10-K
1
tm2111165d1_10k.htm
FORM 10-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
x 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: 001-39813
MedTech Acquisition Corporation
(Exact name of registrant as specified in its
charter)
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including
area code: (908) 391-1288
Securities registered pursuant to Section 12(b)
of the Act:
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 x
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 x
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 x 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 and post such files).
Yes x No ̈
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.
See definition 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 x Smaller reporting company x
Emerging growth company x
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 x No ̈
The registrant’s shares were not listed
on any exchange and had no value as of the last business day of the second fiscal quarter of 2020. The registrant’s units begin
trading on the Nasdaq Capital Market on December 18, 2020 and the registrant’s shares
of Class A common stock and warrants began trading on the Nasdaq Capital Market on February
8, 2021. The aggregate market value of the units outstanding, other than shares held by persons who may be deemed affiliates of the registrant,
computed by reference to the closing price for the units on March 29, 2021, as reported on
the Nasdaq Capital Market was $250,000,000.
As of March 29, 2021, there were 25,000,000 shares
of Class A common stock, par value $0.0001 per share and 6,250,000 shares of the Company’s Class B common stock, par value $0.0001
per share, of the registrant issued and outstanding.
TABLE OF CONTENTS
PAGE
Item 1. Business 1
Item 1A. Risk Factors 18
Item 1B. Unresolved Staff Comments 18
Item 2. Properties 18
Item 3. Legal Proceedings 18
Item 4. Mine Safety Disclosures 18
PART II
Item 6. Reserved 20
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 23
Item 8. Financial Statements and Supplementary Data 23
Item 9A. Controls and Procedure 23
Item 9B. Other Information 23
PART III
Item 10. Directors, Executive Officers and Corporate Governance 24
Item 11. Executive Compensation 29
Item 14. Principal Accounting Fees and Services 33
Item 15. Exhibits and Financial Statement Schedules 34
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report (as defined below),
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, or the Exchange Act. 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) or other assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements. 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.
Unless otherwise stated in
this Report, or the context otherwise requires, references to:
● “board of directors” or “board” are to the board of directors of the Company;
ii
● “DGCL” are to the Delaware General Corporation Law;
● “Exchange Act” are to the Securities Exchange Act of 1934, as amended;
● “JOBS Act” are to the Jumpstart Our Business Startups Act of 2012;
● “management” or our “management team” are to our officers and directors;
● “Nasdaq” are to the Nasdaq Stock Market;
● “PCAOB” are to the Public Company Accounting Oversight Board (United States);
● “Sarbanes-Oxley Act” are to the Sarbanes-Oxley Act of 2002;
iii
● “SEC” are to the U.S. Securities and Exchange Commission;
● “Securities Act” are to the Securities Act of 1933, as amended;
iv
PART I
Item 1. Business.
We are an early stage blank
check company formed on September 11, 2020 as a Delaware corporation for the purpose of effecting an initial business combination. Since
our initial public offering (as described below), we have focused our search for an initial business combination on businesses that may
provide significant opportunities for attractive investor returns. Our efforts to identify a prospective target business are not limited
to a particular industry or geographic region, although we intend to focus on businesses primarily operating in the healthcare sector
in the United States.
Initial Public Offering
On December 22, 2020, we consummated
our initial public offering of 25,000,000 units. Each unit consists of one share of Class A common stock of the Company, par value $0.0001
per share, and one-third of one redeemable warrant of the Company, with each whole warrant entitling the holder thereof to purchase one
share of Class A common stock for $11.50 per share. The units were sold at a price of $10.00 per unit, generating gross proceeds to the
Company of $250,000,000.
Simultaneously with the closing
of the initial public offering, we completed the private sale of an aggregate of 4,933,333 warrants to our sponsor at a purchase price
of $1.50 per private placement warrant, generating gross proceeds of $7,400,000.
A total of $250,000,000 of
the proceeds from the initial public offering and the sale of the private placement warrants was placed in the trust account maintained
by Continental, acting as trustee.
It is the job of our sponsor
and management team to complete our initial business combination. Our management team is led by Karim Karti, our Chairman, Christopher
C. Dewey, our Chief Executive Officer and director, David J. Matlin, our Chief Financial Officer and director, and Robert H. Weiss, our
Chief Administrative Officer and Secretary. We must complete our initial business combination by December 22, 2022, 24 months from the
closing of our initial public offering. If our initial business combination is not consummated by December 22, 2022, then our existence
will terminate, and we will distribute all amounts in the trust account.
