10-K
1
f10k2020_amplitudehealth.htm
ANNUAL REPORT
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-K
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2020
☐ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from to
Commission
file number: 001-39138
AMPLITUDE
HEALTHCARE ACQUISITION CORPORATION
(Exact
name of registrant as specified in its charter)
1177 Avenue of the Americas, Fl 40 New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant’s
telephone number: (212) 823-1900
Securities
registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act.
Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☒ No ☐
The
aggregate market value of the shares of Class A common stock outstanding, other than shares held by persons who may be deemed
affiliates of the registrant, computed by reference to the closing sales price for the ordinary shares on June 30, 2020, as reported
on the Nasdaq Stock Market LLC, was approximately $102,500,000.
As
of March 26, 2021, there were 10,000,000 shares of Class A common stock and 2,500,000 shares of Class B common stock of the registrant
issued and outstanding.
TABLE
OF CONTENTS
PAGE
PART I
Item 1. Business 1
Item 1A. Risk Factors 13
Item 1B. Unresolved Staff Comments 31
Item 2. Properties 31
Item 3. Legal Proceedings 31
Item 4. Mine Safety Disclosures 31
PART II
Item 6. Selected Financial Data 32
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 36
Item 8. Financial Statements and Supplementary Data 36
Item 9A. Controls and Procedures 36
Item 9B. Other Information 37
PART III
Item 10. Directors, Executive Officers and Corporate Governance 38
Item 11. Executive Compensation 43
Item 14. Principal Accounting Fees and Services 47
PART IV
Item 15. Exhibits and Financial Statement Schedules 48
i
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
report, including, without limitation, statements under the heading “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” includes forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements can be identified by the
use of forward-looking terminology, including the words “believes,” “estimates,” “anticipates,”
“expects,” “intends,” “plans,” “may,” “will,” “potential,”
“projects,” “predicts,” “continue,” or “should,” or, in each case, their negative
or other variations or comparable terminology. There can be no assurance that actual results will not materially differ from expectations.
Such statements include, but are not limited to, any statements relating to our ability to consummate any acquisition or other
business combination and any other statements that are not statements of current or historical facts. These statements are based
on management’s current expectations, but actual results may differ materially due to various factors, including, but not
limited to:
● our ability to complete our initial business combination;
● our pool of prospective target businesses;
● our public securities’ potential liquidity and trading;
● the lack of a market for our securities;
● our financial performance.
The
forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments
and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause
actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.”
Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results
may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required
under applicable securities laws. These risks and others described under “Risk Factors” may not be exhaustive.
By
their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances
that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance
and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate
may differ materially from those made in or suggested by the forward-looking statements contained in this report. In addition,
even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are
consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of
results or developments in subsequent periods.
ii
Unless
otherwise stated in this report, or the context otherwise requires, references to:
● “management” or our “management team” are to our officers and directors;
iii
RISK
FACTORS SUMMARY
The
following is a summary of risks, uncertainties and other factors related to our Company. You should carefully consider all of
the risk factors presented in “Item 1A. Risk Factors” and all other information contained in this Report including
the financial statements.
iv
PART
I
Item 1.Business.
Introduction
We
are a blank check company incorporated as a Delaware corporation formed for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer
to throughout this Report as our initial business combination or our business combination.
While
we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we intend to focus on industries
that complement our management team’s background, and to capitalize on the ability of our management team to identify and
acquire a business, focusing on the healthcare or healthcare related industries in the United States and Europe. In particular,
we intend to prioritize companies in the life sciences and pharmaceutical services sectors where our management team has extensive
experience.
Our
Founders and Directors
We
were jointly founded by Metalmark and Avego, two leading investment firms with a focus on the healthcare industry. Metalmark and
Avego (collectively our “Founders”) have a history of collaborating on and evaluating investment opportunities together
and have successfully partnered within the healthcare space. Our management team is led by the respective founding partners of
Metalmark and Avego, Howard Hoffen and Bala Venkataraman, who serve as our Chairman and Chief Executive Officer, respectively,
and Kenneth Clifford, who serves as our Chief Financial Officer. We have hired a President named Vishal Kapoor who has significant
life sciences and pharmaceutical services sectors experience to help us source, diligence and complete the acquisition of a prospective
target business. In addition, we have assembled a team of industry experts with extensive executive and operational experience
at pharmaceutical, life sciences as well as pharmaceutical services companies who will serve as our directors. We believe that
the experience of our management team and our relationship with Metalmark and Avego will allow us to effectively source, identify
and execute an attractive transaction for our shareholders.
