ITEM 7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking
Statements
All statements other
than statements of historical fact included in this Form 10-K including, without limitation, statements under “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position,
business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used
in this Form 10-K, words such as “anticipate,” “believe,” “estimate,” “expect,”
“intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking
statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information
currently available to, the Company’s management. Actual results could differ materially from those contemplated by the
forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking
Statements,” “Item 1A. Risk Factors” and elsewhere in this Form 10-K.
The following discussion
and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited
financial statements and the notes related thereto which are contained in “Item 8. Financial Statements and Supplementary
Data”. Certain information contained in the discussion and analysis set forth below includes forward-looking statements
that involve risks and uncertainties.
Overview
We are a blank check
company formed under the laws of the State of Delaware on August 27, 2020, for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.
We intend to effectuate our business combination using cash from the proceeds of the IPO and the sale of the private placement
warrants, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue
to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business
combination will be successful.
3
Results of Operations
We have neither engaged
in any operations nor generated any revenues to date. Our only activities since our inception through December 31, 2020 were organizational
activities, those necessary to prepare for the IPO, described below. We do not expect to generate any operating revenues until
after the completion of our initial business combination. We generate non-operating income in the form of interest income on cash
and cash equivalents held after the IPO. We incur expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing a
business combination.
For the period from
August 27, 2020 (inception) through December 31, 2020, we had a net loss of $1,450, which consisted of formation and operating
expenses.
Liquidity and Capital Resources
As of December 31,
2020, we had no cash. Until the consummation of the IPO, our only source of liquidity was an initial purchase of common stock
by the sponsor and loans from the sponsor.
On January 20, 2021,
we consummated the IPO of 27,600,000 units, at a price of $10.00 per unit, which included the full exercise by the underwriters
of their over-allotment option in the amount of 3,600,000 units, generating gross proceeds of $276,000,000. Simultaneously with
the closing of the IPO, we consummated the sale of 7,270,000 private placement warrants to the sponsor and the anchor investors
at a price of $1.00 per warrant generating gross proceeds of $7,270,000.
Following
the IPO, the full exercise of the over-allotment option, and the sale of the private placement warrants, a total of $276,000,000
was placed in the trust account. We incurred $15,562,855 in transaction costs, including $5,520,000 of underwriting fees, $9,660,000
of deferred underwriting fees and $382,855 of other offering costs.
We intend to use substantially
all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less deferred
underwriting commissions and income taxes payable), to complete our business combination. To the extent that our capital stock
or debt is used, in whole or in part, as consideration to complete our business combination, the remaining proceeds held in the
trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions
and pursue our growth strategies.
We intend to use the
funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives
or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete
a business combination.
In order
to fund working capital deficiencies or finance transaction costs in connection with a business combination, the sponsor or an
affiliate of the sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required.
If we complete a business combination, we may repay such loaned amounts out of the proceeds of the trust account released to us.
In the event that a business combination does not close, we may use a portion of the working capital held outside the trust account
to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such
loans may be convertible into warrants of the post-business combination entity at a price of $1.00 per warrant, at the option
of the lender. The warrants would be identical to the private placement warrants.
We do not believe
we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our
estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a business combination
are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to
our business combination. Moreover, we may need to obtain additional financing either to complete our business combination or
because we become obligated to redeem a significant number of our public shares upon consummation of our business combination,
in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance
with applicable securities laws, we would only complete such financing simultaneously with the completion of our business combination.
If we are unable to complete our business combination because we do not have sufficient funds available to us, we will be forced
to cease operations and liquidate the trust account. In addition, following our business combination, if cash on hand is insufficient,
we may need to obtain additional financing in order to meet our obligations.
4
Off-Balance Sheet Financing Arrangements
We have no obligations,
assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2020. We do not participate
in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable
interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not
entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments
of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any
long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
The underwriter of
our IPO is entitled to a deferred fee of $0.35 per unit, or $9,660,000 in the aggregate. The deferred fee will become payable
to the underwriter from the amounts held in the trust account solely in the event that we complete a business combination, subject
to the terms of the underwriting agreement.
