of the business
following the initial business combination.
Since
our anchor investors will acquire founder shares from our sponsor upon consummation of the initial business combination, a conflict of
interest may arise in determining whether a particular target business is appropriate for our initial business combination.
Our
anchor investors will acquire founder shares from our sponsor. Provided that we successfully complete a business combination, these anchor
investors will share in any appreciation of the founder shares and, accordingly, our anchor investors’ interests in the founder
shares may provide them with an incentive to vote any public shares they own in favor of a business combination, and make a substantial
profit on such interests, even if the business combination is with a target that ultimately declines in value and is not profitable for
other public stockholders.
Since
our sponsor paid only approximately $0.006 per share for the founder shares, our officers and directors could potentially make a substantial
profit even if we acquire a target business that subsequently declines in value.
Our
sponsor acquired its 3,887,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.006 per share. Our officers
and directors have an economic interest in our sponsor. As a result, the low acquisition cost of the founder shares creates an economic
incentive whereby our officers and directors could potentially make a substantial profit even if we acquire a target business that subsequently
declines in value and is unprofitable for public investors.
Risks
Relating to our Securities
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements
and our activities may be restricted, which may make it difficult for us to complete our business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature
of our investments; and |
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restrictions on the issuance
of securities, each of which may make it difficult for us to complete our business combination. |
In
addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment
company; |
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adoption of a specific
form of corporate structure; and |
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reporting, record keeping,
voting, proxy and disclosure requirements and other rules and regulations. |
In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must
ensure that we are engaged primarily in a business other than investing, reinvesting or trading of securities and that our activities
do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our
total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete
a business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses
or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive
investor.
We
do not believe that our principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust
account may only be invested in United States “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under
the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee
is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by
having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in
the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the
meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest to occur of: (i)
the completion of our primary business objective, which is a business combination; (ii) the redemption of any public shares properly
submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation (a) to modify the substance
or timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by July 27, 2023
or (b) with respect to any other provisions relating to stockholders’ rights or pre-initial business combination activity; or (iii)
absent a business combination, our return of the funds held in the trust account to our public stockholders as part of our redemption
of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company
Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require
additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable
to complete our initial business combination, our public stockholders may receive only approximately $10.12 per share (based on the trust
account balance as of January 31, 2023) on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share upon our liquidation
NASDAQ
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities
and subject us to additional trading restrictions.
Our
Units, Class A common stock and warrants are listed on NASDAQ. We cannot assure you that our securities will continue to be listed
on NASDAQ in the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ prior
to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain
an average global market capitalization and a minimum number of holders of our securities (generally 300 public holders).
Additionally,
in connection with our initial business combination, we will be required to demonstrate compliance with NASDAQ’s initial listing
requirements, which are more rigorous than NASDAQ’s continued listing requirements, in order to continue to maintain the listing
of our securities on NASDAQ. For instance, our stock price would generally be required to be at least $4.00 per share. We cannot
assure you that we will be able to meet those initial listing requirements at that time.
If NASDAQ delists
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect
our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences,
including:
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a limited availability
of market quotations for our securities; |
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reduced liquidity
for our securities; |
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a determination that
our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere
to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
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a limited amount
of news and analyst coverage; and |
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a decreased ability
to issue additional securities or obtain additional financing in the future. |
The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the
sale of certain securities, which are referred to as “covered securities.” Because our units, Class A common stock and warrants
are listed on NASDAQ, our units, Class A common stock and warrants are covered securities. Although the states are preempted from
regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of
fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular
case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check
companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these
powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were
no longer listed on NASDAQ, our securities would not be covered securities and we would be subject to regulation in each state in
which we offer our securities.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules,
and if you or a “group” of stockholders are deemed to hold in excess of 20% of our Class A common stock, you will lose the
ability to redeem all such shares in excess of 20% of our Class A common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate
of 20% of the shares sold in our initial public offering, which we refer to as the “Excess Shares.” However, our amended
and restated certificate of incorporation does not restrict our stockholders’ ability to vote all of their shares (including Excess
Shares) for or against our business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability
to complete our business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open
market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our
business combination. As a result, you will continue to hold that number of shares exceeding 20% and, in order to dispose of such shares,
would be required to sell your stock in open market transactions, potentially at a loss.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor
from being able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws at this time. However, under the terms of the warrant agreement, we will use our best efforts to file, and within 60 business days
following our initial business combination to have declared effective, a registration statement under the Securities Act covering
such shares and maintain a current prospectus relating to the Class A common stock issuable upon exercise of the warrants, until the
expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do
so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement
or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a
stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to
permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis,
and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon
such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration
is available. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national
securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities
Act, we may, at our option, require holders of public warrants who exercise their warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain in
effect a registration statement, but we will be required to use our best efforts to register or qualify the shares under applicable blue
sky laws to the extent an exemption is not available. In no event will we be required to net cash settle any warrant. If the issuance
of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder
of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event,
holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares
of Class A common stock included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right
even if we are unable to register or qualify the underlying shares of Class A common stock for sale under all applicable state securities
laws.