Founders
Metalmark
is a middle-market, growth oriented private investment firm with over two decades of investing experience in a broad range of
industries, with healthcare representing one of its core focus areas. Metalmark was founded by Howard Hoffen, then Chairman and
Chief Executive Officer of Morgan Stanley Capital Partners (“MSCP”) and Morgan Stanley Private Equity, to manage the
MSCP funds and to employ the same successful investment strategies and approaches to the Metalmark Capital funds. Since 1992,
the partners of Metalmark have invested approximately $5.6 billion in over 58 companies and have generated total value of approximately
$11 billion on behalf of investment partners.
Avego is a multi-strategy healthcare-only investment firm with approximately
$300 million (as of November 2019) of committed capital from its principals and more than $1.5 billion in value created in this decade.
The principals of Avego have founded and backed multiple healthcare companies over the last fifteen years, generating significant returns
for their principals and partners. Avego’s expertise and industry contacts allow it to source and evaluate undervalued and high-quality
companies that it believes could be ideal acquisition candidates for our initial business combination. Avego’s principals and scientific
advisors are passionate about applying their experiences as healthcare executives and investors to formulate long-term strategies for
their investment companies that improve the lives of patients and physicians while achieving attractive investment outcomes. Avego’s
investment activity is focused on partnering and working closely with management teams to achieve these objectives.
Metalmark
and Avego have significant domain expertise within the life sciences industry, having investments in the pharmaceutical, specialty
pharmaceutical, and pharmaceutical services verticals and having deep and extensive relationships that enable deal procurement,
evaluation and execution. Additionally, they have extensive capital markets and mergers and acquisitions experience with a shared
discipline regarding investments and capital prioritization, as well as a “true owners” approach with capital at risk.
Our
Directors
Joining
our Founders is a team of key opinion leaders and high level senior life sciences executives, who are currently serving on our
Board of Directors. The team includes Fred Eshelman, former Chairman and Chief Executive Officer of Pharmaceutical Product Development;
Ernest Mario, Chairman of Soleno Therapeutics and former Chief Executive Officer at Glaxo; Peter Dolan, former Chief Executive
Officer of Bristol-Myers Squibb; and Glenn Reicin, the Chief Financial Officer at Sigilon Therapeutics, Inc. Our Board of Directors
provide valuable guidance, extensive technical domain expertise, value added input regarding senior team leadership capabilities,
and have access to differentiated ideas and opportunities through complementary networks to our Founders.
1
Acquisition
Strategy
We
believe our management team is well positioned to identify unique opportunities within the healthcare and healthcare-related industries.
Certain members of our management team have spent significant portions of their careers working with businesses in the healthcare
industry, and have developed a wide network of professional services contacts and business relationships in that industry. Our
selection process leverages our relationships with venture capitalists and growth equity funds, executives of private and public
companies, as well as investment banking firms, which we believe should provide us with a key competitive advantage in sourcing
potential business combination targets. Given our profile and dedicated industry approach, target business candidates are brought
to our attention from various unaffiliated sources, and in particular investors in other private and public companies in our networks.
Our management team also proactively searches for unique opportunities that are best positioned for our initial business combination.
We also believe that our management team’s reputation, experience and track record of making investments in the healthcare
space make us a preferred partner for these potential targets.
Acquisition
Criteria
We
have identified the following criteria to evaluate prospective target businesses. We may however, decide to enter into our initial
business combination with a target business that does not meet these criteria. We currently intend to seek to acquire companies
that we believe:
● will offer attractive risk-adjusted equity returns for our shareholders;
We
may use other criteria as well. Any evaluation relating to the merits of a particular initial business combination may be based,
to the extent relevant, on these general guidelines as well as other considerations, factors and criteria that from time to time
our management team may deem relevant. 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.