Business Strategy
Our business strategy is to
identify and complete our initial business combination with a medical technology company in the healthcare sector. Moreover, we seek an
opportunity that complements the experience of our management team and can benefit from their medical technology, operational, financial,
and marketing expertise. Our selection process leverages the management team’s broad and deep relationships, unique industry experience,
and deal sourcing capabilities to access a wide spectrum of opportunities. This network has been developed over the past two decades while
serving in executive roles at successful organizations. We believe that our management team will identify a business combination that
will benefit from their experience, including:
● Significant experience commercializing new medical technologies and systems;
Acquisition Criteria
Our acquisition strategy
leverages our management team’s proprietary network of long-standing relationships and industry contacts as well as inbound
opportunities to source a business combination. Consistent with our business strategy, we have identified the following general
criteria and guidelines that we believe are important in evaluating prospective target businesses. We use these criteria and
guidelines in evaluating acquisition opportunities, but we may decide to enter into our initial business combination with a target
business that does not meet these criteria and guidelines. We intend to identify and acquire one or more medical technology
businesses that exhibit a number of the following criteria:
1
● Differentiated technology protected by robust intellectual property
These criteria and guidelines
are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to
the extent relevant, on these general criteria and guidelines as well as other considerations, factors, criteria, and guidelines that
our management may deem relevant. In addition to any potential business candidates we identify on our own, other target business candidates
are brought to our attention from various unaffiliated sources, including investment market participants, private equity funds and large
business enterprises seeking to divest non-core assets or divisions. In the event that we decide to enter into our initial business combination
with a target business that only meets some but not all of the above criteria and guidelines, we will disclose that the target business
does not meet all of the above criteria and guidelines in our shareholder communications related to our initial business combination,
which would be in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Acquisition Process
In evaluating a prospective
target business, we conduct an extensive due diligence review which encompasses, as applicable and among other things, meetings with incumbent
management and employees, document reviews, interviews of customers and suppliers, inspection of facilities and a review of financial
and other information about the target and its industry. We also utilize our management team’s operational and capital planning
experience.
We are not prohibited from
pursuing an initial business combination with a target that is affiliated with our sponsor, officers or directors or making the initial
business combination through a joint venture or other form of shared ownership with our sponsor, officers or directors. In the event we
seek to complete our initial business combination with an initial business combination target that is affiliated with our sponsor, officers
or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment banking firm or another
independent entity that commonly renders valuation opinions that such an initial business combination is fair to our company from a financial
point of view.
Members of our management team
directly or indirectly own founder shares and/or private placement warrants and, accordingly, may have a conflict of interest in determining
whether a particular target business is an appropriate business with which to effectuate our initial business combination. Further, each
of our officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the retention
or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect to our
initial business combination.
Each of our officers and directors
presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which
such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or
directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she then has fiduciary or
contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present such opportunity to such entity.
We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors will materially affect our
ability to complete our business combination. 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.
2
No members of our management
team have any obligation to present us with any opportunity for a potential business combination of which they become aware, unless presented
to such member specifically in his or her capacity as an officer or a director of the company. Members of our management team may be required
to present potential business combinations to other entities to whom they have fiduciary duties before they present such opportunities
to us. Any knowledge or presentation of such opportunities may therefore present conflicts of interest.
Each of our officers and directors
has agreed, pursuant to a letter agreement with us, not to become an officer or director of any another special purpose acquisition company
with a focus in the healthcare sector with a class of securities intended to be registered under the Exchange Act, prior to our entry
into a definitive agreement with respect to an initial business combination.
Initial Business Combination
In accordance with the rules
of Nasdaq, 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 value of the assets held in the trust account (excluding the amount of deferred underwriting discounts held
in trust and net of taxes payable) at the time of our signing a definitive agreement in connection with our initial business combination.
If our board of directors is not able to independently determine the fair market value of our initial business combination, we will obtain
an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect
to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent
determination of the fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced
with the business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets
or prospects. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent
directors.
