Item
1. Business
Overview
We
are an early-stage Delaware blank check company incorporated on August 5, 2020 formed for the purpose of entering into a
merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination
with one or more target businesses. Our efforts to identify a prospective target business is not limited to a particular industry
or geographic region although we are focused on target businesses in the healthy living industries that benefit from strong Environmental,
Social and Governance (“ESG”) profiles in North America and Europe.
Initial
Public Offering
On
November 17, 2020, we consummated our initial public offering (“IPO”) of 11,000,000 units (the “units”).
Each unit consists of one share of common stock of the Company, par value $0.0001 per share (the “Common Stock”),
and one redeemable warrant of the Company (“warrant”), with each whole warrant entitling the holder thereof
to purchase one share of Common Stock for $11.50 per share. The units were sold at a price of $10.00 per unit, generating gross
proceeds to the Company of $110,000,000.
Simultaneously
with the closing of the IPO, we completed the private sale of an aggregate of 4,800,000 warrants (the “private placement
warrants”) to BWA Holdings LLC (our “sponsor”) and EarlyBirdCapital (3,975,000 private placement
warrants to our sponsor and 825,000 to EBC) at a purchase price of $1.00 per private placement warrant, generating gross proceeds
of $4,800,000.
In
connection with the IPO, the underwriters were granted a 45-day option from the date of our IPO prospectus (the “Over-Allotment
Option”) to purchase up to 1,650,000 additional units (the “Over-Allotment Units”) to cover over-allotments,
if any. On November 19, 2020, the underwriters purchased an additional 1,618,600 Over-Allotment Units pursuant to the partial
exercise of the Over-Allotment Option, and cancelled the remainder of the Over-Allotment Option. The Over-Allotment Units were
sold at an offering price of $10.00 per Over-Allotment Unit, generating aggregate additional gross proceeds of $16,186,000 to
us. In connection with the cancellation of the remainder of the Over-Allotment Option, we cancelled an aggregate of 7,850 shares
of Common Stock issued to the sponsor prior to the IPO. Simultaneously with the consummation of the Over-Allotment Option, we
completed the private sale of an additional 485,580 private placement warrants to our sponsor and EBC (402,121 private placement
warrants to our sponsor and 83,459 to EBC), generating gross proceeds to us of $485,580.
A
total of $127,447,860, comprised of $122,162,280 of the proceeds from the IPO and $5,285,580 of the proceeds from the private
sales, was placed in a U.S.-based trust account (the “trust account”) maintained by Continental Stock Transfer
& Trust Company, acting as trustee.
We
must complete our initial business combination by May 17, 2022, 18 months from the closing of our IPO. If our initial business
combination is not consummated by May 17, 2022, then our existence will terminate, and we will distribute all amounts in the trust
account.
Our
Company
We
believe our management team, together with N*GEN, an affiliate of our sponsor, are well suited to identify businesses that benefit
from strong ESG profiles and have the potential to generate attractive risk-adjusted returns for our stockholders.
We
are seeking to identify and acquire a business that could benefit from a strategically experienced owner with extensive investment
experience in the healthy consumer and smart cities sectors, and that presents potential for an attractive risk-adjusted return
profile. The global wellness economy was a $4.5 trillion market in 2018, growing roughly twice as fast as the economy as a whole.
Personal care, beauty and food products accounted for approximately $1.8 trillion of that total. Globally, organic foods and beverages
are expected to grow at a compound annual growth rate of over 15.7% from 2018 to 2025, reaching almost $400 billion by 2025.
Consumers are seeking healthier, cleaner, more sustainable products and ingredients in the U.S. and globally. According to a recent
study by NYU Stern and IRI, products marketed as sustainable drove over 50% of packaged goods market growth across all channels
and categories from 2013-2018, despite representing only a 16.6% market share. This growth was over 5.6 times faster than conventional
products and accounted for $114 billion in sales in 2018.
More
recently in large part due to the impacts of Covid-19, the March 2020 year-over-year growth of organic produce in the U.S.
was 10 times as high as the same period in 2019. Changes that were already underway have accelerated. Incumbent businesses
are reacting to address shifts in consumer tastes and the changing landscape. Many of these shifts will continue to change the
ways we live and work, reflecting an acceleration of trends in which members of our management team have been investing for over
10 years.
A
smarter city makes the lives of its inhabitants safer, more convenient, and more comfortable. According to the 2010 Census, U.S.
cities are home to nearly 63% of the population, but comprise under 4% of the total land area of the United States. While
this density can lead to the cherished dynamism of urban areas, it also creates a myriad of issues like pollution, traffic, disease,
and food & energy insecurity. Adoption of green technologies is addressing these problems and forging the city of the
future. According to Grand View Research the global Smart City market will reach $1 trillion in 2020 and is forecasted to grow
at a 5-year CAGR of over 20%, reaching $2.6 trillion by 2025.