The
grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination, and
the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant
to an agreement entered into concurrently with the issuance and sale of the securities in the initial public offering, our initial stockholders
and their permitted transferees and purchasers of private placement units can demand that we register the founder shares, private placement
shares, private placement warrants and the shares of Class A common stock issuable upon exercise of the private placement warrants.
In addition, holders of units that may be issued upon conversion of working capital loans may demand that we register such units or the
shares of Class A common stock, warrants or shares of Class A common stock issuable upon exercise of such warrants underlying
such units. We will bear the cost of registering these securities. The registration and availability of such a significant number of
securities for trading in the public market may have an adverse effect on the market price of our Class A common stock. In addition,
the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because
the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration
to offset the negative impact on the market price of our Class A common stock that is expected when the common stock owned by our
initial stockholders, holders of our private placement units, or holders of our working capital units or their respective permitted transferees
are registered.
We
may issue additional shares of common stock or preferred stock to complete our initial business combination, and may issue shares of
common stock to redeem the warrants or issue shares of common stock or preferred stock under an employee incentive plan after completion
of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the Class B common stock
at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained
in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and likely
present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, par value
$0.0001 per share, 10,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par
value $0.0001 per share. As of the date of this Annual Report, there are 95,403,158 and 6,112,500 authorized but unissued shares of Class
A common stock and Class B common stock, respectively, available for issuance, which amount does not take into account the shares of
Class A common stock reserved for issuance upon exercise of any outstanding warrants or the shares of Class A common stock issuable upon
conversion of Class B common stock. There are no shares of preferred stock issued and currently outstanding. Shares of Class B common
stock are convertible into shares of our Class A common stock initially at a one-for-one ratio but subject to adjustment as set forth
herein, including in certain circumstances in which we issue Class A common stock or equity-linked securities related to our initial
business combination.
We
may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination (including
pursuant to a specified future issuance). After the completion of our initial business combination, we may issue a substantial number
of additional shares of common stock to redeem the warrants as described herein or shares of common or preferred stock under an employee
incentive plan. We may also issue shares of Class A common stock upon conversion of the Class B common stock at a ratio greater than
one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated
certificate of incorporation. However, our amended and restated certificate of incorporation provides, among other things, that prior
to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (i)
receive funds from the trust account or (ii) vote on any initial business combination. The issuance of additional shares of common or
preferred stock:
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may significantly dilute
the equity interest of investors in our initial public offering; |
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may subordinate the rights
of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; |
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could cause a change of
control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use
our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
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may adversely affect prevailing
market prices for our units, Class A common stock and/or warrants. |
In
order to complete our initial business combination, we may seek to amend our amended and restated certificate of incorporation or other
governing instruments, including our warrant agreement, in a manner that will make it easier for us to complete our initial business
combination but that our stockholders or warrant holders may not support.
In
order to complete a business combination, blank check companies have, in the recent past, amended various provisions of their charters
and governing instruments, including their warrant agreement. For example, blank check companies have amended the definition of business
combination, increased redemption thresholds, changed industry focus and, with respect to their warrants, amended their warrant agreements
to require the warrants to be exchanged for cash and/or other securities. We cannot assure you that we will not seek to amend our charter
or other governing instruments or change our industry focus in order to complete our initial business combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-business combination activity (and corresponding
provisions of the agreement governing the release of funds from our trust account) may be amended with the approval of holders of 65%
of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore,
to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial business
combination that some of our stockholders may not support.