In
evaluating a prospective acquisition candidate, we conduct a thorough due diligence review which encompasses, among other things,
meetings with incumbent management, investors and employees, document reviews, inspection of facilities, as well as a review of
scientific, regulatory, operational, financial, legal and other information which will be made available to us. We are not prohibited
from pursuing an initial business combination with a company that is affiliated with our Founders, sponsor, officers, directors
or advisors and their respective affiliates. In the event we seek to complete our initial business combination with a company
that is affiliated with our Founders, sponsor, officers, directors or advisors and their respective affiliates, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or a qualified
independent accounting firm that our initial business combination is fair to our company from a financial point of view.
Initial
Business Combination
Our
initial business combination must occur with one or more target businesses that together have an aggregate fair market value of
at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the
income earned on the trust account) at the time of the agreement to enter into the initial business combination. If our board
is not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from
an independent investment banking firm that is a member of FINRA, or an independent accounting firm with respect to the satisfaction
of such criteria. Our stockholders may not be provided with a copy of such opinion, nor will they be able to rely on such opinion.
We
may, at our option, pursue an acquisition opportunity jointly with one or more entities or funds affiliated with our Founders,
sponsor or management team or their respective affiliates, which we refer to as an “Affiliated Joint Acquisition.”
Any such parties may co-invest with us in the target business at the time of our initial business combination, or we could raise
additional proceeds to complete the acquisition by issuing to such parties a class of equity or equity-linked securities. We refer
to this potential future issuance, or a similar issuance to other specified purchasers, as a “specified future issuance”
throughout this Report.
2
The
amount and other terms and conditions of any such specified future issuance would be determined at the time thereof. We are not
obligated to make any specified future issuance and may determine not to do so. Pursuant to the anti-dilution provisions of our
Class B common stock, any such specified future issuance would result in an adjustment to the conversion ratio such that our initial
stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership at 20% of the sum of the
total number of all shares of common stock outstanding upon completion of our initial public offering plus all shares issued in
the specified future issuance, unless the holders of a majority of the then-outstanding shares of Class B common stock agreed
to waive such adjustment with respect to the specified future issuance at the time thereof. We cannot determine at this time whether
a majority of the holders of our Class B common stock at the time of any such specified future issuance would agree to waive such
adjustment to the conversion ratio. If such adjustment is not waived, the specified future issuance would not reduce the percentage
ownership of holders of our Class B common stock, but would reduce the percentage ownership of holders of our Class A common stock.
If such adjustment is waived, the specified future issuance would reduce the percentage ownership of holders of both classes of
our common stock.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons,
including an Affiliated Joint Acquisition as described above. However, we will only complete such business combination if the
post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
an interest in the target or assets sufficient for the post-transaction company not to be required to register as an investment
company under the Investment Company Act of 1940, as amended, or 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 would acquire a 100% controlling interest in the target.
However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial
business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% of
net assets test. If the business combination involves more than one target business, the 80% of net assets test will be based
on the aggregate value of all of the target businesses and we will treat the target businesses together as the initial business
combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
Our
Acquisition Process
We
believe that conducting comprehensive due diligence on prospective investments is particularly important within the healthcare
industry. We utilize the diligence, rigor, and expertise of our Founders’ respective platforms to evaluate potential targets’
strengths, weaknesses, and opportunities to identify the relative risk and return profile of any potential target for our initial
business combination. Given our management team’s extensive tenure investing in the healthcare industry, we are often familiar
with a prospective target’s end-market, competitive landscape and business model.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our Founders, sponsor,
officers, directors or advisors, subject to certain approvals and consents. In the event we seek to complete our initial business
combination with a company that is affiliated with our Founders, sponsor, officers, directors or advisors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA or an
independent accounting firm that our initial business combination is fair to us from a financial point of view. Currently, we
are not aware of an affiliate of any of our Founders that would make a suitable target for our initial business combination.
Some
of our officers and directors presently have, or 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. All of our officers and certain of our directors and advisors
are employed by or affiliated with our Founders. Our Founders and management team are continuously made aware of potential investment
opportunities, one or more of which we may desire to pursue for a business combination. In addition, we may, at our option, pursue
an Affiliated Joint Acquisition opportunity with an entity to which a Founder, officer or director has a fiduciary or contractual
obligation. Any such entity may co-invest with us in the target business at the time of our initial business combination, or we
could raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity. Our amended
and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered to any director
or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer
of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable
for us to pursue.
