Item 1A. Risk Factors
An investment in our securities involves a high
degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this
Report and the prospectus associated with our initial public offering, before making a decision to invest in our securities. If any of
the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event,
the trading price of our securities could decline, and you could lose all or part of your investment. For risk factors related to
the Business Combination, please refer to the registration statement on Form S-4 initially filed with the SEC on March 25, 2021.
Risks Relating to our Search for, and Consummation of or Inability
to Consummate, a Business Combination
We are a newly formed company with no operating history and no
revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a newly formed company with no operating
results. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective
of completing our initial business combination with one or more target businesses. We have no plans, arrangements or understandings with
any prospective target business concerning a business combination and may be unable to complete our business combination. If we fail to
complete our business combination, we will never generate any operating revenues.
Past performance by our management team or our Advisors is not
indicative of future performance of an investment in us.
Information regarding performance by, or businesses
associated with, our management team or our Advisors, is presented for informational purposes only. Any past experience and performance
of our management team or our Advisors is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate
for our initial business combination; or (2) of any results with respect to any initial business combination we may consummate. You
should not rely on the historical record of the performance of our management team or our Advisors as being indicative of the future performance
of an investment in us or the returns we will, or are likely to, generate going forward.
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 is 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.
If we seek stockholder approval of our initial business combination,
our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders
vote.
Our initial stockholders have agreed to vote their
founder shares, as well as any public shares purchased during or after our initial public offering, in favor of our initial business combination.
As a result, in addition to our initial stockholders’ founder shares, we would need 12,533,089, or 37.5%, of the 33,421,570 public
shares sold in our initial public offering to be voted in favor of a transaction (assuming all outstanding shares are voted) in order
to have our initial business combination approved. Our initial stockholders own shares representing 20% of our outstanding shares of common
stock immediately following the completion of our initial public offering. Accordingly, if we seek stockholder approval of our initial
business combination, it is more likely that the necessary stockholder approval will be received than would be the case if our initial
stockholders agreed to vote their founder shares in accordance with the majority of the votes cast by our public stockholders.
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Your only opportunity to affect the investment decision regarding
a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek
stockholder approval of the business combination.
At the time of your investment in us, you will
not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our board of directors
may complete a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to
vote on the business combination, unless we seek such stockholder vote. Accordingly, if we do not seek stockholder approval, your only
opportunity to affect the investment decision regarding a potential business combination may be limited to exercising your redemption
rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public
stockholders in which we describe our initial business combination.
The ability of our public stockholders to redeem their shares
for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to
enter into a business combination with a target.
We may seek to enter into a business combination
transaction agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount
of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing condition and, as
a result, would not be able to proceed with the business combination. Furthermore, in no event will we redeem our public shares in an
amount that would cause our net tangible assets to be less than $5,000,001. Consequently, if accepting all properly submitted redemption
requests would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination or such
greater amount necessary to satisfy a closing condition as described above, we would not proceed with such redemption and the related
business combination and may instead search for an alternate business combination. Prospective targets will be aware of these risks and,
thus, may be reluctant to enter into a business combination transaction with us.
The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our
capital structure.
At the time we enter into an agreement for our
initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will need to
structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our business
combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have
a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or
arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected,
we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing.
Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable
levels. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize
our capital structure. The amount of the deferred underwriting commissions payable to the underwriter will not be adjusted for any shares
that are redeemed in connection with a business combination. The per-share amount we will distribute to stockholders who properly exercise
their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions, the per-share value of
shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting commissions.
The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares could increase the probability that our initial business combination would not be
consummated and that you would have to wait for liquidation in order to redeem your stock.
If our business combination agreement requires
us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at closing,
the probability that our initial business combination would not be consummated is increased. If our initial business combination is unsuccessful,
you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in need of immediate
liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade at a discount to the pro rata
amount per share in the trust account. In either situation, you may suffer a material loss on your investment or lose the benefit of funds
expected in connection with our redemption until we liquidate or you are able to sell your stock in the open market.
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The requirement that we complete our initial business combination
within the prescribed time frame may give potential target businesses leverage over us in negotiating a business combination and may decrease
our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine
our ability to complete our business combination on terms that would produce value for our stockholders.