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 in
such a way so 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. However, we will only complete an
initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
our stockholders prior to the initial business combination may collectively own a minority interest in the post-transaction company, depending
on valuations ascribed to the target and us in the initial business combination. 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 taken into account
for purposes of Nasdaq’s 80% of fair market value test. If the initial business combination involves more than one target business,
the 80% of fair market value test will be based on the aggregate value of all of the transactions and we will treat the target businesses
together as our initial business combination for purposes of seeking stockholder approval or conducting a tender offer, as applicable.
The net proceeds of our
initial public offering and the sale of the private placement warrants released to us from the trust account upon the closing of our
initial business combination may be used as consideration to pay the sellers of a target business with which we complete our initial
business combination. If our initial business combination is paid for using equity or debt securities, or not all of the funds
released from the trust account are used for payment of the consideration in connection with our initial business combination or
used for redemption of our public shares, we may use the balance of the cash released to us from the trust account following the
closing for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the
payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the purchase
of other companies or for working capital. In addition, we may be required to obtain additional financing in connection with the
closing of our initial business combination to be used following the closing for general corporate purposes as described above.
There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities or through loans,
advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase
agreements or backstop agreements we may enter into following consummation of our initial public offering. Subject to compliance
with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business
combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any
additional funds through the sale of securities or otherwise. None of our sponsor, officers, directors or stockholders is required
to provide any financing to us in connection with or after our initial business combination. We may also obtain financing prior to
the closing of our initial business combination to fund our working capital needs and transaction costs in connection with our
search for and completion of our initial business combination. Our amended and restated certificate of incorporation provides that,
following our initial public offering and prior to the consummation of our initial business combination, we will be prohibited from
issuing additional securities that would entitle the holders thereof to receive funds from the trust account or vote on any initial
business combination, on any pre-business combination activity or on any amendment to Article IX of our amended and restated
certificate of incorporation.
3
Our Business Combination Process
In evaluating prospective business
combinations, we conduct a due diligence review process that encompasses, among other things, a review of historical and projected financial
and operating data, meetings with management and their advisors and, as applicable, on-site inspection of facilities and assets, discussion
with customers and suppliers, legal reviews and other reviews as we deem appropriate. We also utilize the expertise of our management
team in analyzing companies and evaluating operating projections, financial projections and determining the appropriate return expectations
given the risk profile of the target business.
Members of our management team
directly or indirectly own our common stock and warrants, and, accordingly, may have a conflict of interest in determining whether a particular
target business is an appropriate business with which to effectuate our initial business combination. Further, each of our officers and
directors may have a conflict of interest with respect to evaluating a particular business combination if the retention or resignation
of any such officers and directors was included by a target business as a condition to any agreement with respect to our initial business
combination.
Our sponsor and members of
our management team are, in the ordinary course of business, continuously made aware of potential acquisition or investment opportunities,
one or more of which we may desire to pursue for an initial business combination.
Each of our officers and directors
presently has, and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which
such officer or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or
directors become aware of a business combination opportunity that is suitable for an entity to which he or she has then-current fiduciary
or contractual obligations to present the opportunity to such entity, he or she will honor his or her fiduciary or contractual obligations
to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of our officers
or directors will not materially affect our ability to complete our initial business combination, as we believe any such opportunities
presented would be smaller than what we are interested in, in different fields than what we would be interested in, or that such fiduciary
duties or contractual obligations are to entities that are not themselves in the business of engaging in business combinations. 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,
and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our Management Team
Members of our management team
are not obligated to devote any specific number of hours to our matters but they devote as much of their time as they deem necessary to
our affairs until we have completed our initial business combination. The amount of time that any member of our management team devotes
in any time period varies based on the stage of the initial business combination process that we are in.
We believe our management
team’s operating and transaction experience and relationships with companies provide us with a substantial number of potential
business combination targets. Over the course of their careers, the members of our management team have developed a broad network of
contacts and corporate relationships. This network has grown through the activities of our management team sourcing, acquiring and
financing businesses, our management team’s relationships with sellers, financing sources and target management teams and the
experience of our management team in executing transactions under varying economic and financial market conditions.