Importantly,
economics and cost are propelling the diffusion of these new Smart City technologies. According to the National Renewable Energy
Laboratory (“NREL”), costs of lithium-ion batteries have fallen 80% in the past 5 years while solar
energy costs have fallen 82% since 2010 leading to 1350% growth in installed capacity.
Our
sponsor, BWA Holdings LLC, is an entity owned by members of our management and is affiliated with N*GEN. Rosemary L. Ripley, our
CEO, and Peter S.H. Grubstein, our CFO, have worked together at N*GEN since 2007. Shay Murphy joined N*GEN in 2015. Founded in
2001, N*GEN has raised over $500 million in a number of venture capital investment vehicles that it currently manages. Ms. Ripley
and Mr. Grubstein are both Managing Members of N*GEN. Ms. Ripley brings years of private equity, strategy and M&A
experience in the consumer products industry. Mr. Grubstein has deep operating and investing experience in the manufacturing
and distribution businesses and in the sustainability sectors. Both individuals are experienced operating and investment professionals,
under whose leadership N*GEN has distinguished itself by being a market innovator and leader in ESG and impact investing and making
numerous direct investments in healthier consumer sectors, energy efficiency, urban farming and smart cities, and is known in
the industry both for its track record of selecting companies utilizing proprietary research and the value that it adds to its
portfolio companies in scaling their growth. As a result, N*GEN has developed deep industry relationships across its sectors.
We
believe the reputation and expertise of our management team in the healthy living industry make us a desirable partner for potential
business combination targets. The breadth and depth of our investing experience have afforded us with insight on potential candidates
in multiple sectors within the healthy living sector.
As
growth equity investors, we seek to back world class entrepreneurs and invest in innovative B2B and B2C companies offering
differentiated, healthier, and more efficient solutions. We are looking for innovation-driven, growth companies that capitalize
on next generation consumer behavior and challenges that we believe will ultimately become the innovation engines of their industries,
including those in the next generation consumer, health and wellness, and enabling technologies sectors.
We
are especially focusing on sectors being transformed by massive change, which we believe creates enormous opportunities for younger
companies to capture market share by utilizing new business models, routes to market and cleaner ingredients. Specifically, the
acquisition opportunities we are pursuing include companies in the healthy consumer and smart cities sectors that are working
to develop new and creative services and solutions for the next generation consumer. Our management team seeks to collaborate
with experienced entrepreneurs and invest in high growth companies to create a healthier, smarter, and cleaner future.
Historically,
N*GEN has sourced its transactions using proprietary research and targeted sectors growing faster than the overall economy. N*GEN
focuses on differentiated businesses that demonstrate strong, sustainable profitable growth. N*GEN has honed its investment process
over the years and leveraged its extensive network of contacts including advisors, senior professionals in select industries,
private equity principals, investment bankers, other financial sponsors and owners of private businesses.
Covid-19 has
further accelerated changes in how people live and interact with the world, leading people to seek healthier, more connected,
and more sustainable lifestyles. We expect our business combination target to be able to take advantage of the current trends
toward increased spending on health and wellness as well as smarter homes and work environments. On the commercial side, security,
mobility and greater municipal autonomy are fueling growth in local food supply systems, health, infrastructure, communications,
and energy security/efficiency programs.
Business
Strategy
Our
acquisition and value creation strategy is to identify, acquire and build a company in the healthy living/ESG sector that complements
the experience of our management team, benefiting from our strategic and operational expertise. After the initial business combination,
we may pursue additional acquisitions with a focus on generating attractive risk adjusted returns for our stockholders. We seek
to leverage our management team’s network of potential proprietary and public transaction sources where we believe a combination
of our relationships, knowledge and experience could effect a positive transformation or augmentation of existing businesses to
improve their overall value.
We
utilize a research-driven process to generate significant deal flow that we believe is enhanced by the network and industry
experience of our management team.
Over
the course of their careers, the members of our management team and their affiliates have developed a broad network of contacts
and corporate relationships that we believe will serve as a useful source of acquisition opportunities. This network has been
developed through our management team’s:
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extensive
experience in both investing in and operating across our targeted sectors;
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experience
in sourcing, structuring, acquiring, operating, developing, growing, financing and selling businesses; and
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experience
in executing transactions in the sectors under varying economic and financial market conditions.
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We
expect these networks will continue to provide our management team with a robust flow of acquisition opportunities, and supplement
our internally derived deal flow. In addition, target business candidates may be brought to our attention from various unaffiliated
sources, which may include investment market participants, private equity groups, investment banking firms, consultants, accounting
firms and large business enterprises.