Any potential target business with which we enter
into negotiations concerning a business combination will be aware that we must complete our initial business combination within 24 months
from the closing of our initial public offering. Consequently, such target business may obtain leverage over us in negotiating a business
combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable
to complete our initial business combination with any target business. This risk will increase as we get closer to the timeframe described
above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that
we would have rejected upon a more comprehensive investigation.
Our search for a business combination, and any target business
with which we ultimately consummate a business combination, may be materially adversely affected by the recent coronavirus (COVID-19)
outbreak and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus
was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout the world, including the United States.
On January 30, 2020, the World Health Organization declared the outbreak of COVID-19 a “Public Health Emergency of International
Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency
for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization
characterized the outbreak as a “pandemic”. The COVID-19 outbreak has and a significant outbreak of other infectious diseases
could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business
of any potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore,
we may be unable to complete a business combination if continued concerns relating to COVID-19 continue to restrict travel, limit the
ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable
to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination
will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning
the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or
other matters of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations
of a target business with which we ultimately consummate a business combination, may be materially adversely affected. In addition, our
ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19
and other events, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable
on terms acceptable to us or at all.
We may not be able to complete our initial business combination
within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem
our public shares and liquidate, in which case our public stockholders may only receive $10.00 per share, or less than such amount in
certain circumstances, and our warrants will expire worthless.
Our sponsor, executive officers and directors
have agreed that we must complete our initial business combination within 24 months from the closing of our initial public
offering. We may not be able to find a suitable target business and complete our initial business combination within such time
period. If we have not completed our initial business combination within such time period, we will: (i) cease all operations
except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
including interest earned on the funds held in the trust account and not previously released to us to pay our franchise and income
taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in
each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In
such case, our public stockholders may only receive $10.00 per share, and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares.
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If we are unable to complete an initial business
combination within the 24-month period from the closing of our initial public offering, we may seek an amendment to our amended and restated
certificate of incorporation to extend the period of time we have to complete an initial business combination beyond 24 months. Our
amended and restated certificate of incorporation requires that such an amendment be approved by holders of 65% of our outstanding common
stock.
If we seek stockholder approval of our initial business combination,
our sponsor, directors, officers, advisors and their affiliates may elect to purchase shares from public stockholders, which may influence
a vote on a proposed business combination and reduce the public “float” of our Class A common stock.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules,
our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the open
market either prior to or following the completion of our initial business combination, although they are under no obligation to do so.
Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of our shares is no
longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already
elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their
shares. The purpose of such purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining stockholder approval of the business combination, or to satisfy a closing condition in an agreement with a target that requires
us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement
would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public
“float” of our Class A common stock and the number of beneficial holders of our securities may be reduced, possibly making
it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities exchange.
If a stockholder fails to receive notice of our offer to redeem
our public shares in connection with our business combination, or fails to comply with the procedures for tendering its shares, such shares
may not be redeemed.
We will comply with the tender offer rules or proxy
rules, as applicable, when conducting redemptions in connection with our business combination. Despite our compliance with these rules,
if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may not become aware of the opportunity
to redeem its shares. In addition, the proxy solicitation or tender offer materials, as applicable, that we will furnish to holders of
our public shares in connection with our initial business combination will indicate the applicable delivery requirements, which will include
the requirement that a beneficial holder must identify itself in order to validly redeem its shares. For example, we may require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials
mailed to such holders, or up to two business days prior to the initially scheduled vote on the proposal to approve the business combination
in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically. In the event that a stockholder
fails to comply with these or any other procedures, its shares may not be redeemed.
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As the number of special purpose acquisition companies evaluating
targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase
the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business
combination.
In recent years, the number of special
purpose acquisition companies that have been formed has increased substantially. Many potential targets for special purpose
acquisition companies have already entered into an initial business combination, and there are still many special purpose
acquisition companies seeking targets for their initial business combination, as well as many such companies currently in
registration. As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more
resources to identify a suitable target and to consummate an initial business combination. In addition, because there are more
special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition
for available targets with attractive fundamentals or business models may increase, which could cause target companies to demand
improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector
downturns, geopolitical tensions or increases in the cost of additional capital needed to close business combinations or operate
targets post-business combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find
and consummate an initial business combination, and may result in our inability to consummate an initial business combination on
terms favorable to our investors altogether.