Critical Accounting
Policies
The preparation of
financial statements and related disclosures in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported.
Actual results could materially differ from those estimates. We have not identified any critical accounting policies.
Recent Accounting Standards
Management does not
believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Not required for smaller
reporting companies.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
This information appears
following Item 15 of this Form 10-K and is included herein by reference.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
5
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls
and Procedures
Disclosure controls
are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed
under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified
in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information
is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate
to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief
executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls
and procedures as of December 31, 2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our
Certifying Officers concluded that, as of December 31, 2020, our disclosure controls and procedures were effective.
We do not expect that
our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures,
no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure
controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are
resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all
disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we
have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also
is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal
Controls Over Financial Reporting
This Form 10-K does
not include a report of management’s assessment regarding internal control over financial reporting or an attestation report
of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public
companies.
Changes in Internal Control over
Financial Reporting
There were no changes
in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)
during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Our officers and directors are as follows:
Name Age Position
Brian D. Finn 60 Chief Executive Officer, Secretary, Treasurer and Director
Stefan M. Selig 57 Director (Chairman)
Amy Salerno 45 Chief Financial Officer
Sam S. Potter 36 Vice President of Corporate Development
John Howard 68 Director
David J. Berkman 58 Director
Kim S. Fennebresque 70 Director
Brian D. Finn has
served as our Chief Executive Officer, Secretary and Treasurer and a member of our board of directors since our formation. Mr. Finn
has over 35 years of experience in the financial services industry as well as a variety of corporate and philanthropic board
roles. From 2008 until he retired in 2013, Mr. Finn served as Chairman and Chief Executive Officer of Asset Management Finance
Corp (AMF) and as a Senior Advisor to Credit Suisse. From 2004 to 2008, Mr. Finn was Chairman and Head of Alternative Investments
(AI) at Credit Suisse. During his tenure at Credit Suisse, the firm launched a series of alternative investment management firms,
including GSO (now Blackstone-GSO), Global Infrastructure Partners (partnership with General Electric), China Renaissance
Capital (China Private Equity), Gulf Capital (Middle East-North Africa PE), Mubadala Infrastructure Partners (Middle East
Infrastructure in partnership with Mubadala and GE), Ospraie Special Opportunities (Commodities PE), Hudson Clean Energy (Alternative
Energy PE) and Matlin Patterson (distressed). From 2002 to 2005, Mr. Finn held senior managements positions within Credit
Suisse, including President of Credit Suisse First Boston (CSFB), President of Investment Banking, Co-President of Institutional
Securities, CEO of Credit Suisse USA and a member of the Office of the Chairman of CSFB. He was also a member of the Executive
Board of Credit Suisse Group. Mr. Finn began his career in 1982 as a member of the Mergers & Acquisitions Group
(M&A) at The First Boston Corporation, ultimately becoming Co-Head of M&A in 1993. He has advised on dozens of transactions
worth well over $100 billion. In 1997, he joined the private equity firm Clayton, Dubilier & Rice as a partner and
then later rejoined Credit Suisse in 2002. Mr. Finn is a member of the boards of The Scotts Miracle-Gro Company and
Owl Rock Capital. He is currently Chairman of Star Mountain Capital, Chairman of Covr Financial Technologies, an Investment Partner
at Nyca Partners (fintech VC) as well as a board member of a number of early stage companies. He has previously been a Strategic
Advisor to KKR, member of the boards of Baxter International, Telemundo, MGM Pictures, and a number of other public and private
companies. Mr. Finn is past Chairman of the Undergraduate Executive Board of The Wharton School of the University of Pennsylvania,
Vice Chairman of the Board of the City Kids Foundation and a member of the Boards of the Intrepid Fallen Heroes Fund, the Gordon
A. Rich Memorial Foundation and the Starmar Foundation. Mr. Finn received a Bachelor of Science Degree in Economics from
The Wharton School of the University of Pennsylvania. We believe Mr. Finn is well-qualified to serve as a member of
our board of directors due to his extensive experience, relationships and contacts.