Acquisition
Criteria
Consistent
with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective target businesses. We have used and will continue to use these criteria and guidelines in evaluating acquisition opportunities,
but we may decide to enter into our initial business combination with a target business that does not meet these criteria and
guidelines. We intend to acquire companies that we believe:
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have
a current enterprise value between $500 million and $3 billion;
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have
market and/or cost leadership positions in their respective sectors and would benefit from our networks and insights;
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provide
innovative products or services, with the potential for revenue, market share and/or distribution improvements;
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are
fundamentally sound companies that offer compelling growth and value;
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offer
the opportunity for our management team to partner with established management teams or business owners to achieve long-term strategic
and operational excellence;
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exhibit
unrecognized value or other characteristics, desirable returns on capital, and a need for capital to achieve the company’s
growth strategy that offers superior risk/reward potential based on our analysis and due diligence review; and
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will
offer an attractive risk-adjusted return for our stockholders.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination
may be based, to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that our
management 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 Report, would be in
the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Our
Acquisition Process
In
evaluating a prospective target business, we conduct thorough due diligence that encompasses, among other things, meetings with
incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial and other information
that will be made available to us. We utilize our operational and capital allocation experience. We are not prohibited from pursuing
an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek
to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or
a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent
entity that commonly renders valuation opinions that our initial business combination is fair to our company from a financial
point of view.
Members
of our management team and our independent directors indirectly own founder shares and/or private placement warrants and, accordingly,
may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate
our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to
evaluating a particular business combination if the retention or resignation of any such officers and directors was included by
a target business as a condition to any agreement with respect to our initial business combination. Each of our officers and directors
presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant
to which such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of
our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she
has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations
to present such opportunity to such entity. We do not believe, however, that the fiduciary duties or contractual obligations of
our officers or directors will materially affect our ability to complete our business combination.
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
of Directors 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 or another independent entity that commonly renders valuation opinions
with respect to the satisfaction of such criteria.
Corporate
Information
Our
executive offices are located at 733 Third Avenue, 18th Floor, New York, NY 10017. We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified
by the Jumpstart Our Business Startups Act of 2012, or 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 of 2002, or the Sarbanes-Oxley Act. 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 IPO, (b) in which
we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our common stock that is held by nonaffiliates 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.
Competitive
Strengths
Alternative
Path to Becoming Public
We
believe our structure as a public company makes us an attractive business combination partner to prospective target businesses
that desires to become a publicly listed company. A merger with us will offer a target business an alternative process to a public
listing rather than the traditional initial public offering process. We believe that target businesses may favor this alternative,
which we believe is less expensive, while offering greater certainty of execution than the traditional initial public offering.
Furthermore, once a proposed business combination is approved by our stockholders and the transaction is consummated, 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 that could prevent the offering from occurring. Once public,
we believe the target business would have greater access to capital and additional means of creating management incentives that
are better aligned with stockholders’ interests than it would as a private company. A public company can offer further benefits
by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented management. With
public company corporate governance standards, a target business may become attractive to the public investors.
Strong
and Stable Financial Position with Flexibility.
With
funds in the trust account of $127,462,689 (as of December 31, 2020 and assuming no redemptions) available to use for a business
combination, we offer a target business a variety of options such as providing the owners of a target business with shares in
a public company and a public means to sell such shares, providing capital for the potential growth and expansion of its operations
or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate our initial business combination
using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However,
since we have no specific business combination under consideration, we have not taken any steps to secure third party financing
and there can be no assurance that it will be available to us.
Effecting
a Business Combination
General
We
are not presently engaged in, and we will not engage in, any substantive commercial business until we consummate our initial business
combination. We will utilize cash derived from the proceeds of our IPO and the private placement of private warrants, our capital
stock, debt or a combination of these in effecting a business combination which has not yet been identified. A business combination
may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires
to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking
a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various federal
and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially
unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with
more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single
business combination.
We
will have up to 12 months from the closing of our IPO, or until November 17, 2021, to consummate an initial business combination.
However, if we anticipate that we may not be able to consummate our initial business combination within 12 months, we may, by
resolution of our board if requested by our sponsor, extend the period of time to consummate a business combination up to two
times, each by an additional three months (for a total of up to 18 months, or until May 17, 2022, to complete a business
combination), subject to the sponsor depositing additional funds into the trust account as set out below. Pursuant to the terms
of our amended and restated certificate of incorporation and the trust agreement entered into between us and Continental Stock
Transfer & Trust Company, in order for the time available for us to consummate our initial business combination to be extended,
our sponsor or its affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into
the trust account $1,261,860 (or $0.10 per unit, up to an aggregate of $2,523,720) on or prior to the date of the applicable deadline,
for each three month extension. Any such payments would be made in the form of non-interest bearing loans. If we complete
our initial business combination, we will, at the option of our sponsor, repay such loaned amounts out of the proceeds of the
trust account released to us or convert a portion or all of the total loan amount into warrants at a price of $1.00 per warrant,
which warrants will be identical to the private warrants. If we do not complete a business combination, we will repay such loans
only from funds held outside of the trust account. In the event that we receive notice from our sponsor five days prior to the
applicable deadline of its wish for us to effect an extension, we intend to issue a press release announcing such intention at
least three days prior to the applicable deadline. In addition, we intend to issue a press release the day after the applicable
deadline announcing whether or not the funds had been timely deposited. Our sponsor and its affiliates or designees are not obligated
to fund the trust account to extend the time for us to complete our initial business combination. If we are unable to consummate
an initial business combination within such time period, we will redeem 100% of our issued and outstanding public shares for a
pro rata portion of the funds held in the trust account, equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number
of then outstanding public shares, subject to applicable law and as further described herein, and then seek to dissolve and liquidate.