Some
other blank check companies have a provision in their charter that prohibits the amendment of certain of its provisions, including those
which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s
stockholders. In those companies, amendment of these provisions requires approval by between 90% and 100% of the company’s public
stockholders. Our amended and restated certificate of incorporation provides that any of its provisions related to pre-business combination
activity (including the requirement to deposit proceeds of our initial public offering and the private placement of units into the trust
account and not release such amounts except in specified circumstances, and to provide redemption rights to public stockholders as described
herein) may be amended if approved by holders of 65% of our common stock entitled to vote thereon, and corresponding provisions of the
trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock
entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of
a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock
exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated certificate of incorporation
or in our initial business combination. Our initial stockholders, who collectively beneficially own 52.3% of our common stock, will participate
in any vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote
in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation
that govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our ability
to complete a business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach of our
amended and restated certificate of incorporation.
Our
sponsor, officers and directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment to our
amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem 100% of our public
shares if we do not complete our initial business combination by July 27, 2023, unless we provide our public stockholders with the opportunity
to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, including interest (which interest shall be net of amounts released to us to pay
taxes and expenses related to the administration of the trust), divided by the number of then outstanding public shares. Our stockholders
are not parties to, or third-party beneficiaries of, this letter agreement and, as a result, will not have the ability to pursue remedies
against our sponsor, officers or directors for any breach of the letter agreement. As a result, in the event of a breach, our stockholders
would need to pursue a stockholder derivative action, subject to applicable law.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target
business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement units will be sufficient to allow
us to complete our initial business combination, we cannot yet ascertain the capital requirements for any particular transaction. If
the net proceeds of our initial public offering and the sale of the private placement units prove to be insufficient, either because
of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation
to repurchase for cash a significant number of shares from stockholders who elect redemption in connection with our initial business
combination or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be
required to seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will
be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete
our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination
and seek an alternative target business candidate. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share plus any pro rata interest earned on the funds held in the trust account (and not previously
released to us to pay our franchise and income taxes as well as expenses relating to the administration of the trust account) on the
liquidation of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing to
complete our business combination, we may require such financing to fund the operations or growth of the target business. The failure
to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None
of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial business
combination. If we are unable to complete our initial business combination, our public stockholders may only receive approximately $10.12
per share (based on the trust account balance as of January 31, 2023) on the liquidation of our trust account, and our warrants will
expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their
shares.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not
support.
Our
initial stockholders own common shares representing 52.3% of our issued and outstanding shares of common stock. Accordingly, they may
exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments
to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase
any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would increase their control.
Factors that would be considered in making such additional purchases would include consideration of the current trading price of our
Class A common stock. In addition, our Board, whose members were elected by our initial stockholders, is and will be divided into two
classes, each of which will generally serve for a term of two years with only one class of directors being elected in each year. We may
not hold an annual meeting of stockholders to elect new directors prior to the completion of our business combination, in which case
all of the current directors will continue in office until at least the completion of the business combination. If there is an annual
meeting, as a consequence of our “staggered” Board, only a minority of the Board may be considered for election. In addition,
the founder shares, all of which are held by our initial stockholders, will entitle the holders to elect all of our directors prior to
the consummation of our business combination. Holders of our public shares will have no right to vote on the election of directors during
such time. Accordingly, our initial stockholders will continue to exert control at least until the completion of our business
combination.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of
at least 50% of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise
period could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased,
all without your approval.
Our
warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent,
and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity
or correct any defective provision or to make any amendments that are necessary in the good faith determination of our board of directors
(taking into account then existing market precedents) to allow for the warrants to be classified as equity in our financial statements,
but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects
the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants (i) in a manner
adverse to a holder if holders of at least 50% of the then outstanding public warrants approve of such amendment or (ii) to the extent
necessary for the warrants in the good faith determination of our board of directors (taking into account then existing market precedents)
to allow for the warrants to be classified as equity in our financial statements without the consent of any holder. Although our ability
to amend the terms of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples
of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into
cash or stock, shorten the exercise period or decrease the number of shares of our Class A common stock purchasable upon exercise of
a warrant.