You will not have any rights or interests in funds from the trust
account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares
or warrants, potentially at a loss.
Our public stockholders will be entitled to receive
funds from the trust account only upon the earliest to occur of: (a) the completion of our initial business combination, (b) the
redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate
of incorporation (i) to modify the substance or timing of our obligation to provide holders of our Class A common stock the
right to have their shares redeemed in connection with our initial business combination or to redeem 100% of our public shares if we do
not complete our initial business combination within 24 months from the closing of our initial public offering or (ii) with
respect to any other provisions relating to the rights of holders of our Class A common stock, and (c) the redemption of our
public shares if we have not consummated our business combination within 24 months from the closing of our initial public offering,
subject to applicable law. In addition, if we are unable to complete an initial business combination within 24 months from the closing
of our initial public offering for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing
stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be
forced to wait beyond 24 months from the closing of our initial public offering before they receive funds from our trust account.
In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Accordingly, to liquidate
your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
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 warrants, our ability to compete with respect to the acquisition
of certain target businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation
gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, because we are obligated to pay cash
for the shares of Class A common stock which our public stockholders redeem in connection with our initial business combination,
target companies will be aware that this may reduce the resources available to us for our initial business combination.
This may place us at a competitive disadvantage
in successfully negotiating a business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation.
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If the net proceeds of our initial public offering and the sale
of the private placement warrants not being held in the trust account are insufficient to allow us to operate for at least the next 24 months,
we may be unable to complete our initial business combination, in which case our public stockholders may only receive $10.00 per share,
or less than such amount in certain circumstances, and our warrants will expire worthless.
The funds available to us outside of the trust
account may not be sufficient to allow us to operate for at least the 24 months from the closing of our initial public offering,
assuming that our initial business combination is not completed during that time. We believe that the funds available to us outside of
the trust account will be sufficient to allow us to operate for the 24 months following the closing of our initial public offering;
however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available
to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down
payment or to fund a “no-shop” provision (a provision in letters of intent designed to keep target businesses from “shopping”
around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed
business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public
stockholders may receive less than $10.00 per share upon our liquidation.
If third parties bring claims against us, the proceeds held in
the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share.
Our placing of funds in the trust account may not
protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent
registered public accounting firm), prospective target businesses or other entities with which we do business execute agreements with
us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public
stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented from bringing
claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar
claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim
against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims
to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will only enter
into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement would
be significantly more beneficial to us than any alternative. The underwriter of our initial public offering will not execute an agreement
with us waiving such claims to the monies in the trust account.
Examples of possible instances where we may
engage a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise
or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee
that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with us and will not seek recourse against the trust account for any reason. Upon redemption of our public
shares, if we are unable to complete our business combination within the prescribed timeframe, or upon the exercise of a redemption
right in connection with our business combination, we will be required to provide for payment of claims of creditors that were not
waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount
received by public stockholders could be less than the $10.00 per share initially held in the trust account, due to claims of such
creditors. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or
products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the
amount of funds in the trust account to below (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 that may be withdrawn to pay our franchise and income taxes. This liability will not apply with
respect to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as
to any claims under our indemnity of the underwriter of 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, our sponsor may not be able to satisfy those obligations. As a result, if any such claims were successfully
made against the trust account, the funds available for our initial business combination and redemptions could be reduced to less
than $10.00 per public share. In such event, we may not be able to complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of your public shares. None of our officers will indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
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Our stockholders may be held liable for claims by third parties
against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable
for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata
portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within 24 months from the closing of our initial public offering may be considered a liquidating
distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended
to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a
liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is
our intention to redeem our public shares as soon as reasonably possible following the 24th month from the closing of our initial public
offering in the event we do not complete our business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because 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 will be limited to searching for prospective
target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or
prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the
amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the
dissolution. We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders
could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders
may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our
public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination within 24 months
from the closing of our initial public offering is not considered a liquidating distribution under Delaware law and such redemption distribution
is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then
be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders until after
the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
In accordance with the NYSE corporate governance
requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on the
NYSE. 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.