We expect the pro rata redemption price to be approximately $10.10 per public share, without taking into account any interest
earned on such funds. However, we cannot assure you that we will in fact be able to distribute such amounts as a result of claims
of creditors which may take priority over the claims of our public shareholders.
Sources
of Target Businesses
Our
principal means of identifying potential target businesses is through the extensive contacts and relationships of our sponsor,
initial stockholders, officers and directors. While our officers and directors are not required to commit any specific amount
of time in identifying or performing due diligence on potential target businesses, our officers and directors believe that the
relationships they have developed over their careers and their access to our sponsor’s contacts and resources have generated,
and will continue to generate, a number of potential business combination opportunities that will warrant further investigation.
Target business candidates may be brought to our attention from various unaffiliated sources, including investment bankers, venture
capital funds, private equity funds, leveraged buyout funds, management buyout funds and other members of the financial community.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls
or mailings. These sources may also introduce us to target businesses they think we may be interested in on an unsolicited basis,
since many of these sources will have read this Report and know what types of businesses we are targeting.
Our
officers and directors must present to us all target business opportunities that have a fair market value of at least 80% of the
assets held in the trust account at the time of the agreement to enter into the initial business combination, subject to any pre-existing fiduciary
or contractual obligations. While we have not engaged the services of professional firms or other individuals that specialize
in business acquisitions on any formal basis (other than EBC as described in our IPO prospectus), we may engage these firms or
other individuals in the future, in which event we may pay a finder’s fee, consulting fee or other compensation to be determined
in an arm’s length negotiation based on the terms of the transaction. In no event, however, will our sponsor, initial stockholders,
officers, directors or their respective affiliates be paid any compensation prior to, or for any services they render in order
to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is) other than
the $10,000 per month administrative fee, the payment of consulting, success or finder fees in connection with the consummation
of our initial business combination and reimbursement of any out-of-pocket expenses. Our audit committee will review and
approve all reimbursements and payments made to our sponsor, officers, directors or our or their respective affiliates, with any
interested director abstaining from such review and approval.
We
have no present intention to enter into a business combination with a target business that is affiliated with any of our officers,
directors or sponsor. However, we are not restricted from entering into any such transactions and may do so if (i) such transaction
is approved by a majority of our disinterested independent directors and (ii) we obtain an opinion from an independent investment
banking firm, or another independent entity that commonly renders valuation opinions, that the business combination is fair to
our unaffiliated stockholders from a financial point of view.
Selection
of a Target Business and Structuring of a Business Combination
Subject
to our management team’s pre-existing fiduciary obligations and the limitations that a target business have a fair
market value of at least 80% of the balance in the trust account at the time of the execution of a definitive agreement for our
initial business combination, as described below in more detail, and that we must acquire a controlling interest in the target
business, our management will have virtually unrestricted flexibility in identifying and selecting a prospective target business.
We have not established any specific attributes or criteria (financial or otherwise) for prospective target businesses. In evaluating
a prospective target business, our management may consider a variety of factors, including one or more of the following:
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financial
condition and results of operation;
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brand
recognition and potential;
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experience
and skill of management and availability of additional personnel;
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stage
of development of the products, processes or services;
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existing
distribution and potential for expansion;
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degree
of current or potential market acceptance of the products, processes or services;
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proprietary
aspects of products and the extent of intellectual property or other protection for products or formulas;
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impact
of regulation on the business;
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regulatory
environment of the industry;
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costs
associated with effecting the business combination;
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industry
leadership, sustainability of market share and attractiveness of market industries in which a target business participates; and
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macro
competitive dynamics in the industry within which the company competes.
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These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be
based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting
a business combination consistent with our business objective. In evaluating a prospective target business, we conduct an extensive
due diligence review which encompasses, among other things, meetings with incumbent management and inspection of facilities, as
well as review of financial and other information which is made available to us. This due diligence review is conducted either
by our management or by unaffiliated third parties we may engage, although we have no current intention to engage any such third
parties.