Our
warrants are accounted for as a warrant liability and were recorded at fair value upon issuance with changes in fair value each period
reported in earnings, which may have an adverse effect on the market price of our securities or may make it more difficult for us to
consummate an initial business combination.
Following
the consummation of the initial public offering and the concurrent private placement, we issued an aggregate of 7,775,000 warrants (comprised
of the 7,500,000 warrants included in the units sold in the initial public offering and the 275,000 private placement warrants). We account
for these as a warrant liability and will record at fair value upon issuance with any changes in fair value each period reported in earnings
as determined by us based upon a valuation report obtained from an independent third party valuation firm. The impact of changes in fair
value on earnings may have an adverse effect on the market price of our Class A common stock. In addition, potential targets may seek
a business combination partner that does not have warrants that are accounted for as a warrant liability, which may make it more difficult
for us to consummate an initial business combination with a target business.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We
have the ability to redeem outstanding warrants for cash at any time after they become exercisable and prior to their expiration, at
a price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per share
(as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30
trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption and provided certain
other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable
to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants
could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to
do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept
the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less
than the market value of your warrants. In addition, we may redeem your warrants after they become exercisable for a number of shares
of Class A common stock determined based on the redemption date and the fair market value of our Class A common stock. Any such redemption
may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants
are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent increase in the value
of the Class A common stock had your warrants remained outstanding.
Our
warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult to
complete our business combination.
We
have issued warrants to purchase 7,500,000 shares of our Class A common stock as part of the units offered in our initial public offering.
Additionally, we issued as part of the units in a private placement warrants to purchase an aggregate of 275,000 shares of Class A common
stock at $11.50 per share. Our sponsor currently owns 3,887,500 founder shares. The founder shares are convertible into shares of Class
A common stock on a one-for-one basis, subject to adjustment as set forth in our amended and restated certificate of incorporation. In
addition, if our sponsor makes any working capital loans, up to $1,500,000 of such loans may be converted into units, at the price of
$10.00 per unit at the option of the lender. Such units would be identical to the private placement units.
To
the extent we issue shares of Class A common stock to complete a business combination, the potential for the issuance of a substantial
number of additional shares of Class A common stock upon exercise of these warrants and conversion rights could make us a less attractive
acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares of our Class A
common stock and reduce the value of the shares of Class A common stock issued to complete the business combination. Therefore, our warrants
and founder shares may make it more difficult to complete a business combination or increase the cost of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that, so long
as they are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us for cash, (ii) they (including the
Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned
or sold by our sponsor until 30 days after the completion of our initial business combination and (iii) they may be exercised by the
holders on a cashless basis.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike
most blank check companies, if (i) we issue additional shares of common stock or equity-linked securities for capital raising purposes
in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share of common stock
and (ii) the Market Value is below $9.20 per share, then the exercise price of the warrants will be adjusted to be equal to 115% of the
higher of the Market Value and the Newly Issued Price, and the $10.00 and $18.00 per share redemption trigger prices will be adjusted
(to the nearest cent) to be equal to 100% and 180% of the higher of the Market Value and the Newly Issued Price, respectively. This may
make it more difficult for us to consummate an initial business combination with a target business.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial significance
tests include target historical and/or pro forma financial statement disclosure. We will include the same financial statement disclosure
in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States
of America (“GAAP”) or international financial reporting standards as issued by the International Accounting Standards Board
(“IFRS”), depending on the circumstances and the historical financial statements may be required to be audited in accordance
with the standards of the Public Company Accounting Oversight Board (United States) (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 prescribed time frame.
General
Risk Factors
We
are an early stage company with no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve
our business objective.
We
are an early stage company with limited operating results. Because we lack an operating history, you have little basis upon which to
evaluate our ability to achieve our business objective of completing our initial business combination with one or more target businesses.
We may be unable to complete our business combination. If we fail to complete our business combination, we will never generate any operating
revenues.