4
Status as a Public Company
We believe our structure makes
us an attractive business combination partner to target businesses. As a public company, we offer a target business an alternative to
the traditional initial public offering through a merger or other business combination with us. Following an initial business combination,
we believe the target business would have greater access to capital and additional means of creating management incentives that are better
aligned with stockholders’ interests than it would as a private company. A target business can further benefit by augmenting its
profile among potential new customers and vendors and aid in attracting talented employees. In a business combination transaction with
us, the owners of the target business may, for example, exchange their shares of stock in the target business for our shares of Class A
common stock (or shares of a new holding company) or for a combination of our shares of Class A common 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 expeditious and
cost-effective method to becoming a public company than the typical initial public offering. The typical initial public offering process
takes a significantly longer period of time than the typical business combination transaction process, and there are significant expenses
and market and other uncertainties in the initial public offering process, including underwriting discounts and commissions, marketing
and road show efforts that may not be present to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed
initial 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. Following an initial business combination, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent with
stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company can offer further
benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented employees.
While we believe that our structure
and our management team’s backgrounds make us an attractive business partner, some potential target businesses may view our status
as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval of any proposed initial
business combination, negatively.
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 independent registered public accounting firm 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 December 22, 2025, the fifth anniversary
of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion
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. References herein to “emerging
growth company” will have the meaning associated with it in the JOBS Act.
5
Financial Position
With funds available for an
initial business combination initially in the amount of $250,000,000, 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 initial business combination using our cash, debt or
equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us
to tailor the consideration to be paid to the target business to fit its needs and desires. However, 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 other than the pursuit of our initial business combination, for an indefinite period of
time following our initial public offering. We intend to effectuate our initial business combination using cash from the proceeds of our
initial public offering and the private placement of the private placement warrants, the proceeds of the sale of our shares in connection
with our initial business combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the
consummation of our initial public offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders
or the owners of the target, or a combination of the foregoing. We may seek to complete our initial business combination with a company
or business that may be financially unstable or in its early stages of development or growth, which would subject us to the numerous risks
inherent in such companies and businesses.
If our initial business combination
is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or used for redemption of our public shares, we may use the balance of the cash released
to us from the trust account following the closing 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 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, and
we may effectuate our initial business combination using the proceeds of such offering rather than using the amounts held in the trust
account. In addition, we are targeting businesses with enterprise values that are greater than we could acquire with the net proceeds
of our initial public offering and the sale of the private placement warrants, and, as a result, if the cash portion of the purchase price
exceeds the amount available from the trust account, net of amounts needed to satisfy any redemptions by public stockholders, we may be
required to seek additional financing to complete such proposed initial business combination. Subject to compliance with applicable securities
laws, we would expect to complete such financing only simultaneously with the completion of our initial business combination. In the case
of an initial business combination funded with assets other than the trust account assets, our proxy materials or tender offer documents
disclosing the initial business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder
approval of such financing. There is no limitation on our ability to raise funds through the issuance of equity or equity-linked securities
or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to forward purchase
agreements or backstop agreements we may enter into following consummation of our initial public offering. At this time, we are not a
party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities
or otherwise. None of our sponsor, officers, directors or stockholders is required to provide any financing to us in connection with or
after our initial business combination. Our amended and restated certificate of incorporation provides that, following our initial public
offering and prior to the consummation of our initial business combination, we will be prohibited from issuing additional securities that
would entitle the holders thereof to receive funds from the trust account or vote on any initial business combination, on any pre-business
combination activity or on any amendment to Article IX of our amended and restated certificate of incorporation.
6
Sources of Target Businesses
Target business candidates
are brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses
also are brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. 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 the prospectus for our initial public offering and know what types of businesses we are targeting. Our officers and directors,
as well as our sponsor and its affiliates, 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, conferences
or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily
be available to us as a result of the business relationships of our officers and directors and our sponsor and their respective industry
and business contacts as well as their affiliates. While we have not and do not anticipate engaging the services of professional firms
or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the
future, in which event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s
length negotiation based on the terms of the transaction. We will engage a finder only to the extent our management determines that the
use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis
with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily
tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event,
however, will any of our existing officers or directors, or any entity with which our officers or directors are affiliated, be paid any
finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the Company prior
to, or in connection with any services rendered 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 none of our executive officers or directors, or any of their
respective affiliates, will be allowed to receive any compensation, finder’s fees or consulting fees from a prospective business
combination target in connection with a contemplated initial business combination, we do not have a policy that prohibits our sponsor,
executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses
by a target business. We accrue a total of $10,000 per month for office space, utilities and secretarial and administrative support
payable to our sponsor. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.
Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our
initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection
process of an initial business combination candidate.