The
time and costs required to select and evaluate a target business and to structure and complete the business combination cannot
presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which a business combination is not ultimately completed will result in a loss to us and reduce
the amount of capital available to otherwise complete a business combination.
Fair
Market Value of Target Business
Nasdaq
listing rules require that the target business or businesses that we acquire must collectively have a fair market value equal
to at least 80% of the balance of the funds in the trust account at the time of the execution of a definitive agreement for our
initial business combination. Notwithstanding the foregoing, if we are not then listed on Nasdaq for whatever reason, we would
no longer be required to meet the foregoing 80% fair market value test.
We
currently anticipate structuring a business combination to acquire 100% of the equity interests or assets of the target business
or businesses. We may, however, structure our initial business combination where we merge directly with the target business or
a newly formed subsidiary or where we acquire less than 100% of such interests or assets of the target business in order to meet
certain objectives of the target management team or stockholders or for other reasons, but we will only complete such business
combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target
or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities
of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction 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 in exchange for all of the outstanding capital stock of a target.
In this case, we could acquire a 100% controlling interest in the target; however, as a result of the issuance of a substantial
number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of
our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of
a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses
that is owned or acquired is what will be valued for purposes of the 80% of trust account balance test.
The
fair market value of the target will be determined by our Board of Directors based upon one or more standards generally accepted
by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). The proxy solicitation
materials or tender offer documents used by us in connection with any proposed transaction will provide public stockholders with
our analysis of the fair market value of the target business, as well as the basis for our determinations. If our Board of Directors
is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion
from an unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions,
with respect to the satisfaction of such criteria. We will not be required to obtain an opinion from an investment banking firm
as to the fair market value if our board of directors independently determines that the target business complies with the 80%
threshold.
Lack
of Business Diversification
We
may seek to effect a business combination with more than one target business, although we expect to complete our business combination
with just one business. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future
performance of a single business operation. Unlike other entities which may have the resources to complete several business combinations
of entities operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the
resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating
a business combination with only a single entity, our lack of diversification may:
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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 a business combination, and
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result
in our dependency upon the performance of a single operating business or the development or market acceptance of a single or limited
number of products, processes or services.
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If
we determine to simultaneously acquire several businesses and such businesses 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 acquisitions,
which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions,
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.
Limited
Ability to Evaluate the Target Business’ Management
Although
we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business
combination, we cannot assure you that our assessment of the target business’ management will prove to be correct. In addition,
we cannot assure you that the future management will have the necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of our officers and directors, if any, in the target business following a business combination
cannot presently be stated with any certainty. While it is possible that some of our key personnel will remain associated in senior
management or advisory positions with us following a business combination, it is unlikely that they will devote their full-time
efforts to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after
the consummation of a business combination if they are able to negotiate employment or consulting agreements in connection with
the business combination. Such negotiations would take place simultaneously with the negotiation of the business combination and
could provide for them to receive compensation in the form of cash payments and/or our securities for services they would render
to the company after the consummation of the business combination. While the personal and financial interests of our key personnel
may influence their motivation in identifying and selecting a target business, their ability to remain with the company after
the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed
with any potential business combination. Additionally, we cannot assure you that our officers and directors will have significant
experience or knowledge relating to the operations of the particular target business.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do
recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, we will either (1) seek stockholder approval of our initial business combination
at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for
or against the proposed business combination or do not vote at all, into their pro rata share of the aggregate amount then on
deposit in the trust account (net of taxes payable), or (2) provide our stockholders with the opportunity to sell their shares
to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share
of the aggregate amount then on deposit in the trust account (net of taxes payable), in each case subject to the limitations described
herein. 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. If we determine to engage in a tender offer, such tender offer will be structured so that each stockholder may tender
all of his, her or its shares rather than some pro rata portion of his, her or its shares. In that case, we will file tender offer
documents with the SEC which will contain substantially the same financial and other information about the initial business combination
as is required under the SEC’s proxy rules. Whether we seek stockholder approval or engage in a tender offer, we will consummate
our initial business combination only if we have net tangible assets of at least $5,000,001 immediately prior to or upon consummation
of such business combination and, if we seek stockholder approval, a majority of the outstanding shares of common stock voted
are voted in favor of the business combination. We have no specified maximum percentage threshold for conversions in our amended
and restated certificate of incorporation and even those public stockholders who vote in favor of our initial business combination
have the right to convert their public shares. As a result, this may make it easier for us to consummate our initial business
combination.