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Stefan M. Selig has
served as a member of our board of directors (Chairman) since our formation. Mr. Selig is an accomplished banker and senior
executive who has served in prominent leadership roles in both the private and public sectors. During his nearly 30-year Wall
Street career, Mr. Selig built a reputation as a trusted counselor to his clients, and he is recognized for his experience
and judgment in providing strategic and financial advice to leading companies and investors. In 2017, Mr. Selig founded,
and has since served as Managing Partner of, BridgePark Advisors LLC to provide personalized strategic advice on a broad range
of critical business and financial issues and transaction execution to a select group of CEOs, boards of directors, and institutional
and high net worth investors. Mr. Selig served as President Obama’s Under Secretary of Commerce for International Trade
at the U.S. Department of Commerce from 2014 to 2016. As one of the nation’s most senior commercial diplomats, Mr. Selig
headed the International Trade Administration, a bureau of 2,200 trade and investment professionals in over 75 countries. Mr. Selig
also served as the Executive Director of the Travel and Tourism Advisory Board, sat on the board of directors of the Overseas
Private Investment Corporation (OPIC), the U.S. government’s development finance institution, was a Commissioner for the
Congressional Executive Commission on China, and was the Executive Director of the President’s Advisory Council on Doing
Business in Africa. Before joining the Obama Administration, Mr. Selig was at Bank of America Merrill Lynch from 1999 to
2014, most recently as the Executive Vice Chairman of Global Corporate & Investment Banking. At BAML, Mr. Selig built
and maintained critical relationships at the CEO and board level with important clients of the bank. He previously served as Vice
Chairman of Global Investment Banking and Global Head of Mergers & Acquisitions with responsibilityfor Global Technology,
Media and Telecommunications and Global Financial Sponsors Groups; Chairman, Fairness Opinion Review Committee, and Member of
Risk and Reputation and New York Market Committees. Prior to joining Bank of America, Mr. Selig held various senior investment
banking positions, including Co-Head of Mergers & Acquisitions for UBS Securities. He began his investment banking career
in the Mergers & Acquisitions Group at The First Boston Corporation in 1984, and subsequently was an original member of Wasserstein
Perella & Co. Mr. Selig currently serves as a director of a number of public and private companies including: Tuscan
Holdings Corp. (Nasdaq: THCB), a blank check company searching for an initial business combination; Simon Property Group (NYSE:
SPG), an S&P 100 company and a global leader in the ownership of premier shopping, dining, entertainment, and mixed-use destinations;
Entercom Communications Corp. (NYSE: ETM), one of the top two radio broadcasters in the U.S., reaching more than 100 million
people weekly via its 235 radio stations and its digital platforms and live events. Mr. Selig also serves as lead director
of Safehold Inc. (NYSE: SAFE), which acquires, owns, manages and capitalizes ground net leases and of Drive DeVilibiss Healthcare,
a leading manufacturer of medical products controlled by Clayton, Dubilier & Rice. He is a member of the Council on Foreign
Relations, The Economic Club of New York, the Bretton Woods Committee and the Atlantic Council Councilors Program. Mr. Selig
is a graduate received a B.A. from Wesleyan University and an MBA from Harvard Business School. We believe Mr. Selig is well-qualified to
serve as a member of our board of directors due to his extensive experience, relationships and contacts.
Amy Salerno has
served as our Chief Financial Officer since September 2020.From 2016 to 2020, Ms. Salerno served
as the Chief Financial Officer and Chief Operating Officer of Covr Financial Technologies, a leading insurance technology firm,
where she is currently a member of its Board of Directors. Since retiring from her executive positions with Covr, she has been
a private advisor and consultant. Prior to Covr, she was the Chief Operating Officer of Pioneer Wealth Partners, a multi-family office
and wealth advisory boutique catering to high-net worth families, from 2009 to 2016. Previous operational management roles
include Greentech Capital Advisors where she was a Principal in the operations and business development area from 2008 to 2009
and BroadStreet Capital Partners where she was Head of Operations from 2005 to 2009. Ms. Salerno began her career in 1997
at Lehman Brothers in the structured products origination and mortgage backed securities groups. Ms. Salerno received a B.A.
in Economics with Distinction from Cornell University and an M.B.A. from the Tuck School of Business at Dartmouth.