Our
officers have agreed not to become an officer or director of any other special purpose acquisition company with a class of securities
registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act, until we have entered into a definitive
agreement regarding our initial business combination or we have failed to complete our initial business combination by November
22, 2021.
3
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination.
In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of
our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs
of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses
will find this method a more certain and cost effective method to becoming a public company than the typical initial public offering.
In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts
that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent
with stockholders’ interests. It can offer further benefits by augmenting a company’s profile among potential new
customers and vendors and aid in attracting talented employees.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies” including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors
find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of
our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following November 22, 2024,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds $700 million as of the
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.
Financial
Position
With
funds in the trust account available for a business combination, as of December 31, 2020, in the amount of $96,839,379, after
payment of $3,500,000 of deferred underwriting fees, in each case before fees and expenses associated with our initial business
combination, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital
for the potential growth and expansion of its operations or strengthening its balance sheet by reducing its debt or leverage ratio.
Because we are able to complete our business combination using our cash, debt or equity securities, or a combination of the foregoing,
we have the flexibility to use the most efficient combination that will allow us to tailor the consideration to be paid to the
target business to fit its needs and desires. However, we have not taken any steps to secure third party financing and there can
be no assurance it will be available to us.
Effecting
our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to complete
our initial business combination using cash from the proceeds of our initial public offering and the private placement of the
private placement warrants, our capital stock, debt or a combination of these as the consideration to be paid in our initial business
combination. We may seek to complete our initial business combination with a company or business that may be financially unstable
or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
4
If
our initial business combination is paid for using equity or debt instruments, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our business combination or used for redemptions of our Class
A common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes, including
for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due on indebtedness
incurred in completing our initial business combination, to fund the purchase of other assets, companies or for working capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination (which may include a specified future issuance), and we may complete our initial business combination
using the proceeds of our initial public offering rather than using the amounts held in the trust account. Subject to compliance
with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our business
combination. In the case of an initial business combination funded with assets other than the trust account assets, our tender
offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if
required by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds
privately, including pursuant to any specified future issuance, or through loans in connection with our initial business combination.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our business combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Sources
of Target Businesses
We
receive proprietary transaction opportunities to originate as a result of the business relationships, direct outreach, and deal
sourcing activities of our management team and our Founders. In addition to the proprietary deal flow, target business candidates
are brought to our attention from various unaffiliated sources, including investment banking firms, consultants, accounting firms,
private equity groups, large business enterprises, and other market participants. These sources may also introduce us to target
businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read our public
filings and know what types of businesses we are targeting. Our management team and our Founders, as well as their affiliates,
may also bring to our attention target business candidates that they become aware of through their business contacts as a result
of formal or informal inquiries or discussions they may have, as well as attending trade shows or conventions. Some of our officers,
directors and advisors may enter into employment or consulting agreements with the post-transaction company following our initial
business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection
process of an acquisition candidate. Except as set forth herein with respect to a bonus payment to Mr. Kapoor, in no event will
our sponsor or any of our existing officers, directors or advisors, or any entity with which they are affiliated, be paid any
finder’s fee, consulting fee, advisory fee or other compensation prior to, or for any services they render in order to effectuate,
the completion of our initial business combination (regardless of the type of transaction that it is) although we may consider
cash or other compensation to officers or advisors we have hired or may hire to be paid either prior to or in connection with
our initial business combination. We have agreed to reimburse our sponsor for any out-of-pocket expenses related to identifying,
investigating and completing an initial business combination.
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our
Founders, sponsor, officers, directors or advisors or making the acquisition through a joint venture or other form of shared ownership
with our Founders, officers, directors or advisors. In the event we seek to complete our initial business combination with a business
combination target that is affiliated with our Founders, sponsor, officers, directors or advisors, we, or a committee of independent
directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting
firm that such an initial business combination is fair to our company from a financial point of view. We are not required to obtain
such an opinion in any other context. If any of our officers or directors becomes aware of a business combination opportunity
that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual obligations,
he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination
opportunity to us. Any such entity may co-invest with us in the target business at the time of our initial business combination,
or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such entity.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for an initial business
combination in a single industry. By completing our business combination with only a single entity, our lack of diversification
may:
5
Limited
Ability to Evaluate the Target’s Management Team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our business combination with that business, our assessment of the target business’ management may not prove to be correct.