We
chose our net tangible asset threshold of $5,000,001 to ensure that we would avoid being subject to Rule 419 promulgated
under the Securities Act of 1933, as amended. However, if we seek to consummate an initial business combination with a target
business that imposes any type of working capital closing condition or requires us to have a minimum amount of funds available
from the trust account upon consummation of such initial business combination, we may need to have more than $5,000,001 in net
tangible assets immediately prior to or upon consummation and this may force us to seek third party financing which may not be
available on terms acceptable to us or at all. As a result, we may not be able to consummate such initial business combination
and we may not be able to locate another suitable target within the applicable time period, if at all. Public stockholders may
therefore have to wait 12 months, or until November 17, 2021 (or up to 18 months, or until May 17, 2022, if we extend
the period of time to consummate a business combination) from the closing of our IPO in order to be able to receive a pro rata
share of the trust account.
Our
sponsor, initial stockholders, officers and directors have agreed (1) to vote any shares of common stock owned by them in
favor of any proposed business combination, (2) not to convert any shares of common stock in connection with a stockholder
vote to approve a proposed initial business combination and (3) not sell any shares of common stock in any tender in connection
with a proposed initial business combination.
None
of our officers, directors, sponsor, initial stockholders or their affiliates has indicated any intention to purchase units or
shares of common stock in our IPO or from persons in the open market or in private transactions. However, if we hold a meeting
to approve a proposed business combination and a significant number of stockholders vote, or indicate an intention to vote, against
such proposed business combination or that they wish to convert their shares, our officers, directors, sponsor, initial stockholders
or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote and
reduce the number of conversions. Notwithstanding the foregoing, our officers, directors, sponsor, initial stockholders and their
affiliates will not make purchases of shares of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of
the Exchange Act, which are rules designed to stop potential manipulation of a company’s stock.
Conversion
Rights
At
any meeting called to approve an initial business combination, public stockholders may seek to convert their shares, regardless
of whether they vote for or against the proposed business combination or do not vote at all, into their pro rata share of the
aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial business
combination, less any taxes then due but not yet paid. Alternatively, we may provide our public stockholders with the opportunity
to sell their shares of our common stock to us through a tender offer (and thereby avoid the need for a stockholder vote) for
an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, less any taxes then due
but not yet paid.
Our
sponsor, initial stockholders and our officers and directors do not have conversion rights with respect to any shares of common
stock owned by them, directly or indirectly, whether acquired prior to our IPO or purchased by them in our IPO or in the aftermarket.
Additionally, the holders of the representative shares do not have conversion rights with respect to the representative shares.
We
may require public stockholders, whether they are a record holder or hold their shares in “street name,” to either
(i) tender their certificates to our transfer agent or (ii) deliver their shares to the transfer agent electronically
using Depository Trust Company’s Deposit/Withdrawal At Custodian (“DWAC”) System, at the holder’s
option, in each case prior to a date set forth in the proxy materials sent in connection with the proposal to approve the business
combination.
There
is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker a nominal amount and it would be up
to the broker whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of whether or
not we require holders seeking to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion
rights regardless of the timing of when such delivery must be effectuated. However, in the event we require stockholders seeking
to exercise conversion rights prior to the consummation of the proposed business combination and the proposed business combination
is not consummated this may result in an increased cost to stockholders.
Any
proxy solicitation materials we furnish to stockholders in connection with a vote for any proposed business combination will indicate
whether we are requiring stockholders to satisfy such certification and delivery requirements. Accordingly, a stockholder would
have from the time the stockholder received our proxy statement up until the vote on the proposal to approve the business combination
to deliver his shares if he wishes to seek to exercise his conversion rights. This time period varies depending on the specific
facts of each transaction. However, as the delivery process can be accomplished by the stockholder, whether or not he is a record
holder or his shares are held in “street name,” in a matter of hours by simply contacting the transfer agent or his
broker and requesting delivery of his shares through the DWAC System, we believe this time period is sufficient for an average
investor. However, we cannot assure you of this fact.
Any
request to convert such shares once made, may be withdrawn at any time up to the vote on the proposed business combination or
the expiration of the tender offer. Furthermore, if a holder of public shares delivered his certificate in connection with an
election of their conversion and subsequently decides prior to the applicable date not to elect to exercise such rights, he may
simply request that the transfer agent return the certificate (physically or electronically).
If
the initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account.
In such case, we will promptly return any shares delivered by public holders.
Liquidation
if No Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 12 months, or until November 17, 2021 (or
up to 18 months, or until May 17, 2022, from the closing of our IPO if we extend the period of time to consummate a business combination)
from the closing of our IPO to complete an initial business combination. If we have not completed an initial business combination
by such date, 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 100% of the outstanding public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including any interest not previously released
to us but net of taxes payable, 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 liquidation distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above)
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Our
sponsor, initial stockholders, officers and directors have agreed that they will not propose any amendment to our amended and
restated certificate of incorporation that would affect our public stockholders’ ability to convert or sell their shares
to us in connection with a business combination as described herein or affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete a business combination within 12 months, or until November 17, 2021 (or up
to 18 months, or until May 17, 2021 from the closing of our IPO if we extend the period of time to consummate a business
combination) from the closing of our IPO unless we provide our public stockholders with the opportunity to convert their shares
of common stock upon such approval at a per-share price, payable in cash, equal to the aggregate amount then on deposit in
the trust account, including interest not previously released to us but net of franchise and income taxes payable, divided by
the number of then outstanding public shares. This redemption right shall apply in the event of the approval of any such amendment,
whether proposed by our sponsor, initial stockholders, executive officers, directors or any other person.