8
Sam S. Potter has
served as our Vice President of Corporate Development since September 2020. Mr. Potter has been serving as Managing Member
of BMB Capital, a financial consulting firm he founded, since November 2019. Mr. Potter has also been serving as the Vice
President of Corporate Development for WVC Holdings, an early-stage investment firm, starting in November 2016 at its predecessor
Wolf Venture Capital. From April 2015 to September 2016, Mr. Potter served as Vice President of Finance at Ebbu, an early-stage hemp
and cannabis research company, and from June 2014 to April 2015, he was a consultant to GoHydrate, a direct-to-consumer beverage
company. Previously, Mr. Potter served as an investment professional in Ares Management’s Direct Lending business from
2010 to 2014. Mr. Potter started his career in 2007 at Deutsche Bank in the Global Industrials Group. Mr. Potter received
a B.S. from the Kelley School of Business at Indiana University.
John D. Howard has
served as a member of our board of directors since our formation. Mr. Howard has served as the founder and Co-Managing Partner
of Irving Place Capital, an investment firm, since its formation in 1997. Mr. Howard has 35 years of private equity
investing experience in the consumer products, retail, and industrial industries. Prior to founding Irving Place Capital (as Bear
Stearns Merchant Banking), he was the co-Chief Executive Officer of Vestar Capital Partners, a private investment firm specializing
in management buyouts. Previously, Mr. Howard was a Senior Vice President and Partner of Wesray Capital Corporation, one
of the foremost private equity sponsors and a pioneer in the leveraged buyout business. His board experience includes Bendon, New York &
Company, rag & bone, AERO SAFETY, Aéropostale, Dots, Integrated
Circuit Systems, Multi Packaging Solutions, Nice-Pak Holdings, NRT Incorporated, Safety 1st, Seven
For All Mankind, Standard Holdings, Stuart Weitzman, Universal Hospital Services, Vitamin Shoppe. Mr. Howard
is also the non-executive Chairman of the Board of Bright Lights Acquisition Corp., a blank check company like our company
that completed its initial public offering in January 2021 raising $200 million. Mr. Howard received a BA from Trinity
College and an MBA from Yale School of Management. We believe Mr. Howard is well-qualified to serve as a member of our
board of directors due to his extensive experience, relationships and contacts.
David J. Berkman has
served as a member of our board of directors since October 2020. Since January 2000, Mr. Berkman has served as the Managing
Partner of Associated Partners, LP, a private equity firm primarily engaged in telecommunications infrastructure operations and
investments. He serves on the boards (or equivalent bodies) of Hamilton Lane Inc. (NASDAQ: HLNE), Entercom Communications Corp.
(NYSE: ETM), as Lead Director, and on its audit, compensation (Chair), nominating/corporate governance and executive committees,
Franklin Square Holdings, LP and Chemimage, Inc. and on the advisory committee of First Round Capital, a venture firm. Mr. Berkman
also serves on the board of overseers of the University of Pennsylvania School of Engineering and Applied Science. He previously
served on the boards of Actua Corporation until 2018 and Diamond Resorts International, Inc. until 2016. He received a B.S. in
Economics from the Wharton School of the University of Pennsylvania. We believe Mr. Berkman is well-qualified to serve
as a member of our board of directors due to his extensive experience in private markets, in the start-up and operation of
various platforms, as well as his long-standing service on other public company boards. Additionally, we believe his insight
in the areas of corporate finance, financial reporting, and accounting and controls will be valuable to our board.