Changes
in laws or regulations or how such laws or regulations are interpreted or applied, or a failure to comply with any laws or regulations,
may adversely affect our business, including our ability to negotiate and complete our initial business combination, and results of operations.
We are subject to laws and regulations enacted
by national, regional and local governments. We will be required to comply with certain SEC and other legal requirements. Compliance
with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and
their interpretation and application may also change from time to time and those changes could have a material adverse effect on our
business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted
and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business
combination and results of operations.
On
March 30, 2022, the SEC issued proposed rules relating to, among other items, disclosures in business combination transactions involving
SPACs and private operating companies; the financial statement requirements applicable to transactions involving shell companies; the
use of projections in SEC filings in connection with proposed business combination transactions; the potential liability of certain participants
in proposed business combination transactions; and the extent to which special purpose acquisition companies (“SPACs”) could
become subject to regulation under the Investment Company Act, including a proposed rule that would provide SPACs a safe harbor from
treatment as an investment company if they satisfy certain conditions that limit a SPAC’s duration, asset composition, business
purpose and activities. These rules, if adopted, whether in the form proposed or in a revised form, may increase the costs of and the
time needed to negotiate and complete an initial business combination, and may constrain the circumstances under which we could complete
an initial business combination.
We
may be subject to the 1% excise tax instituted under the Inflation Reduction Act of 2022 in connection with redemptions we conduct after
December 31, 2022.
On
August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for,
among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and
certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed
on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally
1% of the fair market value of the shares repurchased at the time of the repurchase. For purposes of calculating the excise tax, repurchasing
corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases
during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”)
has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax.
Any redemption or other repurchase we conduct
after December 31, 2022, in connection with a business combination, extension vote or otherwise, may be subject to the excise tax. Whether
and to what extent we would be subject to the excise tax in connection with a business combination, extension vote or otherwise would
depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the business
combination, extension or otherwise, (ii) the structure of a business combination, (iii) the nature and amount of any “PIPE”
or other equity issuances in connection with a business combination (or otherwise issued not in connection with a business combination
but issued within the same taxable year of a business combination) and (iv) the content of regulations and other guidance from the Treasury.
In addition, because the excise tax would be payable by us and not by the redeeming holder, the mechanics of any required payment of
the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a business combination
or otherwise inhibit our ability to complete a business combination.
Past
performance by our management team and members of our Board may not be indicative of future performance of an investment in us.
Information
regarding performance by, or businesses associated with, our management team and members of our Board is presented for informational
purposes only. Past performance by such individuals is not a guarantee either (i) of success with respect to any business combination
we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely
on the historical record of performance of our management team and members of our Board as indicative of our future performance of an
investment in us or the returns we will, or are likely to, generate going forward. Additionally, in the course of their respective careers,
members of our management team and Board have been involved in businesses and deals that were unsuccessful.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of
certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this could make
our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and
exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden
parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important.
We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including
if the market value of our Class A common stock held by non-affiliates equals or exceeds $700 million as of any June 30 before that time,
in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will
find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as
a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may
be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting
standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do
not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting
standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such
extended transition period, which means that when a standard is issued or revised and it has different application dates for public or
private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new
or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth
company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of
the potential differences in accountant standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take
advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of any fiscal year for so long as either (1) the market value of our common
stock held by non-affiliates did not equal or exceed $250 million as of the prior June 30, or (2) our annual revenues did not equal or
exceed $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates did not equal or
exceed $700 million as of the prior June 30.
Our management concluded that there is substantial doubt
about our ability to continue as a “going concern.”
As of December 31, 2022, the Company had $780,672
in its operating bank accounts and $51,357,799 in securities held in the Trust Account to be used for a Business Combination or to repurchase
or redeem its common stock in connection therewith. As of December 31, 2022, approximately $1.2 million of the amount on deposit in the
Trust Account represented interest income, which is available to pay the Company’s tax obligations. If the Company is unable to
raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily
be limited to, suspending the pursuit of a business combination. The Company cannot provide any assurance that new financing will be available
to it on commercially acceptable terms, if at all. Further, our plans to raise capital and to consummate our initial business combination
may not be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern through our
liquidation date. The financial statements contained elsewhere in this annual report do not include any adjustments that might result
from our inability to consummate a business combination or our inability to continue as a going concern.