Under
the Delaware General Corporation Law, 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 100% of our outstanding public shares in the event we do not complete our initial business
combination within the required time period may be considered a liquidation distribution under Delaware law. If the corporation
complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law 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. It is our intention to redeem our public shares as soon as reasonably possible following the 12 month period
from the closing of our IPO, or by November 17, 2021 (or up to the 18 month period from the closing of our IPO if we extend
the period of time to consummate a business combination, or by May 17, 2022), 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.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public
shares in the event we do not complete our initial business combination within the required time period is not considered a liquidation
distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of
the Delaware General Corporation Law, 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 liquidation distribution.
Because
we will not be complying with Section 280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General
Corporation Law requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all
existing and pending claims or claims that may be potentially brought against us within the subsequent ten years. However, because
we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective
target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers,
etc.) or prospective target businesses.
We
are required to seek to have all third parties (including any vendors or other entities we engage after our IPO) and any prospective
target businesses enter into agreements with us waiving any right, title, interest or claim of any kind they may have in or to
any monies held in the trust account. As a result, the claims that could be made against us will be limited, thereby lessening
the likelihood that any claim would result in any liability extending to the trust. We therefore believe that any necessary provision
for creditors will be reduced and should not have a significant impact on our ability to distribute the funds in the trust account
to our public stockholders. Nevertheless, Marcum LLP, our independent registered public accounting firm, and the underwriters
of our IPO, will not execute agreements with us waiving such claims to the monies held in the trust account. Furthermore, there
is no guarantee that other vendors, service providers and prospective target businesses will execute such agreements. Nor is there
any guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account. Our sponsor
has agreed that it will be liable to ensure that the proceeds in the trust account are not reduced below $10.10 per share by the
claims of target businesses or claims of vendors or other entities that are owed money by us for services rendered or contracted
for or products sold to us, but we cannot assure you that it will be able to satisfy its indemnification obligations if it is
required to do so. We have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified
whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets
are securities of our company. Therefore, we believe it is unlikely that our sponsor will be able to satisfy its indemnification
obligations if it is required to do so. Additionally, the agreement our sponsor entered into specifically provides for two exceptions
to the indemnity it has given: it will have no liability (1) as to any claimed amounts owed to a target business or vendor
or other entity who has executed an agreement with us waiving any right, title, interest or claim of any kind they may have in
or to any monies held in the trust account, or (2) as to any claims for indemnification by the underwriters of our IPO against
certain liabilities, including liabilities under the Securities Act. As a result, if we liquidate, the per-share distribution
from the trust account could be less than $10.10 due to claims or potential claims of creditors.
We
anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after the 12 month period
(or up to the 18 months if we extend the period of time to consummate a business combination) from the closing of our IPO
and anticipate it will take no more than 10 business days to effectuate such distribution. The holders of the founder shares have
waived their rights to participate in any liquidation distribution from the trust account with respect to such shares. There will
be no distribution from the trust account with respect to our warrants, which will expire worthless. We will pay the costs of
any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, our sponsor
has contractually agreed to advance us the funds necessary to complete such liquidation (currently anticipated to be no more than
approximately $15,000) and has contractually agreed not to seek repayment for such expenses.
If
we are unable to complete an initial business combination and expend all of the net proceeds of our IPO, other than the proceeds
deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the initial per-share redemption
price would be $10.10. As discussed above, the proceeds deposited in the trust account could become subject to claims of our creditors
that are in preference to the claims of public stockholders.
Our
public stockholders shall be entitled to receive funds from the trust account only in the event of our failure to complete a business
combination within the required time period, if the stockholders seek to have us convert or purchase their respective shares upon
a business combination which is actually completed by us or upon certain amendments to our amended and restated certificate of
incorporation prior to consummating an initial business combination. In no other circumstances shall a stockholder have any right
or interest of any kind to or in the trust account.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which 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 to our public stockholders at least $10.10 per share.
If
we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which 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. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders
promptly after 12 months (or up to 18 months if we extend the period of time to consummate a business combination) from
the closing of our IPO, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors
with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary
duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive
damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you
that claims will not be brought against us for these reasons.