9
Kim S. Fennebresque has
served as a member of our board of directors since October 2020. Mr. Fennebresque has served as a senior advisor to Cowen
Group Inc., a diversified financial services firm, since 2008, where he also served as its chairman, president and chief executive
officer from 1999 to 2008. Mr. Fennebresque serves on the board of directors of Albertsons Companies, a grocery retailer,
since March 2015, Ally Financial Inc. (NYSE: ALLY), a financial services company, since May 2009, BlueLinx Holdings Inc. (NYSE:
BXC), a distributor of building products, since May 2013, and as its Chairperson since May 2016. Mr. Fennebresque has served
as a member of the Supervisory Board of BAWAG P.S.K., one of Austria’s largest banks, since 2017, and as Deputy Chairman
since 2019. Mr. Fennebresque previously served as a director of Ribbon Communications Inc. (NASDAQ: RBBN), a provider of
network communications solutions, from October 2017 to February 2020, and as a director of Delta Tucker Holdings, Inc. (the parent
of DynCorp International, a provider of defense and technical services and government outsourced solutions) from May 2015 to July
2017. From 2010 to 2012, Mr. Fennebresque served as chairman of Dahlman Rose & Co., LLC, an investment bank. He has also
served as head of the corporate finance and mergers and acquisitions departments at UBS and was a general partner and co-head of
investment banking at Lazard Frères & Co. He has also held various positions at First Boston Corporation, an investment
bank acquired by Credit Suisse. Mr. Fennebresque received a B.A. from Trinity College and a J.D. from Vanderbilt Law School
where he was Associate Editor of the Law Review. We believe Mr. Fennebresque is well-qualified to serve as a member
of our board of directors due to his extensive experience as a director of several public companies and history of leadership
in the financial services industry.
Number and terms of office of officers
and directors
Our board of directors
is divided into three classes, with only one class of directors being elected in each year, and with each class (except for those
directors appointed prior to our first annual meeting of stockholders) serving a three-year term. 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. The term of office of the first class of directors, consisting of Kim S. Fennebresque, expires
at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of John D. Howard
and David J. Berkman, expires at our second annual meeting of the stockholders. The term of office of the third class of directors,
consisting of Brian D. Finn and Stefan M. Selig, expires at our third annual meeting of stockholders. We may not hold an annual
meeting of stockholders until after we complete our initial business combination.
Our officers are appointed
by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our
board of directors is authorized to nominate persons to the offices set forth in our amended and restated certificate of incorporation
as it deems appropriate.
Director Independence
NYSE
listing standards require that a majority of our board of directors be independent. An “independent director” is defined
generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship
which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent
judgment in carrying out the responsibilities of a director. Our board of directors has determined that John D. Howard, Kim S.
Fennebresque and David J. Berkman are “independent directors” as defined in the NYSE listing standards and applicable
SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Any
affiliated transactions will be on terms no less favorable to us than could be obtained from independent parties. Our board of
directors will review and approve all affiliated transactions with any interested director abstaining from such review and approval.
Committees of the Board of Directors
We have three standing
committees: an audit committee, a nominating committee, and a compensation committee. Each such committee is composed of solely
independent directors.
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Audit Committee
On
January 14, 2021, we established an audit committee of the board of directors, which consists of John D. Howard, Kim S. Fennebresque
and David J. Berkman, each of whom is an independent director under the NYSE’s listing standards. The audit committee’s
duties, which are specified in our audit committee charter, include, but are not limited to:
● reviewing and approving our annual audit plan;
● appointing or replacing the independent registered public accounting firm;
● monitoring our environmental sustainability and governance practices;
● reviewing any material related party transactions; and
Financial
Expert on Audit Committee
The
board of directors has determined that Mr. Fennebresque qualifies as an “audit committee financial expert” as defined
under rules and regulations of the SEC.