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Because we are not limited to a particular industry, sector or
any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain the merits or risks
of any particular target business’ operations.
Although we expect to focus our search for a
target business in the industrial sector, we may seek to complete a business combination with an operating company in any industry
or sector. However, we are not, under our amended and restated certificate of incorporation, permitted to effectuate our business
combination with another blank check company or similar company with nominal operations. To the extent we complete our business
combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we
combine with a financially unstable business or an entity lacking an established record of revenues or earnings, we may be affected
by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers
and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will
properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately
prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination
target. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction
in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
We may seek acquisition opportunities in industries or sectors
which may or may not be outside of our management’s area of expertise.
We may consider a business combination outside
of our management’s area of expertise if a business combination candidate is presented to us and we determine that such candidate
offers an attractive acquisition opportunity for our company. Although our management will endeavor to evaluate the risks inherent in
any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant
risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable to investors
in 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 our initial prospectus regarding the areas
of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our
management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any stockholders who choose
to remain stockholders following our business combination could suffer a reduction in the value of their shares. Such stockholders are
unlikely to have a remedy for such reduction in value.
We do not have a specified maximum redemption threshold. The absence
of such a redemption threshold may make it possible for us to complete a business combination with which a substantial majority of our
stockholders do not agree.
Our amended and restated certificate of incorporation
does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 or any greater net tangible asset or cash requirement which may be contained
in the agreement relating to our initial business combination. As a result, we may be able to complete our business combination even though
a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder
approval of our initial business combination and do not conduct redemptions in connection with our business combination pursuant to the
tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors, Advisors
or their affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock
that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business
combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all
shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an
alternate business combination.
In order to effectuate our initial business combination, we may
seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for
us to complete our initial business combination but that our stockholders may not support.
In order to effectuate a business
combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing
instruments, including their warrant agreements. For example, blank check companies have amended the definition of business
combination, increased redemption thresholds and extended the time to consummate an initial business combination and, with respect
to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. We
cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate an initial
business combination in order to effectuate our initial business combination.
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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 shares representing
20% 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 of directors,
whose members were elected by our initial stockholders, is and will be divided into three classes, each of which will generally serve
for a term of three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders
to elect new directors prior to the completion of our business combination, in which case all of the current directors will continue in
office until at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of
their ownership position, will have considerable influence regarding the outcome. In addition, prior to the completion of an initial business
combination, holders of a majority of our founder shares may remove a member of the board of directors for any reason. In addition, as
long as our sponsor is controlled by our founders, we have agreed not to enter into a definitive agreement regarding an initial business
combination without the prior consent of our sponsor. Accordingly, our initial stockholders will continue to exert control at least until
the completion of our business combination.
You are not 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 warrants are intended to be used to complete an initial business combination with a target business,
we may be deemed to be a “blank check” company under the United States securities laws. However, because we have net tangible
assets in excess of $5,000,000 upon the successful completion of our initial public offering and the sale of the private placement warrants
and have filed a Current Report on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated
by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors are 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, if our initial public offering were subject to Rule 419,
that rule would prohibit the release of any interest earned on funds held in the trust account to us unless and until the funds in the
trust account were released to us in connection with our completion of an initial business combination.
We may be required to take write-downs or write-offs, restructuring
and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our
stock price, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on
a target business with which we combine, we cannot assure you that this diligence will surface all material issues that may be
present inside a particular target business, that it would be possible to uncover all material issues through a customary amount of
due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these
factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges
that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may
arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these
charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature
could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to
violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business
or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholders who choose to remain stockholders
following the business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a
remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our
officers or directors of a duty of care or other fiduciary duty owed to such stockholders, or if they are able to successfully bring
a private claim under securities laws that the tender offer materials or proxy statement related to our initial business combination
contained an actionable material misstatement or material omission.
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Our directors may decide not to enforce the indemnification obligations
of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
In the event that the proceeds in the trust account
are reduced below the lesser of (i) $10.00 per public share or (ii) such lesser amount per share held in the trust account as
of the date of the liquidation of the trust account due to reductions in the value of the trust assets, in each case net of the interest
which may be withdrawn to pay our franchise and income taxes, and our sponsor asserts that it is unable to satisfy its obligations or
that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal
action against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent
directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action
is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that
a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification obligations, the amount of
funds in the trust account available for distribution to our public stockholders may be reduced below $10.00 per share.