We are not prohibited from
pursuing an initial business combination with an initial business combination target that is affiliated with our sponsor, officers or
directors or making the initial business combination through a joint venture or other form of shared ownership with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with an initial business combination target that is affiliated
with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions that such an initial business combination is fair
to our company from a financial point of view.
If any of our officers or directors
becomes aware of an initial business combination opportunity that falls within the line of business of any entity to which he or she has
then-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. Our officers and directors currently have certain relevant fiduciary
duties or contractual obligations that may take priority over their duties to us.
Selection of a Target Business and Structuring
of our Initial Business Combination
In accordance with the
rules of Nasdaq, 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 value of the assets held in the trust account (excluding the amount of deferred underwriting
discounts held in trust and net of taxes payable) at the time of our signing a definitive agreement in connection with our initial
business combination. The fair market value of our initial business combination will be determined by our board of directors based
upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based
on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions of
comparable businesses. If our board of directors is not able to independently determine the fair market value of our initial
business combination (including with the assistance of financial advisors), we will obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such
criteria. While we consider it unlikely that our board of directors will not be able to make an independent determination of the
fair market value of our initial business combination, it may be unable to do so if it is less familiar or experienced with the
business of a particular target or if there is a significant amount of uncertainty as to the value of a target’s assets or
prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business
combination. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting
one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with
another blank check company or a similar company with nominal operations.
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In any case, we will only complete
an initial business combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise
acquire a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act. If we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of
such business or businesses that are owned or acquired by the post-transaction company is what will be taken into account for purposes
of Nasdaq’s 80% of fair market value test.
To the extent we effect our
initial business combination with a company or business that may be financially unstable or in its early stages of development or growth
we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate the risks
inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective
business target, we conduct a due diligence review, which may encompass, among other things, meetings with incumbent ownership, management
and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and
other information that will be made available to us.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of,
and negotiation with, a prospective target business with which our initial business combination is not ultimately completed will result
in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of
time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or
several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in
a single line of business. By completing our initial business combination with only a single entity, our lack of diversification may:
Limited Ability to Evaluate the Target’s
Management Team
Although we closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial 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, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any of
the members of our management team will remain with the combined company will be made at the time of our initial business combination.
While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business
combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial 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.
We cannot assure you that any
of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following our initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure
you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge
or experience necessary to enhance the incumbent management.
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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
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase public shares
or public warrants in privately-negotiated transactions or in the open market either prior to or following the completion of our initial
business combination. There is no limit on the number of shares or warrants our initial stockholders, directors, officers, advisors or
their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. 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.
If they engage in such transactions, they will not make any such purchases when they are in possession of any material non-public information
not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. 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. Any such purchases will be reported pursuant
to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements. None
of the funds held in the trust account will be used to purchase shares or public warrants in such transactions prior to completion of
our initial business combination.
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The purpose of any such
purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood of
obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination, where
it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce
the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in
connection with our initial business combination. Any such purchases of our securities may result in the completion of our initial
business combination that may not otherwise have been possible. In addition, if such purchases are made, the public
“float” of our shares of Class A common stock or warrants 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
and/or any of their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their
affiliates may pursue privately-negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption
requests tendered 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 our initial business combination, whether or not such stockholder has already submitted a proxy with
respect to our initial business combination. Such persons would select the stockholders from whom to acquire shares based on the number
of shares available, the negotiated price per share and such other factors as any such person may deem relevant at the time of purchase.
The price per share paid in any such transaction may be different than the amount per share a public stockholder would receive if it elected
to redeem its shares in connection with our initial 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 and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will be made only
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 and/or their affiliates will not
make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Any such purchases
will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases are subject to such
reporting requirements.
Redemption Rights for Public Stockholders upon
Completion of our Initial Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two
business days prior to the consummation of the initial business combination including interest earned on the funds held in the trust account
and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations
described herein. As of December 31, 2020, the amount in the trust account was approximately $10.00 per public share. The per-share amount
we will distribute to investors who properly redeem their shares will not be reduced by 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 initial business combination.
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination
either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) without a stockholder
vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial 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 applicable law or stock exchange
listing requirements.
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 shares of common stock or seek to amend our amended and restated
certificate of incorporation would require stockholder approval. So long as we obtain and maintain a listing for our securities on
Nasdaq, we will be required to comply with Nasdaq’s stockholder approval rules.
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The requirement that we provide
our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above is contained in provisions