Corporate
Governance and Nominating Committee
On
January 14, 2021, we established a corporate governance and nominating committee of the board of directors, which consists of
John D. Howard, Kim S. Fennebresque and David J. Berkman, each of whom is an independent director under the NYSE’s listing
standards. The corporate governance and nominating committee’s duties, which are specified in our corporate governance and
nominating committee charter, include, but are not limited to:
11
● considering director nominees recommended by stockholders; and
Guidelines
for Selecting Director Nominees
The guidelines for
selecting director nominees, which are specified in the nominating committee charter, generally provide that persons to be nominated:
Each year in connection
with the nomination of candidates for election to the board of directors, the corporate governance and nominating committee will
evaluate the background of each candidate, including candidates that may be submitted by our stockholders.
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Compensation
Committee
On
January 14, 2021, we established a compensation committee of the board of directors, which consists of John D. Howard, Kim S.
Fennebresque and David J. Berkman, each of whom is an independent director under the NYSE’s listing standards. Mr. Howard
serves as the chairman of the compensation committee. The compensation committee’s duties, which are specified in our compensation
committee charter, include, but are not limited to:
● approving any employment or severance agreements with our Section 16 Officers;
● approving the compensation of our directors; and
The
charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation
consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of
the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel
or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required
by the NYSE and the SEC.
Code of Ethics
On
January 14, 2021 we adopted a code of ethics applicable to our directors, officers and employees, is available on our corporate
website. The code of ethics codifies the business and ethical principles that govern all aspects of our business. You are able
to review this document by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the
code of ethics will be provided by us without charge upon request. Requests for copies of our code of ethics should be sent in
writing to our executive office.
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ITEM 11. EXECUTIVE
COMPENSATION
Executive
Compensation
None
of our executive officers or directors have received any cash compensation for services rendered to us. No compensation of any
kind, including finder’s and consulting fees, will be paid by us to our initial stockholders, officers and directors, or
any of their respective affiliates, for services rendered prior to or in connection with the completion of our initial business
combination, except that we may pay up to $300,000 of salaries and consulting fees to our officers prior to our initial business
combination and at the closing of our initial business combination, we may pay customary financial consulting, finder or advisory
fees to our initial stockholders, officers, directors or their affiliates which will not be made from the proceeds of the IPO
held in the trust account prior to the completion of our initial business combination. We may pay such financial consulting, finder
or advisory fees at the closing of our initial business combination in the event such party or parties provide us with specific
target company, industry, financial or market expertise, as well as insights, relationships, services or resources in order to
assess, negotiate and consummate an initial business combination. The amount of any such fee we pay will be based upon the prevailing
market for similar services for comparable transactions at such time, and will be subject to the review of our audit committee
pursuant to the audit committee’s policies and procedures relating to transactions that may present conflicts of interest.
We would disclose any such fee in the proxy or tender offer materials used in connection with a proposed business combination.
In addition, our initial stockholders, executive officers and directors, or any of their respective affiliates will be reimbursed
for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses
and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments
that were made to the sponsor, executive officers or directors, or our or their affiliates. Other than quarterly audit committee
review of such reimbursements, we do not expect to have any additional controls in place governing our reimbursement payments
to our directors and executive officers for their out-of-pocket expenses incurred in connection with our activities on our behalf
in connection with identifying and completing an initial business combination.
After
the completion of our initial business combination, members of our management team who remain with us may also be paid consulting
or management fees from the combined company. All of these fees will be fully disclosed to stockholders, to the extent then known,
in the proxy solicitation materials or tender offer materials furnished to our stockholders in connection with a proposed business
combination. We have not established any limit on the amount of such fees that may be paid by the combined company to members
of our management team. It is unlikely the amount of such compensation will be known at the time of the proposed business combination,
because the directors of the post-combination business will be responsible for determining executive officer and director compensation.
Any compensation to be paid to our executive officers will be determined, or recommended to the board of directors for determination,
either by a compensation committee constituted solely by independent directors or by a majority of the independent directors on
our board of directors. In this event, such compensation will be publicly disclosed at the time of its determination in a Current
Report on Form 8-K or a periodic report, as required by the SEC.