Compliance obligations under the Sarbanes-Oxley Act may make
it more difficult for us to complete our initial business combination, require substantial financial and management resources, and increase
the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal control over financial reporting. Only in the event we are deemed to be a large
accelerated filer or an accelerated filer will we be required to comply with the independent registered public accounting firm attestation
requirement on our internal control over financial reporting. Further, for as long as we remain an emerging growth company, we will not
be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial
reporting. The fact that we are a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome
on us as compared to other public companies because a target company with which we seek to complete our business combination may not be
in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal
control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such acquisition.
If we are unable to develop and maintain an effective system
of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which
may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
If we identify a material weakness, we may be
unable to provide required financial information in a timely and reliable manner and we may incorrectly report financial information.
Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or investigations by the stock
exchange on which our shares of Class A common stock are listed, the SEC or other regulatory authorities. Effective internal controls
are necessary for us to provide reliable financial reports and prevent fraud. The existence of a material weakness in internal control
over financial reporting could adversely affect our reputation or investor perceptions of us, which could have a negative effect on the
trading price of our stock. We can give no assurance that material weaknesses or restatements of financial results will not arise in
the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls.
Even if we are successful in maintaining our controls and procedures, in the future those controls and procedures may not be adequate
to prevent or identify irregularities or errors or to facilitate the fair presentation of our financial statements.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
If we identify any material weaknesses in the future,
any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures
that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain
compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing
requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you
that any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
Provisions in our amended and restated certificate of incorporation
and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class
A common stock and could entrench management.
Our amended and restated certificate of incorporation
contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These
provisions include a staggered Board and the ability of the Board to designate the terms of and issue new series of preferred shares,
which may make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium
over prevailing market prices for our securities.
We are also subject to anti-takeover provisions
under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more
difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Our amended and restated certificate of incorporation designates
the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be
initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with
us or our directors, officers, employees or agents.
Our amended and restated certificate of incorporation
provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (“Court
of Chancery”) will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action
or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers,
employees or stockholders to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL,
our amended and restated certificate of incorporation or bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery
or (iv) any action asserting a claim against us, our directors, officers, or employees that is governed by the internal affairs doctrine,
in each such case except for such claims as to which (a) the Court of Chancery determines that it does not have personal jurisdiction
over an indispensable party, (b) exclusive jurisdiction is vested in a court or forum other than the Court of Chancery, or (c) the Court
of Chancery does not have subject matter jurisdiction. Any person or entity purchasing or otherwise acquiring or holding any interest
in shares of our common stock will be deemed to have notice of, and consented to, the provisions of our amended and restated certificate
of incorporation described in the preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring
a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage
such lawsuits against us and such persons, although our stockholders will not be deemed to have waived our compliance with federal securities
laws and the rules and regulations thereunder and may therefore bring a claim in another appropriate forum.
Our amended and restated certificate of incorporation
provides that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Exchange Act
or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal
jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Additionally, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States
of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
However, there is uncertainty as to whether a court would enforce the exclusive forum provisions relating to causes of actions arising
under the Securities Act.
Cyber incidents or attacks directed at us could result in information
theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information
systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the
cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early
stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.
We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents.
It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial
loss.
If we complete our initial business combination with a company
with operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively
impact our operations.
If we complete our initial business combination
with a company with operations or opportunities outside of the United States, we would be subject to any special considerations or risks
associated with companies operating in an international setting, including any of the following:
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higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets; |
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rules and regulations regarding currency redemption; |
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complex corporate withholding taxes on individuals; |
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laws governing the manner in which future business combinations may be effected; |
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tariffs and trade barriers; |
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regulations related to customs and import/export matters; |
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longer payment cycles and challenges in collecting accounts receivable; |
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tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
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currency fluctuations and exchange controls; |
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rates of inflation; |
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cultural and language differences; |
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employment regulations; |
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crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; |
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deterioration of political relations with the United States; and |
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government appropriations of assets. |
We may not be able to adequately address these
additional risks. If we were unable to do so, our operations might suffer, which may adversely impact our results of operations and financial
condition.