In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company.
Furthermore, the future role of members of our management team or of our board, if any, in the target business cannot presently
be stated with any certainty. While it is possible that one or more of our directors will remain associated in some capacity with
us following our business combination, it is presently unknown if any of them will devote their full efforts to our affairs subsequent
to our business combination. Moreover, we cannot assure you that members of our management team will have significant experience
or knowledge relating to the operations of the particular target business. The determination as to whether any members of our
board of directors will remain with the combined company will be made at the time of our initial business combination.
Following
a business combination, to the extent that we deem it necessary, we may seek to recruit additional managers to supplement the
incumbent management team of the target business. We cannot assure you that we will have the ability to recruit additional managers,
or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder
approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business
or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we
may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
Type of Transaction Whether Stockholder Approval is Required
Purchase of assets No
Purchase of stock of target not involving a merger with the company No
Merger of target into a subsidiary of the company No
Merger of the company with a target Yes
Under
NASDAQ’s listing rules, stockholder approval would be required for our initial business combination if, for example:
Permitted
Purchases of our Securities
In
the event we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares
in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions.
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None
of the funds in the trust account will be used to purchase shares in such transactions. Our sponsor, directors, officers, advisors
or their affiliates will not make any such purchases when they are in possession of any material non-public information not disclosed
to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual
acknowledgement that such stockholder, although still the record holder of our shares, is no longer the beneficial owner thereof
and therefore agrees not to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or their
affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise
their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. We
do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under
the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers
determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such
rules.
The
purpose of such purchases would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it
appears that such requirement would otherwise not be met. 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 common stock may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
Our
sponsor, officers, directors, advisors and/or their affiliates anticipate that they may identify the stockholders with whom our
sponsor, officers, directors, advisors or their affiliates may pursue privately negotiated purchases by either the stockholders
contacting us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials
in connection with our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates
enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election
to redeem their shares for a pro rata share of the trust account or vote against the business combination. Our sponsor, officers,
directors, advisors or their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange
Act and the other federal securities laws.
Any
purchases by our sponsor, officers, directors, advisors and/or their affiliates who are affiliated purchasers under Rule 10b-18
under the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which
is a safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain
technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor,
officers, directors, advisors and/or their affiliates will not make purchases of common stock if the purchases would violate Section
9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest
earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then
outstanding public shares, subject to the limitations described herein. The amount in the trust account as of December 31, 2020
is $10.03 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be
reduced by the deferred underwriting commissions we will pay to the underwriters. Our sponsor, officers and directors have entered
into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder
shares and any public shares held by them in connection with the completion of our business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business
combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under
the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder
approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our
outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval.
If we structure a business combination transaction with a target company in a manner that requires stockholder approval, we will
not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We intend to conduct
redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by
law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons. So long
as we obtain and maintain a listing for our securities on NASDAQ, we are required to comply with such rules.
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If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will,
pursuant to our amended and restated certificate of incorporation:
Upon
the public announcement of our business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through
a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event that we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20
business days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business
combination until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders
not tendering more than a specified number of public shares which are not purchased by our sponsor, which number will be based
on the requirement that we will only redeem our public shares so long as (after such redemption) our net tangible assets will
be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment
of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or
any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete
the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
● file proxy materials with the SEC.
In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present
in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all
outstanding shares of capital stock of the company entitled to vote at such meeting. Our sponsor, officers and directors will
count toward this quorum and have agreed to vote their founder shares and any public shares purchased in favor of our initial
business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes
will have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to
our sponsor, officers and directors’ founder shares, we would need 3,750,001, or 37.5%, of the 10,000,000 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. We intend to give approximately 30 days (but not less than 10 days nor more
than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business
combination. These quorum and voting thresholds, and the voting agreements of our sponsor, officers and directors, may make it
more likely that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares
irrespective of whether they vote for or against the proposed transaction.
Our
amended and restated certificate of incorporation provides that we will only redeem our public shares so long as (after such redemption)
our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination
and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business