We
do not intend to take any action to ensure that members of our management team maintain their positions with us after the completion
of our initial business combination, although it is possible that some or all of our executive officers and directors may negotiate
employment or consulting arrangements to remain with us after our initial business combination. The existence or terms of any
such employment or consulting arrangements to retain their positions with us may influence our management’s motivation in
identifying or selecting a target business but we do not believe that the ability of our management to remain with us after the
completion of our initial business combination will be a determining factor in our decision to proceed with any potential business
combination. We are not party to any agreements with our executive officers and directors that provide for benefits upon termination
of employment.
ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following table sets forth
information regarding the beneficial ownership of our common stock as of March 31, 2021 by:
● all our executive officers and directors as a group.
14
Unless otherwise indicated,
we believe that all persons named in the table have sole voting and investment power with respect to all of our common stock beneficially
owned by them. The following table does not reflect record or beneficial ownership of the private placement warrants as these
warrants are not exercisable within 60 days of March 31, 2021.
Amount and Approximate
Nature of Percentage of
Beneficial Outstanding
Name and Address of Beneficial Owner(1) Ownership Shares
Stefan M. Selig(4) * -
Amy Salerno(4) * -
Sam S. Potter(4) * -
John D. Howard(4) * -
David J. Berkman(4) * -
Kim S. Fennebresque(4) * -
Integrated Core Strategies (US) LLC(5) 1,750,000 6.3 %
Empyrean Capital Overseas Master Fund, Ltd.(6) 1,380,100 5.0 %
* Less than 1%.
15
The holders of the
founder shares have agreed (a) to vote any founder shares owned by it in favor of any proposed initial business combination and
(b) not to redeem any founder shares in connection with a stockholder vote to approve a proposed initial business combination.
Restrictions on Transfers of Founder
Shares and private placement warrants
The founder shares,
private placement warrants and any shares of our Class A common stock issued upon conversion or exercise thereof are each
subject to transfer restrictions pursuant to lock-up provisions in the agreements entered into by the sponsor and management
team. The sponsor and each member of our management team have agreed not to transfer, assign or sell any of their founder shares
until the earliest of (a) one year after the completion of our initial business combination and (b) upon completion
of our initial business combination, (x) if the last reported sale price of our Class A common stock equals or exceeds
$12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any
20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination
or (y) the date on which we complete a liquidation, merger, capital stock exchange or other similar transaction after our
initial business combination that results in all of our stockholders having the right to exchange their Class A common stock
for cash, securities or other property. The private placement warrants and the respective Class A common stock underlying
such warrants are not transferable or salable until 30 days after the completion of our initial business combination. The
foregoing restrictions are not applicable to transfers (a) to our initial stockholders, officers or directors, any affiliates
or family members of any of our initial stockholders, officers or directors, any members of the sponsor or its affiliates, any
affiliates of the sponsor, or any employees of such affiliates; (b) in the case of an individual, by gift to a member of
one of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate
family, an affiliate of such person or to a charitable organization; (c) in the case of an individual, by virtue of laws
of descent and distribution upon death of the individual; (d) in the case of an individual, pursuant to a qualified domestic
relations order; (e) by private sales or transfers made in connection with the completion of a business combination at prices
no greater than the price at which the founder shares, private placement warrants or Class A common stock, as applicable,
were originally purchased; (f) by virtue of the limited partnership agreements or other applicable organizational documents
of the sponsor upon dissolution of the sponsor; (g) as distributions to limited partners or members of the sponsor; (h) by
virtue of the laws of the State of Delaware or of the sponsor’s organizational documents upon liquidation or dissolution
of the sponsor; (i) to the Company for no value for cancellation in connection with the completion of our initial business
combination; (j) in the event of our liquidation prior to the completion of our initial business combination; or (k) in
the event of our completion of a liquidation, merger, capital stock exchange or other similar transaction which results in all
of our stockholders having the right to exchange their Class A common stock for cash, securities or other property subsequent
to our completion of our initial business combination; provided , however, that in the case of clauses (a) through (h), or
with our prior written consent, these permitted transferees must enter into a written agreement agreeing to be bound by these
transfer restrictions and the other restrictions contained in the letter agreements.
Equity Compensation
Plans
As
of December 31, 2020, we had no compensation plans (including individual compensation arrangements) under which equity securities
of the registrant were authorized for issuance.
ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
For a complete discussion
regarding certain relationships and related transactions, see the section titled “Certain Transactions” contained
in our prospectus dated January 14, 2021, incorporated by reference herein.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The following is a
summary of fees paid or to be paid to Marcum LLP, or Marcum, for services rendered.
Audit Fees.
Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services
that are normally provided by Marcum in connection with regulatory filings. The aggregate fees billed by Marcum for professional
services rendered for the audit of our annual financial statements, and other required filings with the SEC for the period from
August 27, 2020 (inception) through December 31, 2020 totaled $63,860. The above amounts include interim procedures and audit
fees, as well as attendance at audit committee meetings.
16
Audit-Related Fees.
Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of
the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest
services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.
We did not pay Marcum for consultations concerning financial accounting and reporting standards for the period from August 27,
2020 (inception) through December 31, 2020.
Tax Fees. We
did not pay Marcum for tax planning and tax advice for the period from August 27, 2020 (inception) through December 31, 2020.
All Other Fees.
We did not pay Marcum for other services for the period from August 27, 2020 (inception) through December 31, 2020.
Pre-Approval Policy
Our audit committee
was formed upon the consummation of our IPO. As a result, the audit committee did not pre-approve all of the foregoing services,
although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the
formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services
and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the
de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to
the completion of the audit).
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS,
AND SCHEDULES
(a) The following documents are filed as
part of this report:
(1) Financial Statements.
Page
Report of Independent Registered Public Accounting Firm F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders’ Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
(2) Financial Statement Schedules.
None.
17
(3) Exhibits.
We hereby file as part of this Report the
exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied
at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such
material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed
rates or on the SEC website at www.sec.gov.
Exhibit No. Description
3.1 Amended and Restated Certificate of Incorporation.**
3.2 Bylaws.**
4.1 Specimen Unit Certificate.***
4.2 Specimen Share Certificate.***
4.3 Specimen Warrant Certificate.**
4.5 Description of Registrant’s Securities.
10.7 Form of Indemnification Agreement.*
10.9 Form of Letter Agreement from Rotor Sponsor LLC.***
14 Code of Ethics.***
Item
16. FORM 10-K SUMMARY
None.
18
SIGNATURES
Pursuant to the requirements
of the Section 13 or 15 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on the 31st day of March, 2021.
ROTOR ACQUISITION CORP.
By: /s/ Brian D. Finn
Brian D. Finn
Chief Executive Officer
In accordance with
the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Name Title Date
/s/ Stefan M. Selig Chairman March 31, 2021
Stefan M. Selig
/s/ Brian D. Finn Chief Executive Officer March 31 2021
Brian D. Finn (Principal Executive Officer), Secretary, Treasurer and Director
/s/ Amy Salerno Chief Financial Officer March 31, 2021
Amy Salerno
/s/ John D. Howard Director March 31, 2021
John D. Howard
/s/ David J. Berkman Director March 31, 2021
David J. Berkman
/s/ Kim S. Fennebresque Director March 31, 2021
Kim S. Fennebresque
19
ROTOR ACQUISITION
CORP.
INDEX TO FINANCIAL
STATEMENTS
Report of Independent Registered Public Accounting Firm F-2
Financial Statements:
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholder’s Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7 to F-14
F-1
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholder and Board of Directors of
Rotor Acquisition Corp.
Opinion on the Financial Statements
We have audited the accompanying balance
sheet of Rotor Acquisition Corp. (the “Company”) as of December 31, 2020, the related statements of operations, changes
in stockholder’s equity and cash flows for the period from August 27, 2020 (inception) through December 31, 2020, and
the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its
operations and its cash flows for the period from August 27, 2020 (inception) through December 31, 2020, in conformity with accounting
principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based