Amended
and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions relating to our IPO that will
apply to us until the consummation of our initial business combination. These provisions cannot be amended without the approval
of a majority of our stockholders. If we seek to amend any provisions of our amended and restated certificate of incorporation
that would affect our public stockholders’ ability to convert or sell their shares to us in connection with a business combination
as described herein or affect the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
a business combination within 12 months, or by November 17, 2021 (or up to 18 months, or by May 17, 2022, from the closing
of our IPO if we extend the period of time to consummate a business combination) from the closing of our IPO, we will provide
dissenting public stockholders with the opportunity to convert their public shares in connection with any such vote. This conversion
right shall apply in the event of the approval of any such amendment, whether proposed by our sponsor, any executive officer,
director or director nominee, or any other person. Our sponsor, officers and directors have agreed to waive any conversion rights
with respect to any founder shares and any public shares they may hold in connection with any vote to amend our amended and restated
certificate of incorporation. Specifically, our amended and restated certificate of incorporation provides, among other things,
that:
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we
shall either (1) seek stockholder approval of our initial business combination at
a meeting called for such purpose at which stockholders may seek to convert their shares,
regardless of whether they vote for or against the proposed business combination or do
not vote at all, into their pro rata share of the aggregate amount then on deposit in
the trust account (net of taxes payable), or (2) provide our stockholders with the
opportunity to sell their shares to us by means of a tender offer (and thereby avoid
the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate
amount then on deposit in the trust account (net of taxes payable), in each case subject
to the limitations described herein;
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we
will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 immediately prior
to or upon consummation of such business combination and, if we seek stockholder approval, a majority of the outstanding shares
of common stock voted are voted in favor of the business combination;
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if
our initial business combination is not consummated within 12 months, or by November 17, 2021 (or up to 18 months, or
by May 17, 2022, if we extend the period of time to consummate a business combination) from the closing of our IPO, then we will
redeem all of the outstanding public shares and thereafter liquidate and dissolve our company;
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upon
the consummation of our IPO, approximately $127.4 million was placed into the trust account;
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we
may not consummate any other business combination, merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar transaction prior to our initial business combination; and
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prior
to our initial business combination, we may not issue additional stock that participates in any manner in the proceeds of the
trust account, or that votes as a class with the common stock sold in our IPO on an initial business combination.
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Competition
In
identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business
objective similar to ours. Many of these entities are well established and have extensive experience identifying and effecting
business combinations directly or through affiliates. Many of these competitors possess greater technical, human and other resources
than us and our financial resources will be relatively limited when contrasted with those of many of these competitors. While
we believe there may be numerous potential target businesses that we could acquire with the net proceeds of our IPO, our ability
to compete in acquiring certain sizable target businesses may be limited by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
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our
obligation to seek stockholder approval of a business combination or engage in a tender offer may delay the completion of a transaction;
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our
obligation to convert or repurchase shares of common stock held by our public stockholders may reduce the resources available
to us for a business combination; and
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our
outstanding warrants, and the potential future dilution they represent.
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Any
of these factors may place us at a competitive disadvantage in successfully negotiating a business combination. Our management
believes, however, that our status as a public entity and potential access to the United States public equity markets may
give us a competitive advantage over privately held entities having a similar business objective as ours in acquiring a target
business with significant growth potential on favorable terms.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the
target business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete
effectively.
Facilities
Our
executive offices are located at 733 Third Avenue, New York, New York 10017. We pay $10,000 per-month to NGEN MGT
II, LLC, an affiliate of our executive officers. We consider our current office space, combined with the other office space otherwise
available to our executive officers, adequate for our current operations.
Employees
We
have three executive officers. These individuals are not obligated to devote any specific number of hours to our matters and intend
to devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will
vary based on whether a target business has been selected for the business combination and the stage of the business combination
process the company is in. Accordingly, once a suitable target business to acquire has been located, management may spend more
time investigating such target business and negotiating and processing the business combination (and consequently spend more time
on our affairs) than had been spent prior to locating a suitable target business. We presently expect our executive officers to
devote such amount of time as they reasonably believe is necessary to our business. We do not intend to have any full-time employees
prior to the consummation of a business combination.
Periodic
Reporting and Audited Financial Statements
Our
units, common stock and warrants are registered under the Exchange Act, and we have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our
annual report will contain financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of any proxy solicitation
materials or tender offer documents sent to stockholders to assist them in assessing the target business. These financial statements
will need to be prepared in accordance with or reconciled to United States generally accepted accounting principles or international
financial reporting standards as promulgated by the International Accounting Standards Board. We cannot assure you that any particular
target business identified by us as a potential acquisition candidate will have the necessary financial statements. To the extent
that this requirement cannot be met, we may not be able to acquire the proposed target business.
We
may be required to have our internal control procedures audited for the fiscal year ending December 31, 2021 as required
by the Sarbanes-Oxley Act. 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.