If, after we distribute the proceeds in the trust account to our
public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a
bankruptcy court may seek to recover such proceeds, and we and our board may be exposed to claims of punitive damages.
If, after we distribute the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either
a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our
creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the trust account to our
public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the
claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy
estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims
deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation
may be reduced.
If we are deemed to be an investment company under the Investment
Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it
difficult for us to complete our business combination.
If we are deemed to be an investment company under
the Investment Company Act, our activities may be restricted, including:
· restrictions on the nature of our investments; and
· In addition, we may have imposed upon us burdensome requirements, including:
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· registration as an investment company;
· adoption of a specific form of corporate structure; and
In order not to be regulated as an investment company
under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other
than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or
trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and
cash items) on an unconsolidated basis. Our business 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 anticipated principal
activities will subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in
United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity
of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company
Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to
invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan
targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant
bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment
Company Act. Our initial public offering was not intended for persons who are seeking a return on investments in government securities
or investment securities. The trust account is intended as a holding place for funds pending the earliest to occur of: (a) the completion
of our initial business combination, (b) the redemption of any public shares properly tendered in connection with a stockholder vote
to amend our amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to provide
holders of our Class A common stock the right to have their shares redeemed in connection with our initial business combination or
to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing of our
initial public offering or (ii) with respect to any other provisions relating to the rights of holders of our Class A common
stock, and (c) the redemption of our public shares if we have not consummated our business combination within 24 months from
the closing of our initial public offering, subject to applicable law. If we do not invest the proceeds as discussed above, we may be
deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these
additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete
a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share on the liquidation of our trust account and our warrants will expire worthless.
We may have a limited ability to assess the management of a prospective
target business and, as a result, may affect our initial business combination with a target business whose management may not have the
skills, qualifications or abilities to manage a public company, 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’ 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.
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We may issue notes or other debt securities, or otherwise incur
substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus negatively
impact the value of our stockholders’ investment in us.
We may choose to incur substantial debt to complete
our 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:
· our inability to pay dividends on our common stock;
· 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 warrants,
which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of
diversification may negatively impact our operations and profitability.
The net proceeds from our initial public offering
and the sale of the private placement warrants initially provided us with $325,533,836 that we may use to complete our initial business
combination (after taking into account the $11,697,550 of deferred underwriting commissions being held in the trust account and the expenses
of our initial public offering).
We may effectuate our business combination with
a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not be able to
effectuate our business combination with more than one target business because of various factors, including the existence of complex
accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present operating
results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing our initial
business combination with only a single business, our lack of diversification may subject us to numerous economic, competitive and regulatory
developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks or offsetting
of losses, unlike other entities which may have the resources to complete several business combinations in different industries or different
areas of a single industry. Accordingly, the prospects for our success may be:
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.
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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.
Because we must furnish our stockholders with target business
financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective
target businesses.
The federal proxy rules require that the proxy
statement with respect to the vote on an initial business combination include historical and pro forma financial statement disclosure.
We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required
under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America, or GAAP, or international financial reporting standards, or IFRS, depending
on the circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public
Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool of potential target
businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose such statements
in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
The provisions of our amended and restated certificate of incorporation
that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from
our trust account) may be amended with the approval of holders of 65% of our common stock, which is a lower amendment threshold than that
of some other blank check companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation
and the trust agreement to facilitate the completion of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation
provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of our
initial public offering and the private placement of warrants into the trust account and not release such amounts except in specified
circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of 65%
of our common stock entitled to vote thereon, and corresponding provisions of the trust agreement governing the release of funds from
our trust account may be amended if approved by holders of 65% of our common stock entitled to vote thereon. In all other instances, our
amended and restated certificate of incorporation may be amended by holders of a majority of our outstanding common stock entitled to
vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our initial stockholders, who collectively
beneficially own 20% 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 which govern our pre-business combination behavior more easily than some other
blank check companies, and this may increase our ability to complete a business combination with which you do not agree. Our stockholders
may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
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Our sponsor, executive officers and directors have
agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation