General
Ault Disruptive Technologies
Corporation, a Delaware corporation, is a recently organized blank check company incorporated in February 2021 whose business purpose
is to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with
one or more businesses, which we refer to as our initial business combination. To date, our efforts have been limited to organizational
activities, including our initial public offering, as well as searching for a suitable acquisition target. We have not selected any specific
business combination target, although we have engaged in substantive discussions, directly and indirectly, with a significant number of
business combination targets with respect to an initial business combination with us.
While we may pursue an initial
business combination opportunity in any business, industry, sector or geographical location, we are focused on opportunities to acquire
companies with innovative and emerging technologies, products or services that have the potential to transform major industries and radically
impact society. We intend to acquire a target business or businesses with disruptive technologies that our management team believes can
achieve mainstream adoption and create opportunities for long-term appreciation in value.
Our sponsor, Ault Disruptive
Technologies Company, LLC, is a wholly-owned subsidiary of Ault Alliance, Inc. (formerly known as BitNile Holdings, Inc.) (NYSE American:
AULT) (“Ault”). Ault owns interests in various subsidiaries and investments that are engaged in the cryptocurrency, oil exploration,
crane services, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics, hotel operations and textiles.
Immediately prior to our Initial
Public Offering (as defined below) our Sponsor owned 100% of our capital stock, consisting of shares of common stock. We anticipate that
our Sponsor’s voting power and equity ownership may be substantially diluted in connection with our initial business combination,
either from the issuance of new shares of common stock in exchange for the capital stock of the target, the issuance of our capital stock
to third-party investors providing additional funding to us in connection with the initial business combination, or both.
On December 20, 2021, we consummated
our initial public offering (the “Initial Public Offering”) of 11,500,000 units (the “Units”), of which 1,500,000
Units represented the exercise by the underwriters’ of their over-allotment option. Each Unit consisted, before its components began
trading separately, of one share of common stock of the Company, par value $0.001 per share, and three-fourths of one redeemable warrant
of the Company (the “Warrant”), with each whole Warrant entitling the holder thereof to purchase one share of common stock
for $11.50 per share. The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $115,000,000.
Simultaneously with the closing
of the Initial Public Offering, we completed the private placement and sale of an aggregate of 7,100,000 Warrants to purchase one share
of common stock (the “Placement Warrants”) to our Sponsor, at a purchase price of $1.00 per Placement Warrant, generating
gross proceeds to the Company of $7,100,000.
A total of $116,725,000, comprised of $112,125,000 of the proceeds from the Initial Public Offering (which amount
includes the $3,450,000 of the underwriters’ deferred discount) and $4,600,000 of the proceeds of the sale of the Placement Warrants,
was placed in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company,
acting as trustee. Except with respect to interest earned on the funds held in the trust account that may be released to us to pay taxes
(less up to $50,000 interest to pay dissolution expenses), the funds held in the trust account will not be released from the trust account
until the earliest of (i) the consummation of our initial business combination, (ii) the redemption of any public shares properly submitted
in connection with a stockholder vote to amend our amended and restated certificate of incorporation (A) to modify the substance or timing
of our obligation to allow redemptions in connection with our initial business combination or certain amendments to our charter prior
thereto or to redeem 100% of our public shares if we do not consummate our initial business combination within 18 months following the
effectiveness of the Initial Public Offering or (B) with respect to any other provision relating to stockholders’ rights or pre-business
combination activity, and (iii) the redemption of our public shares if we are unable to consummate our initial business combination within
18 months following the effectiveness of the Initial Public Offering, subject to applicable law.
The Placement Warrants are
identical to the Warrants included in the Units which were sold in the Initial Public Offering, except (a) the Placement Warrants will
not be transferable, assignable or saleable until 30 days after the consummation of our initial business combination except to permitted
transferees and (b) the Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) will not be redeemable
by us, (ii) may be exercised by the holders on a cashless basis, and (iii) will be entitled to registration rights. No underwriting discounts
or commissions were paid with respect to such sales of the Placement Warrants. The issuance of the Placement Warrants was made pursuant
to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
We will provide our public stockholders with the opportunity to redeem
all or a portion of their shares of our common stock upon the consummation of our initial business combination, subject to the limitations
described herein. On December 13, 2022, we received notice from our Sponsor of the Sponsor’s intention to deposit $1,150,000 into
the trust account established in connection with our IPO (the “First Deposit”). The First Deposit was required to extend the
period of time we have to consummate our initial business combination by three months from the initial deadline of December 20, 2022 (12
months from the date of the IPO) until March 20, 2023. On March 15, 2023, we received notice from our Sponsor of the Sponsor’s intention
to deposit another $1,150,000 into the trust account established in connection with our IPO (the “Second Deposit” and together
with the First Deposit, the “Deposits”). The Second Deposit was required to extend the period of time we have to consummate
our initial business combination by three months from the first extension deadline of March 20, 2023 until June 20, 2023. The Sponsor
intends to make the Deposits, and when each Deposit is received, the Sponsor will receive 1,150,000 private placement warrants in connection
with each such Deposit, or 2,300,000 private placement warrants in total.
If we are unable to consummate our initial business combination within
18 months following the effectiveness of the Initial Public Offering, we will redeem 100%. The per-share price upon such redemption will
be payable in cash and will equal the aggregate amount then on deposit in the trust account, including interest earned on the funds held
in the trust account and not previously released to us to pay our taxes (less up to $50,000 of interest to pay dissolution expenses),
divided by the number of then outstanding public shares, subject to applicable law and certain conditions as described herein.
We are located at 11411 Southern
Highlands Parkway, Suite 240, Las Vegas, NV 89141.
Strategy
While we may pursue an initial
business combination target in any industry or geographic location, we are focusing our search on opportunities to acquire companies with
innovative and emerging technologies, products or services that have the potential to transform major industries and radically impact
society. Our business strategy is to identify and consummate our initial business combination with a company that complements the experience
of our management team and can benefit from our management team’s operational expertise. Our selection process is designed to leverage
our management team’s relationship network and unique multi-industry expertise, including proven deal-sourcing and structuring capabilities,
to provide us with a multitude of business combination opportunities. Our management team has experience:
| · | delivering positive returns within industries mired in legacy thought and practices; |
| · | developing and growing companies, both organically and inorganically, and expanding the product ranges
and geographic footprints of a number of businesses; |
| · | sourcing, structuring, acquiring and selling businesses and achieving synergies to create stockholder
value; |
| · | establishing a wide deal flow and efficient methodology of screening superior merger and acquisition targets
utilizing various relationships with leading private equity firms, venture capital firms and venture arms of electrification technology
companies who have various portfolio investments that are potential acquisition candidates; |
| · | partnering with industry-leading companies to increase sales and improve the competitive position of those
companies; |
| · | fostering relationships with sellers, capital providers and target management teams; and |
| · | accessing the equity and debt capital markets across various business cycles, including financing businesses
and assisting companies with the transition to public ownership. |
Our Management Team
Our management team consists
of experienced deal makers, operators and investors.
Milton C. (Todd) Ault, III,
the Chairman of the board of directors of the Company (the “Board”), has nearly 30 years of experience identifying value in
multiple asset classes in numerous financial markets as an entrepreneur, private equity investor, board member and corporate executive.
Since March 2017, Mr. Ault has spent a substantial portion of his time transforming Ault into a diversified holding company with interests
in the cryptocurrency, oil exploration, crane services, defense/aerospace, industrial, automotive, medical/biopharma, consumer electronics,
hotel operations and textiles industries. Mr. Ault has been the Executive Chairman of the board of directors of Ault from March 2017 to
date and served as its Chief Executive Officer from December 2017 to January 2021.
Mr. Ault also serves as the
Chairman Emeritus of Alzamend Neuro, Inc. (“Alzamend Neuro”), a biopharmaceutical company focused on developing novel products
for the treatment of neurodegenerative diseases and psychiatric disorders, since June 2021, and previously served as its Executive Chairman
of the board of directors from February 2016 to June 2021. Mr. Ault serves as the Executive Chairman of the board of directors of Avalanche
International Corp. dba MTIX International (“Avalanche”), a publicly traded company engaged in developing advanced materials
and processing technology for textile applications, since September 2014. Further, Mr. Ault serves as the Chairman of the board of directors
and the Chief Executive Officer of Ault & Company, Inc., a holding company with various investments, since December 2015. Additionally,
Mr. Ault has been the Vice President of Business Development for MCKEA Holdings, LLC, a private wealth management family office, since
January 2011.
As our Chairman, Mr. Ault
leads the Board and guides the Company. Mr. Ault brings extensive knowledge of the current business environment and a deep background
in identifying undervalued businesses and disruptive technology companies and transactional expertise in mergers and acquisitions, financial
restructuring and capital markets.
William B. Horne, our Chief
Executive Officer and a member of the Board, is also a key team member of Ault. He has been Ault’s Chief Executive Officer since
January 2021, its President from August 2020 to January 2021 and its Chief Financial Officer from January 2018 to August 2020. Mr. Horne
joined the board of directors of Ault in October 2016. Mr. Horne has demonstrated day-to-day operational leadership of Ault and experience
with a range of disruptive technology companies in quickly evolving industries, as well as extensive knowledge of complex financial and
accounting issues.
Mr. Horne has been the Chairman
of the board of directors of Alzamend Neuro since June 2021 and served as its Chief Financial Officer from June 2016 to December 2018
and director from June 2016 to June 2021. He is also a director and the Chief Financial Officer of Avalanche since June 2016. Mr. Horne
previously served as Chief Financial Officer of OptimisCorp, a healthcare technology developer, from January 2008 to May 2013, and Chief
Financial Officer of Patient Safety Technologies, Inc., a medical device provider, from June 2005 to October 2008, and its interim Chief
Executive Officer from January 2007 to April 2008. Prior to that, Mr. Horne held supervisory positions at the accounting firm Price Waterhouse,
LLP (now PwC). Mr. Horne earned a B.A. degree in accounting from Seattle University.
Henry C.W. Nisser, our President,
General Counsel and a member of the Board, joined Ault as its Executive Vice President and General Counsel in May 2019, and became a director
in September 2020 and President, while remaining its General Counsel, in January 2021. Mr. Nisser is well qualified in his position due
to his substantial knowledge and more than two decades of working experience in corporate law, mergers and acquisitions, and corporate
controls and governance.
Mr. Nisser has served as the
Executive Vice President and General Counsel of Alzamend Neuro on a part-time basis since May 2019, and has been a director of that company
since September 2020. Mr. Nisser has also been the Executive Vice President and General Counsel of Avalanche since May 2019. Prior to
joining Ault and these companies, Mr. Nisser practiced law at the New York law firm Sichenzia Ross Ference LLP from October 2011 to April
2019, concentrating on national and international corporate law, with a focus on U.S. federal securities law compliance, mergers and acquisitions,
equity and debt financings, and corporate governance. Mr. Nisser earned a B.A. degree in international relations and economics from Connecticut
College and an LL.B. from University of Buckingham School of Law in the United Kingdom. Mr. Nisser speaks fluent French and Swedish and
is conversant in Italian.
Kenneth S. Cragun, our Chief
Financial Officer, has been the Chief Financial Officer of Ault since August 2020, Senior Vice President of Finance of Alzamend Neuro
on a part-time basis since June 2021 and was previously its Chief Financial Officer on a part-time basis from December 2018 to June 2021.
Mr. Cragun also currently sits on the board of directors and is the chairman of the audit committee of Verb Technology Company, Inc. (Nasdaq:
VERB), a publicly-traded software-as-a-service applications platform developer, since September 2018 and also sits on the board of directors
of The Singing Machine Company, Inc. (Nasdaq: MICS), a publicly-traded company that is the worldwide leader in consumer karaoke products.
Mr. Cragun served as a Chief
Financial Officer Partner at Hardesty, LLC, a national executive services firm from October 2016 to December 2018. His assignments at
Hardesty included serving as Chief Financial Officer of CorVel Corporation (Nasdaq: CRVL), a publicly-traded healthcare risk management
software company, and RISA Tech, Inc., a structural design and optimization software company. Mr. Cragun was also Chief Financial Officer
of two Nasdaq-traded companies, Local Corporation, a local search engine provider, from April 2009 to September 2016, and Modtech Holdings,
Inc., a supplier of modular buildings, from June 2006 to March 2009. Mr. Cragun began his career at the accounting firm Deloitte. Mr.
Cragun earned a B.S. degree in accounting from Colorado State University-Pueblo.
David Katzoff, our Senior
Vice President of Finance, has been the Senior Vice President of Finance of Ault since January 2019. He is also the Chief Financial Officer
of Alzamend Neuro since August 2021, and was previously its Chief Operating Officer of Alzamend Neuro from December 2020 until August
2021 and Senior Vice President of Operations from November 2019 to December 2020. Mr. Katzoff is also the Chief Financial Officer of Imperalis
Holding Corp. (OTCPK: IMHC), a publicly-traded company in the power conversion and power system
solutions business. Mr. Katzoff served as the Chief Financial Officer of Lumina Media, LLC, a privately-held media company
and publisher of life-style publications, from 2015 to December 2018, and Vice President of Finance of Local Corporation from 2003 to
2017. Mr. Katzoff earned a B.S. degree in business management from the University of California at Davis.
We believe the reputations
and experience of our officers and directors and our ability to leverage their sourcing, valuation, diligence and execution capabilities
provides us with a significant pipeline of opportunities from which to evaluate and select a business that will benefit from our expertise.
Our competitive strengths, we believe, include the following:
Industry Experience.
Our management team has demonstrated success growing companies. We believe the strong track record of our management team provides access
to quality initial business combination partners. In addition, through our management team, we believe we have contacts and sources from
which to generate acquisition opportunities and possibly seek complementary follow-on business arrangements. These contacts and sources
include those in government, private and public companies, private equity and venture capital funds, investment bankers, attorneys and
accountants.
Alternative Path to
Becoming Public. We believe our structure makes us an attractive business combination partner to prospective target businesses
that desire to become a publicly listed company. A merger with us will offer a target business an alternative process to a public listing
rather than the traditional initial public offering process. We believe that the target businesses may favor this alternative, which we
believe is less expensive, while offering greater potential certainty of execution than the traditional initial public offering. Furthermore,
once a proposed business combination is approved by our stockholders and the transaction is consummated, the target business will have
effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering,
as well as general market conditions that could prevent the offering from occurring. Once public, we believe the target business would
have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’
interests than it would as a private company. A public company can offer further benefits by augmenting a company’s profile among
potential new customers and vendors and aid in attracting talented management. With public company corporate governance standards, a target
business may become attractive to the public investors.
Strong and Stable Financial Position
with Flexibility. With funds in the trust account of $118.2 million available to use, as of December 31, 2022, for a business
combination (including deferred underwriting commissions and taxes payable), we offer a target business a variety of options such as providing
the owners of a target business with shares in a public company and a public means to sell such shares, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate
our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs
and desires. However, since we have no specific business combination under consideration, we have not taken any steps to secure third
party financing and there can be no assurance that it will be available to us on favorable terms, if at all.
Depth of Team and Access
to Resources. We have a dedicated management team with a track record of executing on transactions, and the resources
to source and evaluate a large number of potential transactions.
Experienced Board of
Directors. We believe that our ability to leverage the experience of our Board, comprising senior operating executives across
multiple sectors and industries, provides us with a distinct advantage in being able to source, evaluate and consummate an attractive
transaction.
Sourcing Channels and
Leading Industry Relationships. We believe our capabilities, reputation, and deeply-varied industry relationships provides us
with a differentiated pipeline of acquisition opportunities that would be difficult for other participants in the market to replicate.
Execution and Structuring
Capability. We believe our management team and Board’s combined expertise and reputation will allow us to source and
complete a transaction possessing structural attributes that create an attractive investment thesis. These types of transactions are typically
complex and require creativity, industry knowledge and expertise, rigorous due diligence, and extensive negotiations and documentation.
We believe that by focusing our investment activities on these types of transactions, we can generate investment opportunities that have
attractive risk/reward profiles based on their valuations and structural characteristics.
Public Company Experience.
All members of our management team and most of our directors have extensive experience as public company executives and/or board members.
This experience serves as a key competitive advantage in selecting companies that will benefit from going public, positioning us as an
attractive partner to management teams of potential target companies, and help to create long-term value post-closing of our
initial business combination.
Acquisition Strategy
Based on the collective business
and acquisition experiences of our management team, we seek to identify and target opportunities to acquire companies with innovative
and emerging technologies, products or services that have the potential to transform major industries and radically impact society. We
intend to acquire a target business or businesses with disruptive technologies that our management team believes can achieve mainstream
adoption and create opportunities for long-term appreciation in value. Among these businesses, we may look at companies engaged in 5G
communications, robotics, blockchain and enterprise networking. Given our management team’s collective track record of successfully
closing transactions and extensive industry contacts, we believe we can identify potential targets in these and other areas and successfully
negotiate and consummate our initial business combination, although we cannot provide any assurance as to if or when an initial business
combination will be consummated. In addition, we believe the target business will benefit from our involvement, including through the
potential strategic relationships we can introduce, as well by our assisting the target in areas such as corporate financing and integrating
mergers and acquisitions, vendor and customer growth. Our selection process also leverages our team’s network of industry, private
equity and venture capital relationships as well as relationships with management teams of public and private companies, investment bankers,
attorneys and accountants that we believe should provide us with significant acquisition transaction opportunities.
Acquisition Criteria
Consistent with our 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.
| · | Significant Transformational Potential. We generally seek to acquire businesses that have
promising disruptive technologies which, if they gain momentum and become mainstream, have the potential to be a game changer in the near
future. We may pursue businesses with owners who would be interested in a reverse merger, which is a combination effected via an exchange
of equity, that could leave most or all our existing cash available as capital to support growth efforts. Such a transaction could result
in dilution to holders of the common stock. See “Risk Factors.” |
| · | Potential Leadership Position in its Industry. We generally seek to identify businesses
that have the potential to gain a leadership position in their industry or a defensible niche with a target market as a result of a new
and emerging technology. |
| · | Strong Competitive Positioning and Differentiated Technology. We focus
on attractive companies with differentiated technology aimed at solving critical challenges in their areas of focus. Companies with unique
and disruptive platforms and product offerings, including technology innovators, are at the forefront of our evaluation process. Our management
team and our Board have extensive operational, commercial and transactional experience with technology-driven companies in our target
sectors, and use these skills to identify market leaders. |
| · | Unrealized Potential for Stockholder Value Creation. We seek target businesses that are
both initially attractive investment candidates and that possess the potential for ongoing stockholder value creation in the long term.
Examples of post-acquisition value creating activities include operational improvements in sales and marketing, increasing operating efficiency
and reducing costs. Other examples include value created through add-on acquisitions or divestitures, or by lowering the cost of capital
by opening up new sources of debt or equity financing. |
| · | Potential to Grow Through Further Acquisition Opportunities. We generally seek to acquire
a business that has the potential to grow inorganically through additional acquisitions. |
| · | Enterprise Value. We are generally focused on companies with valuations between $200,000,000
and $500,000,000, as such companies generally have proven business models and offer long-term earnings growth potential. |
| · | Partnership Approach. We are pursuing a partnership approach to working with
a management team that shares our strategic vision and believes we can help them achieve the full potential of their business. Our management
team and our Board have a long history of starting and growing businesses, and we will use our collective experience to help guide management
teams of target businesses. |
| · | Has a Committed and Capable Management Team. We generally seek to acquire a business with
a professional management team whose interests are aligned with those of our investors. Where necessary, we may also look to complement
and enhance the capabilities of the target business’s management team by recruiting additional talent through our network of contacts. |
| · | Benefit from Being a Publicly Traded Company. We primarily seek a target that we believe
will benefit from being publicly traded and will be able to effectively utilize the broader access to capital and the public profile that
are associated with being a publicly traded company. |
These criteria are not intended
to be exhaustive. Our evaluation relating to the merits of a particular initial business combination are based, to the extent relevant,
on these general guidelines as well as other considerations, factors and criteria that from time to time our management may deem relevant.
Initial Business Combination
NYSE American rules require
that we must consummate an initial business combination with one or more operating businesses or assets with a fair market value equal
to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted,
and excluding the amount of any deferred underwriting commissions). Our Board will make the determination as to the fair market value
of our initial business combination. If our Board 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 valuation or appraisal firm
that regularly provides fairness opinions solely with respect to the satisfaction of such criteria. While we consider it unlikely that
our Board will not be able to make such independent determination of fair market value, it may be unable to do so if the Board is less
familiar or experienced with the target company’s business, there is a significant amount of uncertainty as to the value of the
target company’s assets or prospects, including if such company is an emerging growth company, or if the anticipated transaction
involves a complex financial analysis or other specialized skills and the Board determines that outside expertise would be helpful or
necessary in conducting such analysis. Since any opinion, if obtained, would merely state that the fair market value meets the 80% of
net assets test, unless such opinion includes material information regarding the valuation of a target business or the consideration to
be provided, it is not anticipated that copies of such opinion would be distributed to our stockholders. However, if required under applicable
law, any proxy statement that we deliver to stockholders and file with the SEC in connection with a proposed transaction will include
such opinion.
We anticipate structuring
our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire
100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination
such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to
meet certain objectives of the target management team or stockholders or for other reasons, but we will only consummate such business
combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act of 1940, as amended (the “Investment Company Act”). Even if the post-transaction company owns or acquires 50%
or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest
in the post-transaction company, depending on valuations ascribed to the target and us in the business combination transaction. For example,
we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock
of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial
number of new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding
shares subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses
are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will
be taken into account for purposes of NYSE American’s 80% of net assets test. If the business combination involves more than one
target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses.
To the extent we effect our
initial business combination with a company or business that may be financially unstable or in a quickly evolving industry, 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
target business, we expect to conduct a thorough due diligence review which will encompass, among other things, meetings with incumbent
management and employees, document reviews, inspection of facilities, as well as a review of financial, operational, legal and other information
which will be made available to us.
The time required to select
and evaluate a target business and to structure and consummate our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately consummated will result in our incurring losses
and will reduce the funds we can use to consummate another business combination.
Sourcing of Potential Initial Business Combination Targets
Certain members of our management
team have spent significant portions of their careers working with undervalued businesses which have developed or possess disruptive technology
and have developed a wide network of professional services contacts and business relationships in that industry. The members of our Board
also have significant executive management and public company experience with disruptive technology related companies and bring additional
relationships that further broaden our industry network.
This network has provided
our management team with a flow of referrals that have resulted in numerous transactions. We believe that the network of contacts and
relationships of our management team provides us with an important source of acquisition opportunities. In addition, target business candidates
will have been brought to our attention from various unaffiliated sources, including investment market participants, private equity groups,
investment banks, consultants, accounting firms and large business enterprises.
Members of our management
team and our independent directors directly or indirectly own founder shares and/or Placement Warrants following the Initial Public Offering
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.
In addition, each of our officers
and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to related companies
or other entities pursuant to which such officer or director is or will be required to present a business combination 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 consummate our initial business combination.
Ault will adopt a policy pursuant
to which any business combination opportunity that is a corporate opportunity of Ault that may also be a business combination opportunity
for the Company will first be presented to a standing committee of the board of directors of Ault for consideration as to whether Ault
desires to pursue such business combination opportunity as a direct investment or to present such opportunity to the Company for consideration.
Howard Ash, an independent director of Ault, will be the sole member of that committee and will not serve in any fiduciary capacity at
the Company.
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 common
stock (or shares of a new holding company) or for a combination of our shares of 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
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 consummated, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to consummate 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 will 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 the fifth anniversary of the effectiveness of the
Initial Public Offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to
be a large accelerated filer, which means the market value of our common stock that is held by 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.
Additionally, we are a “smaller
reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equals
or exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during
such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th.
Financial Position
With funds available for an initial business
combination of approximately $118.2 million (including deferred underwriting commissions and taxes payable), 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 consummate our initial business
combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient
combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we
have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged
in, and we will not engage in, any operations for an indefinite period of time following the Initial Public Offering. We intend to effectuate
our initial business combination using cash from the proceeds of the IPO and the sale of the Placement Warrants, the proceeds of the sale
of our shares in connection with our initial business combination (pursuant to backstop agreements we may enter into), 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 consummate our initial business combination with a company or business that may be financially unstable or in a quickly evolving
industry, 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 redemptions of our common stock, we may apply the balance of the cash
released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the post-transaction
company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, to fund the
purchase of other 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 consummation 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 intend to target businesses larger than we could acquire with the net proceeds of the Initial Public Offering
and the sale of the Placement Warrants and may as a result be required to seek additional financing to consummate such proposed initial
business combination. Subject to compliance with applicable securities laws, we would expect to complete such financing only simultaneously
with the consummation 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 applicable law or stock exchange requirements, we would seek stockholder approval of such
financing. There are no prohibitions on our ability to raise funds privately, or through loans in connection with 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.
We have not engaged or retained
any agent or other representative to identify or locate any suitable acquisition candidate, to conduct any research or take any measures,
directly or indirectly, to locate or contact a target business. Accordingly, there is no current basis for our stockholders to evaluate
the possible merits or risks of the target business with which we may ultimately consummate our initial business combination. Although
our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this
assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside
of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
Sources of Target Businesses
Target business candidates
have been brought to our attention from various unaffiliated sources, including investment bankers and investment professionals, 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 this Annual Report and know what types of businesses
we are targeting. Our officers and directors, as well as our Sponsor and their affiliates, have also brought to our attention target business
candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may
have, as well as attending trade shows or conventions. In addition, we expect to receive a number of 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 affiliates. While we do not presently 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 our Sponsor
or any of our existing officers or directors 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 consummation of our initial business combination (regardless of the type of transaction that it is). None of our Sponsor,
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 except
as set forth herein. Effective January 1, 2022, we have agreed to pay Ault, an affiliate of our Sponsor, a total of $10,000 per month
for office space, utilities and secretarial and administrative support and to reimburse our Sponsor for any out-of-pocket expenses related
to identifying, investigating and completing an initial business combination. 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 consummate 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. We are not required to obtain such an opinion in any other context.
As more fully discussed in
the section of this Annual Report entitled “Directors, Executive Officers and Corporate Governance – Conflicts of Interest,”
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 pre-existing fiduciary or contractual obligations, he or she may be required to present such business
combination opportunity to such entity prior to presenting such business combination opportunity to us. 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
NYSE American rules require
that we must consummate an initial business combination with one or more operating businesses or assets with a fair market value equal
to at least 80% of the net assets held in the trust account (net of amounts disbursed to management for working capital purposes, if permitted,
and excluding the amount of any deferred underwriting commissions). Our board of directors will make the determination as to the fair
market value of 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 valuation
or appraisal firm that regularly prepares fairness opinions solely with respect to the satisfaction of such criteria. While we consider
it unlikely that our board of directors will not be able to make such independent determination of fair market value, it may be unable
to do so if the board of directors is less familiar or experienced with the target company’s business, there is a significant amount
of uncertainty as to the value of the company’s assets or prospects, including if such company is an emerging growth company, or
if the anticipated transaction involves a complex financial analysis or other specialized skills and the board of directors determines
that outside expertise would be helpful or necessary in conducting such analysis. Since any opinion, if obtained, would merely state that
the fair market value meets the 80% of net assets test, unless such opinion includes material information regarding the valuation of a
target business or the consideration to be provided, it is not anticipated that copies of such opinion would be distributed to our stockholders.
However, if required under applicable law, any proxy statement that we deliver to stockholders and file with the SEC in connection with
a proposed transaction will include such opinion.
We anticipate structuring
our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire
100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination
such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order to
meet certain objectives of the target management team or stockholders or for other reasons, but we will only consummate such business
combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act of 1940, as amended, or the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the
voting securities of the target, our stockholders prior to the business combination may collectively own a minority interest in the post-transaction
company, depending on valuations ascribed to the target and us in the business combination transaction. For example, we could pursue a
transaction in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In
this case, we would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of
new shares, our stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares
subsequent to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses
are owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will
be taken into account for purposes of NYSE American’s 80% of net assets test. If the business combination involves more than one
target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses. There is no basis for
our stockholders to evaluate the possible merits or risks of any target business with which we may ultimately consummate our initial business
combination.
To the extent we effect our
initial business combination with a company or business that may be financially unstable or in a quickly evolving industry, 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 expect to conduct a thorough due diligence review, which may encompass, among other things, meetings with incumbent
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 consummate our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately consummated will result in our incurring losses
and will reduce the funds we can use to consummate another business combination.
Lack of Business Diversification
For an indefinite period of
time following the consummation 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 consummate business combinations with multiple entities in one
or several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being
in a single line of business. In addition, we may ultimately search for an initial business combination in a single industry. By completing
our initial business combination with only a single entity, our lack of diversification may:
| • | subject us to negative economic, competitive and regulatory developments, any or all of which may have
a substantial adverse impact on the particular industry in which we operate after our initial business combination, and |
| • | cause us to depend on the marketing and sale of a single product or limited number of products or services. |
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 an 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.
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 applicable law or applicable stock exchange listing requirements, 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 the NYSE American’s
listing rules, stockholder approval would be required for our initial business combination if, for example:
| • | we issue (other than in a public offering for cash) shares of common stock that will either (a) be equal
to or in excess of 20% of the number of shares of common stock then outstanding or (b) have voting power equal to or in excess of 20%
of the voting power then outstanding; |
| • | any of our directors, officers or substantial security holders (as defined by the NYSE American rules)
has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of shares of common
stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either
(a) 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance in the case of any of our directors
and officers or (b) 5% of the number of shares of common stock or 5% of the voting power outstanding before the issuance in the case of
any substantial security holders; or |
| • | the issuance or potential issuance of common stock will result in our undergoing a change of control. |
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 consummation of our initial
business combination. There is no limit on the number of shares our initial stockholders, directors, officers or their affiliates may
purchase in such transactions, subject to compliance with applicable law and NYSE American 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 nonpublic 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 the consummation of our initial
business combination.
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 warrant holders for approval in connection with our initial business combination.
Any such purchases of our securities may result in the consummation 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 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 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 submitted
by stockholders following our mailing of proxy materials in connection with our initial business combination. To the extent that our Sponsor,
officers, directors 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. Our Sponsor,
officers, directors or their affiliates will only purchase public 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 only be made to
the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation under
Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied with in order
for the safe harbor to be available to the purchaser. Our Sponsor, officers, directors 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. We expect that 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 Consummation of our
Initial Business Combination
We will provide our public stockholders with the opportunity to redeem
all or a portion of their shares of common stock upon the consummation of our initial business combination at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of the initial
business combination including interest earned on the funds held in the trust account and not previously released to us to pay our taxes,
divided by the number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account
will be approximately $10.35 per public share once the Deposits are made. Our Sponsor, officers and directors have entered into a letter
agreement with us (the “Letter Agreement”), pursuant to which they have agreed to waive their redemption rights with respect
to any founder shares and Placement Warrants and any public shares held by them in connection with the consummation 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 of common stock upon the consummation of our initial
business combination either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) 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 the law or stock exchange listing requirement.
Under NYSE American rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers
with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to
amend our amended and restated certificate of incorporation would require stockholder approval. If we structure an initial business combination
with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder
vote to approve the proposed initial business combination. We may conduct redemptions without a stockholder vote pursuant to the tender
offer rules of the SEC unless stockholder approval is required by law or stock exchange listing requirements or we choose to seek stockholder
approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities on NYSE American, we will
be required to comply with such rules.
If stockholder approval of
the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or
other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
| • | conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange
Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and |
| • | file proxy materials with the SEC. |
In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public stockholders with the redemption rights described above upon consummation of the initial business combination.
If we seek stockholder approval,
we will consummate our initial business combination only if a majority of the outstanding shares of common stock present and entitled
to vote at the meeting to approve the initial business combination when a quorum is present are voted in favor of the initial business
combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock
of the Company representing a majority of the voting power of all outstanding shares of capital stock of the Company entitled to vote
at such meeting. Pursuant to the Letter Agreement, our Sponsor, officers and directors have agreed to vote any founder shares and Placement
Warrants held by them and any shares subsequently acquired in favor of our initial business combination. For purposes of seeking approval
of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business
combination once a quorum is obtained. As a result, in addition to the founder shares, we would need 4,312,501, or 30.0%, of the 14,375,000
public shares issued and outstanding as of the date of this Annual Report to be voted in favor of a transaction (assuming all outstanding
shares are voted) in order to have our initial business combination approved. We intend to give approximately 30 days (but not less than
10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial
business combination. These quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely
that we will consummate our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of
whether they vote for or against the proposed transaction.
If a stockholder vote is not
required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended and restated
certificate of incorporation:
| • | conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate
issuer tender offers, and |
| • | file tender offer documents with the SEC prior to completing our initial business combination which contain
substantially the same financial and other information about the initial business combination and the redemption rights as is required
under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. |
Upon the public announcement
of our initial business combination, we or our Sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase
shares of our common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5
under the Exchange Act.
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to consummate our initial business combination until the expiration of the tender
offer period. In addition, we will not redeem any public shares unless our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered
to purchase, we will withdraw the tender offer and not consummate the initial business combination.
Our amended and restated certificate
of incorporation provides that we may not redeem our public shares unless our net tangible assets are at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. For example, the proposed initial business combination may
require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital
or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed
initial business combination. In the event the aggregate cash consideration we would be required to pay for all shares of common stock
that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial
business combination exceed the aggregate amount of cash available to us, we will not consummate the initial business combination or redeem
any shares, and all shares of common stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption upon Consummation of our Initial Business
Combination if we Seek Stockholder Approval
Notwithstanding the foregoing,
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 amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate
of 15% of the shares sold in the Initial Public Offering, which we refer to as the “Excess Shares.” Such restriction shall
also be applicable to our affiliates. We believe this restriction will discourage stockholders from accumulating large blocks of shares,
and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed initial business combination
as a means to force us or our management to purchase their shares at a significant premium to the then-current market price or on other
undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of the shares sold in the Initial Public Offering
without our prior consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our
ability to consummate our initial business combination, particularly in connection with an initial business combination with a target
that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we do not restrict our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection with Redemption Rights
We may require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to either tender their certificates to our transfer agent up to two business days prior to the vote on the proposal to approve the initial
business combination, or to deliver their shares to the transfer agent electronically using the Depository Trust Company’s DWAC
(Deposit/Withdrawal At Custodian) System, at the holder’s option. The proxy materials that we will furnish to holders of our public
shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such
delivery requirements. Accordingly, a public stockholder would have up to two days prior to the vote on the initial business combination
to tender its shares if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable
for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The transfer
agent will typically charge the tendering broker $80 and it would be up to the broker whether or not to pass this cost on to the redeeming
holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption rights to tender
their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of when such delivery
must be effectuated.
The foregoing is different
from the procedures used by many special purpose acquisition companies. In order to perfect redemption rights in connection with their
business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business
combination, and a holder could simply vote against a proposed initial business combination and check a box on the proxy card indicating
such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved, the company would
contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder
then had an “option window” following the consummation of the initial business combination during which he or she could monitor
the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell his or her shares
in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to
which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights surviving
past the consummation of the initial business combination until the redeeming holder delivered its certificate. The requirement for physical
or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the initial
business combination is approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date of the stockholder meeting. Furthermore, if a holder of a public share
delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable date not
to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically or electronically).
It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed
promptly following the consummation of our initial business combination.
If our initial business combination
is not approved or consummated for any reason, then our public stockholders who elected to exercise their redemption rights would not
be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
On December 13, 2022, we received notice from our Sponsor of the Sponsor’s
intention to make the First Deposit. The First Deposit was required to extend the period of time we have to consummate our initial business
combination by three months from the initial deadline of December 20, 2022 (12 months from the date of the IPO) until March 20, 2023.
On March 15, 2023, we received notice from our Sponsor of the Sponsor’s intention to make the Second Deposit. The Second Deposit
was required to extend the period of time we have to consummate our initial business combination by three months from the first extension
deadline of March 20, 2023 until June 20, 2023. The Sponsor intends to make the Deposits, and when each Deposit is received, the Sponsor
will receive 1,150,000 private placement warrants in connection with each such Deposit, or 2,300,000 private placement warrants in total.
Redemption of Public Shares and Liquidation if no Initial Business
Combination
Our amended and restated certificate of incorporation provides that
we have only 18 months following the effectiveness of the Initial Public Offering to consummate our initial business combination. As noted
above, our Sponsor previously elected to extend the period of time to consummate a business combination by three months, until March 20,
2023 and then by an additional three months, until June 20, 2023. Pursuant to the terms of our amended and restated certificate of incorporation
and the trust agreement entered into between us and Continental Stock Transfer & Trust Company, in order to extend the time available
for us to complete our initial business combination, our Sponsor or its affiliates or designees, must make the Deposits.
If we are unable to consummate our initial business combination within
such 18-month period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released
to us to pay our taxes (less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public
shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in the case of clauses
(ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail
to consummate our initial business combination within the 18-month period.
Our Sponsor, officers and directors have entered into the Letter Agreement
with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with respect to any founder
shares held by them if we fail to consummate our initial business combination within 18 months following the effectiveness of the Initial
Public Offering. However, if our Sponsor, officers or directors acquire public shares, they will be entitled to liquidating distributions
from the trust account with respect to such public shares if we fail to consummate our initial business combination within 18 months following
the effectiveness of the Initial Public Offering.
Our Sponsor, officers and directors have agreed, pursuant to a written
agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (i) to modify the
substance or timing of our obligation to allow redemption in connection with our initial business combination or certain amendments to
our charter prior thereto or to redeem 100% of our public shares if we do not consummate our initial business combination within 18 months
following the effectiveness of the Initial Public Offering or (ii) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares
of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes
divided by the number of then outstanding public shares. However, we may not redeem our public shares unless our net tangible assets are
at least $5,000,001, either immediately prior to or upon consummation of our initial business combination, and after payment of underwriters’
discounts and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption
right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement
(described above), we would not proceed with the amendment or the related redemption of our public shares at such time.
We expect that all costs and expenses associated
with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately
$207,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose.
We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any tax obligations we may owe. However,
if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent
that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional
amount of up to $50,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of the Initial Public Offering
and the sale of the Placement Warrants, other than the proceeds deposited in the trust account, and without taking into account interest,
if any, earned on the trust account, the per-share redemption amount received by stockholders upon our dissolution would be approximately
$10.35 per public share. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which
would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount
received by stockholders will not be substantially less than $10.35 per public share. Under Section 281(b) of the DGCL, our plan of dissolution
must provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are
sufficient assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders.
While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’
claims.
Although we will seek to have
all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders,
there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from
bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other
similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with respect
to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to it and will
only enter into an agreement with a third party that has not executed a waiver if management believes that such third party’s engagement
would be significantly more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management
to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. Marcum LLP, our independent registered public accounting firm, and the underwriters
of the Initial Public Offering, would not execute agreements with us waiving such claims to the monies held in the trust account.
In addition, there is no guarantee that such entities will agree to
waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. Our Sponsor has agreed that it will be liable to us if and to the extent
any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered
into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in
the trust account to below the lesser of (i) $10.35 per public share, and (ii) the actual amount per public share held in the trust account
as of the date of the liquidation of the trust account, if less than $10.35 per public share, due to reductions in the value of the trust
assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business
who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will
it apply to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities
under the Securities Act. However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently
verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and believe that our Sponsor’s only assets
are securities of our company. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. None of our
officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target
businesses.
In the event that the proceeds in the trust account are reduced below
(i) $10.35 per public share, or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of
the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to
pay taxes, and our Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations
related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its
indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our
Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment
may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative
to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our Sponsor
to reserve for such indemnification obligations and we cannot assure you that our Sponsor would be able to satisfy those obligations.
Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less
than $10.35 per public share.
We will seek to reduce the possibility that
our Sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers,
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest
or claim of any kind in or to monies held in the trust account. Our Sponsor will also not be liable as to any claims under our indemnity
of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act. We have
access to up to approximately $207,000 of income from investments held in the trust account and the sale of the Placement Warrants with
which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated
to be no more than approximately $50,000). In the event that we liquidate and it is subsequently determined that the reserve for claims
and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims made by creditors.
Under the DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account
distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial business
combination within 18 months following the effectiveness of the Initial Public Offering may be considered a liquidating distribution under
Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes
reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period
before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust account distributed
to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial business combination
within 18 months following the effectiveness of the Initial Public Offering, is not considered a liquidating distribution under Delaware
law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may
bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of
a liquidating distribution. If we are unable to consummate our initial business combination within 18 months following the effectiveness
of the Initial Public Offering, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously
released to us to pay our taxes (less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in the case of clauses (ii) and (iii)
above to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly,
it is our intention to redeem our public shares as soon as reasonably possible following our 18th month and, therefore, we
do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions
received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section 280, Section 281(b) of
the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending
claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company,
rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only
likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. As described
above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors, service providers, prospective
target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of
any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be made against us are significantly
limited and the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our Sponsor
may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.35 per public
share, or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due
to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes and will not be liable as
to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities
under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, our Sponsor will not
be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law and may
be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To
the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.35 per public share to
our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that
is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as
either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
some or all amounts received by our stockholders. Furthermore, our Board may be viewed as having breached its fiduciary duty to our creditors
and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for
these reasons.
Our public stockholders will be entitled to receive funds from the trust
account only upon the earlier to occur of: (i) the consummation of our initial business combination, (ii) the redemption of any public
shares properly tendered in connection with a stockholder vote to amend any provisions of our amended and restated certificate of incorporation
(A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or certain
amendments to our charter prior thereto or to redeem 100% of our public shares if we do not consummate our initial business combination
within 18 months following the effectiveness of the Initial Public Offering or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, and (iii) the redemption of all of our public shares if we are unable to consummate
our business combination within 18 months following the effectiveness of the Initial Public Offering, subject to applicable law. In no
other circumstances will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder
approval in connection with our initial business combination, a stockholder’s voting in connection with the initial business combination
alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such
stockholder must have also exercised its redemption rights as described above. These provisions of our amended and restated certificate
of incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote.
Comparison of Redemption or Purchase Prices
in Connection with Our Initial Business Combination and if We Fail to Consummate Our Initial Business Combination
The following table compares the redemptions and other permitted purchases
of public shares that may take place in connection with the consummation of our initial business combination and if we are unable to consummate
our initial business combination within 18 months following the effectiveness of the Initial Public Offering.
|
Redemptions in Connection
with our Initial Business
Combination |
|
Other Permitted Purchases
of Public Shares
by us or our Affiliates |
|
Redemptions if we fail to
Consummate an Initial
Business Combination |
Calculation of
redemption price |
Redemptions at the time of our initial business combination may be made
pursuant to a tender offer or in connection with a stockholder vote. The redemption price will be the same whether we conduct redemptions
pursuant to a tender offer or in connection with a stockholder vote. In either case, our public stockholders may redeem their public shares
for 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 (which is anticipated to be $10.35 per public share), 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 limitation
that no redemptions will take place if all of the redemptions would cause our net tangible assets to be less than $5,000,001 as described
elsewhere in this Annual Report and any limitations (including but not limited to cash requirements) agreed to in connection with the
negotiation of terms of a proposed initial business combination. |
|
If we seek stockholder approval of our initial business combination, our Sponsor, directors, officers or their affiliates may purchase shares in privately negotiated transactions or in the open market prior to or following consummation of our initial business combination. There is no limit to the prices that our Sponsor, directors, officers or their affiliates may pay in these transactions. |
|
If we are unable to consummate our initial business combination within
18 months following the effectiveness of the Initial Public Offering, we will redeem all public shares at a per-share price, payable in
cash, equal to the aggregate amount, then on deposit in the trust account (which is anticipated to be $10.35 per public share) including
interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to $50,000 of interest
to pay dissolution expenses), divided by the number of then outstanding public shares. |
|
Redemptions in Connection
with our Initial Business
Combination |
|
Other Permitted Purchases
of Public Shares
by us or our Affiliates |
|
Redemptions if we fail to
Consummate an Initial
Business Combination |
Impact to remaining
stockholders |
The redemptions in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of the deferred underwriting commissions and taxes payable. |
|
If the permitted purchases described above are made there would be no impact to our remaining stockholders because the purchase price would not be paid by us. |
|
The redemption of our public shares if we fail to consummate our initial business combination will reduce the book value per share for the shares held by our initial stockholders, who will be our only remaining stockholders after such redemptions. |
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we may encounter intense competition from other entities having
a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, and operating
businesses seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying
and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our
obligation to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available
to us for our initial business combination and our outstanding warrants and rights, and the future dilution they potentially represent,
may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully
negotiating an initial business combination.
Government Regulation
Our Sponsor is a Delaware
limited liability company. The Sponsor has substantial ties to one non-U.S. person, namely a citizen of Sweden who has held resident alien
status in the United States for more than forty years. While the Sponsor may constitute a “foreign person” under the strict
terms of the rules and regulations of the Committee on Foreign Investment in the United States (“CFIUS”), we do not believe
any initial business combination between us and a potential target company would be subject to rigorous or any CFIUS review in view of
the individual’s foreign citizenship of Sweden, or in view of the “benign” asset class in which we seek to complete
a business combination. If, however, our initial business combination should fall within the scope of applicable foreign ownership restrictions,
we may be unable to consummate particular proposed business combinations that could be favorable to us. The process of any governmental
review of an acquisition, whether under CFIUS or other regulations, could be lengthy, which could delay our ability to complete our initial
business combination within the requisite time period, which means we may be required to liquidate, in which case investors could lose
their entire investment. If we make a mandatory filing or determine to submit a voluntary notice to CFIUS, or proceed with a business
combination without notifying CFIUS, we risk CFIUS intervention, before or after the closing of a business combination.
Facilities
Our executive offices are
located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas, Nevada 89141 and our telephone number is (949) 444-5464. Our executive
offices are provided to us by Ault, an affiliate of our Sponsor. We have agreed to pay Ault a total of $10,000 per month for office space,
utilities and secretarial and administrative support. We consider our current office space adequate for our current operations.
An investment in our common
stock involves significant risks. You should carefully consider the following risks and all other information set forth in this Annual
Report before deciding to invest in our common stock. If any of the events or developments described below occurs, our business, financial
condition and results of operations may suffer. In that case, the value of our common stock may decline and you could lose all or part
of your investment.
You should consider each of
the following risk factors and any other information set forth in this Annual Report and the other reports filed by the Company with the
SEC, including the Company’s financial statements and related notes, in evaluating the Company’s business and prospects. The
risks and uncertainties described below are not the only ones that impact on the Company’s operations and business. Additional risks
and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair its business
or operations. If any of the following risks actually occurs, the Company’s business and financial condition, results or prospects
could be harmed. Please also read carefully the section entitled “Note About Forward-Looking Statements” at the beginning
of this Annual Report.
A new 1% U.S. federal excise tax could be imposed
on us in connection with redemptions by us of our shares or our liquidation.
On August 16, 2022,
President Biden signed into law the Inflation Reduction Act of 2022 (the “IR Act”), which, among other things, imposes a new
1% U.S. federal excise tax on certain repurchases of stock by “covered corporations” (which include publicly traded domestic
(i.e., U.S.) corporations) beginning in 2023, with certain exceptions (the “Excise Tax”). The Excise Tax is imposed on the
repurchasing corporation itself, not its stockholders from which the stock is repurchased. Because we are a Delaware corporation and our
securities are trading on NYSE American, we are a “covered corporation” for this purpose. The amount of the Excise Tax is
generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the
Excise Tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market
value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the Excise Tax. The U.S. Department
of the Treasury has authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of, the Excise
Tax; however, no guidance has been issued to date. It is uncertain whether, and to what extent, the Excise Tax could apply to any repurchase
by us of our common stock or in the event of our liquidation, in each instance after December 31, 2022, including any redemptions in connection
with an initial business combination or in the event we do not consummate an initial business combination.
Whether and to what extent
we would be subject to the Excise Tax on a redemption of our shares of common stock or other stock issued by us would depend on a number
of factors, including (i) whether the redemption is treated as a repurchase of stock for purposes of the Excise Tax, (ii) the fair market
value of the redemption treated as a repurchase of stock in connection with our initial business combination, an extension or otherwise
(iii) the structure of the initial business combination, (iv) the nature and amount of any “PIPE” or other equity issuances
in connection with the initial business combination (or otherwise issued not in connection with the initial business combination but issued
within the same taxable year of a redemption treated as a repurchase of stock) and (v) the content of regulations and other guidance from
the U.S. Department of the Treasury. As noted above, the Excise Tax would be payable by us, and not by the redeeming holder, and the mechanics
of any required payment of the Excise Tax have not yet been determined. The imposition of the Excise Tax could cause a reduction in the
cash available on hand to complete an initial business combination or for effecting redemptions and may affect our ability to complete
an initial business combination. In addition, the Excise Tax could cause a reduction in the per share amount payable to our public stockholders
in the event we liquidate the Trust Account due to a failure to complete an initial business combination within the requisite timeframe.
Disruptive technology companies present special
risks to investors including more volatility than the market as a whole.
We intend to focus on opportunities
to acquire companies with innovative and emerging technologies, products or services that have the potential to transform major industries
and radically impact society. These companies may not in fact be “disruptive” or may not be able to create or capitalize on
any transformative developments. The risks associated with such companies include, but are not limited to, small or limited markets for
their securities, changes in business cycles, world economic growth, technological progress, rapid obsolescence and government regulation.
Securities of disruptive technology companies tend to be more volatile than securities of companies that do not rely heavily on technology.
Rapid change to technologies that affect a company’s products could have a material adverse effect on such company’s results.
As the number of special purpose acquisition
companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate
an initial business combination.
In recent years, the number
of special purpose acquisition companies that have been formed has increased substantially. Many potential targets for special purpose
acquisition companies have already entered into an initial business combination, and there are still many special purpose acquisition
companies seeking targets for their initial business combination, as well as many such companies currently in registration. As a result,
at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify a suitable
target and to consummate an initial business combination.
In addition, because there
are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the competition
for available targets with attractive fundamentals or business models may increase, which could cause targets companies to demand improved
financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical
tensions, or increases in the cost of additional capital needed to close business combinations or operate targets post-business combination.
This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination,
and may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
The requirement that we consummate an initial business combination within
18 months following the effectiveness of the Initial Public Offering may give potential target businesses leverage over us in negotiating
a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets as we
approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would
produce value for our stockholders.
Any potential target business with which we enter into negotiations
concerning a business combination will be aware that we must consummate an initial business combination within 18 months following the
effectiveness of the Initial Public Offering. Consequently, such target business may obtain leverage over us in negotiating a business
combination, knowing that if we do not consummate our initial business combination with that particular target business, we may be unable
to consummate our initial business combination with any target business. This risk will increase as we get closer to the timeframe described
above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that
we would have rejected upon a more comprehensive investigation.
Our search for a business combination, and
any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus
(COVID-19) pandemic.
The COVID-19 pandemic has
resulted in a widespread health crisis that has adversely affected the economies and financial markets worldwide, and the business of
any potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore,
we may be unable to consummate a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to
have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate
and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend
on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the
severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other
matters of global concern continue for an extensive period of time, our ability to consummate a business combination, or the operations
of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
We may not be able to consummate an initial business combination within
18 months following the effectiveness of the Initial Public Offering or such later date as approved by our stockholders, in which case
we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case
our public stockholders may only receive $10.35 per public share, or less than such amount in certain circumstances, and our Warrants
will expire worthless.
The Sponsor, our officers and directors have agreed that we must consummate
our initial business combination within 18 months following the effectiveness of the Initial Public Offering. We may not be able to find
a suitable target business and consummate an initial business combination within 18 months following the effectiveness of the Initial
Public Offering. Our ability to consummate our initial business combination may be negatively impacted by general market conditions, volatility
in the capital and debt markets and the other risks described herein. If we have not completed an initial business combination within
such applicable time period or such later date as approved by our stockholders, we will: (i) cease all operations except for the purpose
of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the
funds held in the trust account and not previously released to us to pay our taxes, if any (less up to $50,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, liquidate
and dissolve, subject in the case of clauses (ii) and (iii) above to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law.
Our public stockholders may not be afforded
an opportunity to vote on our proposed initial business combination, which means we may consummate our initial business combination even
though a majority of our public stockholders do not support such a combination.
We may choose not to hold
a stockholder vote to approve our initial business combination unless the initial business combination would require stockholder approval
under applicable law or stock exchange listing requirements or if we decide to hold a stockholder vote for business or other legal reasons.
Except as required by applicable law or stock exchange requirements, the decision as to whether we will seek stockholder approval of a
proposed initial business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely
in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction
would otherwise require us to seek stockholder approval. Accordingly, we may consummate our initial business combination even if holders
of a majority of our public shares do not approve such initial business combination. Please see the section entitled “Business —
Stockholders May Not Have the Ability to Approve Our Initial Business Combination.”
If we seek stockholder approval of our initial
business combination, our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our
public stockholders vote.
Pursuant to the Letter Agreement, the Sponsor,
our officers and directors have agreed to vote any founder shares and Placement Warrants held by them, as well as any public shares subsequently
acquired, in favor of our initial business combination. As a result, in addition to the founder shares, we would need 4,312,501, or 30.0%,
of the 14,375,000 public shares issued and outstanding as of the date of this Annual Report to be voted in favor of a transaction (assuming
all outstanding shares are voted) in order to have our initial business combination approved. Our Sponsor owns shares representing approximately
20% of our outstanding shares of common stock as of the date of this Annual Report. Accordingly, if we seek stockholder approval of our
initial business combination, the agreement by our initial stockholders to vote in favor of our initial business combination will increase
the likelihood that we will receive the requisite stockholder approval for such initial business combination.
Your only opportunity to affect the investment decision regarding a
potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder
approval of the initial business combination.
At the time of your investment
in us, you were not provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our
Board may consummate an initial business combination without seeking stockholder approval, public stockholders may not have the right
or opportunity to vote on the initial business combination, unless we seek such stockholder vote. Accordingly, if we do not seek stockholder
approval, your only opportunity to affect the investment decision regarding a potential business combination may be limited to exercising
your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed
to our public stockholders in which we describe our initial business combination.
The ability of our public stockholders to redeem
their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult
for us to enter into an initial business combination with a target.
We may seek to enter into
an initial business combination agreement with a prospective target that requires as a closing condition that we have a minimum net worth
or a certain amount of cash. If too many public stockholders exercise their redemption rights, we would not be able to meet such closing
condition and, as a result, would not be able to proceed with the initial business combination. Furthermore, in no event will we redeem
our public shares unless our net tangible assets are at least $5,000,001 either immediately prior to or upon consummation of our initial
business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny
stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial
business combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be
less than $5,000,001 upon consummation of our initial business combination and after payment of underwriters’ fees and commissions
or such greater amount necessary to satisfy a closing condition, each as described above, we would not proceed with such redemption and
the related business combination and may instead search for an alternate business combination. Prospective targets will be aware of these
risks and, thus, may be reluctant to enter into an initial business combination with us.
The ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares may not allow us to consummate the most desirable business combination or optimize our capital
structure.
At the time we enter into
an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore
will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If
our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such
requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption than we initially
expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third
party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher
than desirable levels. The above considerations may limit our ability to consummate the most desirable business combination available
to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted
for any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to stockholders
who properly exercise their redemption rights will not be reduced by the deferred underwriting commission and after such redemptions,
the per-share value of shares held by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting commissions.
The ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful
and that you would have to wait for liquidation in order to redeem your stock.
If our initial business combination
agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount
of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business
combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If
you are in need of immediate liquidity, you could attempt to sell your stock in the open market; however, at such time our stock may trade
at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with our redemption until we liquidate or you are able to sell your stock in the open
market.
We may not be able to consummate our initial business combination within
the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public
shares and liquidate, in which case our public stockholders may only receive $10.35 per public share, or less than such amount in certain
circumstances, and our Warrants will expire worthless.
Our amended and restated certificate of incorporation provides that
we must consummate our initial business combination within 18 months following the effectiveness of the Initial Public Offering. We may
not be able to find a suitable target business and consummate our initial business combination within such time period. Our ability to
consummate our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt
markets and the other risks described herein. For example, if the outbreak of COVID-19 continues to grow both in the U.S. and globally
and, while the extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to consummate
our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing
being unavailable on terms acceptable to us or at all. Additionally, the outbreak of COVID-19 may negatively impact businesses we may
seek to acquire.
If we have not consummated our initial business combination within such
time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more
than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to
pay our taxes (less up to $50,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to
the approval of our remaining stockholders and our Board, dissolve and liquidate, subject in the case of clauses (ii) and (iii) above
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, our
public stockholders may only receive $10.35 per public share, and our Warrants will expire worthless. In certain circumstances, our public
stockholders may receive less than $10.35 per public share on the redemption of their shares. See “Risk Factors — If third
parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received
by stockholders may be less than $10.35 per public share” and other risk factors below.
If we seek stockholder approval of our initial business combination,
our Sponsor, directors, officers, any of the related companies and their affiliates may elect to purchase shares or Warrants from public
stockholders, which may influence a vote on a proposed initial business combination and reduce the public “float” of our common
stock.
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, directors, officers, any of the related companies or their affiliates may purchase public shares
or public Warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the
consummation of our initial business combination, although they are under no obligation to do so. 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. None of
the funds in the trust account will be used to purchase shares or public Warrants in such transactions.
Such a purchase may include
a contractual acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner
thereof and therefore agrees not to exercise its redemption rights. In the event that our Sponsor, directors, officers, any of the related
companies or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already elected to
exercise their redemption rights or submitted a proxy to vote against our initial business combination, such selling stockholders would
be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial business combination. 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. The purpose of such purchases 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 warrant holders for approval in connection with our initial business combination.
Any such purchases of our
securities may result in the consummation of our initial business combination that may not otherwise have been possible. We expect that
any such purchases will be reported pursuant to Section 13 and Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), to the extent such purchasers are subject to such reporting requirements.
In addition, if such purchases
are made, the public “float” of our common stock or public Warrants and the number of beneficial holders of our securities
may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities
exchange.
If a stockholder fails to receive notice of
our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for
tendering its shares, such shares may not be redeemed.
We will comply with the tender
offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our
compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as applicable, such stockholder may
not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that
we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly tender or redeem public shares. For example, we may require our public stockholders seeking
to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either deliver
their stock certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders, or up
to two business days prior to the vote on the proposal to approve the initial business combination in the event we distribute proxy materials,
or to deliver their shares to the transfer agent electronically. In the event that a stockholder fails to comply with these or any other
procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed. See the section entitled “Business —
Redemption Rights for Public Stockholders upon Consummation of our Initial Business Combination — Tendering Stock Certificates
in Connection with a Tender Offer or Redemption Rights.”
You will not have any rights or interests in
funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to
sell your public shares or Warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the trust
account only upon the earliest to occur of: (i) our consummation of an initial business combination, and then only in connection with
those shares of common stock that such stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption
of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate of incorporation
(A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination or certain
amendments to our charter prior thereto or to redeem 100% of our public shares if we do not consummate our initial business combination
within 18 months following the effectiveness of the Initial Public Offering or (B) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity and (iii) the redemption of our public shares if we are unable to consummate an initial
business combination within 18 months following the effectiveness of the Initial Public Offering, subject to applicable law and as further
described herein. In no other circumstances will a public stockholder have any right or interest of any kind in the trust account. Holders
of Warrants and rights will not have any right to the proceeds held in the trust account with respect to the Warrants. Accordingly, to
liquidate your investment, you may be forced to sell your public shares or Warrants, potentially at a loss.
You will not be entitled to protections normally afforded to investors
of many other blank check companies.
Since the net proceeds of
the Initial Public Offering and the sale of the Placement Warrants are intended to be used to consummate an initial business combination
with a target business that has not been identified, we may be deemed to be a “blank check” company under the United States
securities laws. However, because we have net tangible assets in excess of $5,000,000 as a result of the successful completion of the
Initial Public Offering and the sale of the Placement Warrants and filed a Current Report on Form 8-K, including an audited balance sheet
demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419.
Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means our shares and
warrants have become tradable and we will have a longer period of time to consummate our business combination than do companies subject
to Rule 419.
Because of our limited resources and the significant competition for
business combination opportunities, it may be more difficult for us to consummate our initial business combination. If we are unable to
consummate our initial business combination, our public stockholders may receive only approximately $10.35 per public share on our redemption
of our public shares, or less than such amount in certain circumstances, and our Warrants will expire worthless.
We expect to encounter intense competition from other entities having
a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check
companies and other entities competing for the types of businesses we intend to acquire. Many of these individuals and entities are well-established
and have extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess greater technical, human and other resources or more industry knowledge
than we do, and our financial resources will be relatively limited when contrasted with those of many of these competitors. While we believe
there are numerous target businesses we could potentially acquire with the net proceeds of the Initial Public Offering and the sale of
the Placement Warrants, our ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited
by our available financial resources. This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain
target businesses. Furthermore, because we are obligated to pay cash for the shares of common stock which our public stockholders redeem
in connection with our initial business combination, target companies will be aware that this may reduce the resources available to us
for our initial business combination. This may place us at a competitive disadvantage in successfully negotiating and completing an initial
business combination. If we are unable to consummate our initial business combination, our public stockholders may receive only approximately
$10.35 per public share on the liquidation of our trust account and our Warrants will expire worthless. In certain circumstances, our
public stockholders may receive less than $10.35 per public share upon our liquidation. See “Risk Factors — If third parties
bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.35 per public share” and other risk factors herein.
If the net proceeds of the Initial Public Offering and the sale of the
Placement Warrants not being held in the trust account are insufficient to allow us to operate for at least the 18 months following the
effectiveness of the Initial Public Offering, we may be unable to consummate our initial business combination, in which case our public
stockholders may only receive $10.35 per public share, or less than such amount in certain circumstances, and our Warrants will expire
worthless.
The funds available to us outside of the trust account to fund our working
capital requirements may not be sufficient to allow us to operate for at least the 18 months following the effectiveness of the Initial
Public Offering, assuming that our initial business combination is not consummated during that time. We believe that the funds available
to us outside of the trust account will be sufficient to allow us to operate for at least the 18 months following such effectiveness;
however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available
to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down
payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses
from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses)
with respect to a particular proposed initial business combination, although we do not have any current intention to do so. If we entered
into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently
required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching
for, or conduct due diligence with respect to, a target business. If we are unable to consummate our initial business combination, our
public stockholders may receive only approximately $10.35 per public share on the liquidation of our trust account and our Warrants will
expire worthless. In certain circumstances, our public stockholders may receive less than $10.35 per public share, upon our liquidation.
See “Risk Factors — If third parties bring claims against us, the proceeds held in the trust account could be reduced and
the per-share redemption amount received by stockholders may be less than $10.35 per public share” and other risk factors herein.
If the net proceeds of the Initial Public Offering
and the sale of the Placement Warrants not being held in the trust account are insufficient, it could limit the amount available to fund
our search for a target business or businesses and consummate our initial business combination and we will depend on loans from our Sponsor
or management team to fund our search for an initial business combination, to pay our taxes and to consummate our initial business combination.
If we are unable to obtain these loans, we may be unable to consummate our initial business combination.
Of the net proceeds of the Initial Public Offering, the sale of the
Placement Warrants and the sale of investments from the Trust Account, approximately $207,000 is available to us outside the trust account
to fund our working capital requirements as of December 31, 2022. If we are required to seek additional capital, we would need to borrow
funds from our Sponsor, management team or other third parties to operate or may be forced to liquidate. None of our Sponsor, members
of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any such advances
would be repaid only from funds held outside the trust account or from funds released to us upon consummation of our initial business
combination. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender,
upon consummation of our initial business combination. The warrants would be identical to the Placement Warrants. Prior to the consummation
of our initial business combination, we do not expect to seek loans from parties other than our Sponsor or an affiliate of our Sponsor
as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to
funds in our trust account. If we are unable to obtain these loans, we may be unable to consummate our initial business combination. If
we are unable to consummate our initial business combination because we do not have sufficient funds available to us, we will be forced
to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive approximately $10.35 per public
share on our redemption of our public shares, and our Warrants will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.35 per public share, on the redemption of their shares. See “Risk Factors — If third parties bring
claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.35 per public share” and other risk factors below.
Subsequent to the consummation of our initial
business consummation, we may be required to take write- downs or write-offs, restructuring and impairment or other charges that could
have a significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose
some or all of your investment.
Even if we conduct extensive
due diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that
may be present inside a particular target business, that it would be possible to uncover all material issues through a customary amount
of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these
factors, we may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that
could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and
previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be
non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative
market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants
to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing
to partially finance the initial business combination. Accordingly, any stockholders who choose to remain stockholders following the initial
business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction
in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of
care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy
solicitation or tender offer materials, as applicable, relating to the initial business combination constituted an actionable material
misstatement or omission.
If third parties bring claims against us, the proceeds held in the trust
account could be reduced and the per-share redemption amount received by stockholders may be less than $10.35 per public share.
Our placing of funds in the
trust account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers,
prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest
or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute
such agreements, or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including,
but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the
enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds
held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that
has not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to us
than any alternative. Marcum LLP, our independent registered public accounting firm, and the underwriters of the Initial Public Offering,
would not execute agreements with us waiving such claims to the monies held in the trust account.
Examples of possible instances where we may engage a third party that
refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management
to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver or in cases where management is unable to find a service provider willing to execute
a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result
of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any
reason. Upon redemption of our public shares, if we are unable to consummate our initial business combination within the prescribed timeframe,
or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment
of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the
per-share redemption amount received by public stockholders could be less than the $10.35 per public share held in the trust account,
due to claims of such creditors. Pursuant to the Letter Agreement, the Sponsor, has agreed that it will be liable to us if and to the
extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered
into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in
the trust account to below the lesser of (i) $10.35 per public share, and (ii) the actual amount per public share held in the trust account
as of the date of the liquidation of the trust account, if less than $10.35 per public share, due to reductions in the value of the trust
assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target business
who executed a waiver of any and all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will
it apply to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities
under the Securities Act. However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently
verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that our Sponsor’s only assets
are securities of the Company. Therefore, we cannot assure you that the Sponsor would be able to satisfy those obligations. None of our
officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target
businesses.
Our directors may decide not to enforce the
indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution
to our public stockholders.
In the event that the proceeds in the trust account are reduced below
the lesser of (i) $10.35 per public share, and (ii) the actual amount per share held in the trust account as of the date of the liquidation
of the trust account if less than $10.35 per public share due to reductions in the value of the trust assets, in each case net of the
interest which may be withdrawn to pay taxes, and the Sponsor, asserts that it is unable to satisfy its obligations or that it has no
indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against
our Sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take
legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors,
in exercising their business judgment and subject to their fiduciary duties, may choose not to do so in any particular instance if, for
example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if
the independent directors determine that a favorable outcome is not likely. If our independent directors choose not to enforce these indemnification
obligations, the amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.35
per public share.
We may not have sufficient funds to satisfy indemnification claims
of our directors and executive officers.
We have agreed to indemnify
our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right,
title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for any
reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside
of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers and directors may
discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions
also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even though such an action,
if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected
to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
If, after we distribute the proceeds in the
trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that
is not dismissed, a bankruptcy court may seek to recover such proceeds, and we and our board of directors may be exposed to claims of
punitive damages.
If, after we distribute the
proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek
to recover some or all amounts received by our stockholders. In addition, our Board may be viewed as having breached its fiduciary duty
to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the
trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that
is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount
that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the
proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included
in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any
bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If we are deemed to be an investment company
for purposes of the Investment Company Act, we may be forced to abandon our efforts to complete an Initial Business Combination and instead
be required to liquidate the Company. To mitigate the risk of that result, on or prior to the 18-month anniversary of the effective date
of the registration statement relating to our Public Offering, we may instruct Continental Stock Transfer and Trust Company to liquidate
the securities held in the Trust Account and instead hold all funds in the Trust Account in cash. As a result, following such change,
we will likely receive minimal, if any, interest, on the funds held in the Trust Account, which would reduce the dollar amount that our
public stockholders would have otherwise received upon any redemption or liquidation of the Company if the assets in the Trust Account
had remained in mutual funds.
On
March 30, 2022, the SEC issued proposed rules (the “SPAC Rule Proposals”), relating, among other things, to circumstances
in which special purpose acquisition companies (“SPACs”) such as us could potentially be subject to the Investment Company
Act and the regulations thereunder. The SPAC Rule Proposals would provide a safe harbor for such companies from the definition of “investment
company” under Section 3(a)(1)(A) of the Investment Company Act, provided that a SPAC satisfies certain criteria. To comply with
the duration limitation of the proposed safe harbor, a SPAC would have a limited time period to announce and complete a de-SPAC transaction.
Specifically, to comply with the safe harbor, the SPAC Rule Proposals would require a company to file a report on Form 8-K announcing
that it has entered into an agreement with a target company for an initial business combination no later than 18 months after the effective
date of the registration statement for its initial public offering. The company would then be required to complete its initial business
combination no later than 12 months after the effective date of the registration statement for its initial public offering. We understand
that the SEC has recently been taking informal positions regarding the Investment Company Act consistent with the SPAC Rule Proposals.
There is currently uncertainty concerning the applicability of the Investment
Company Act to a SPAC, including a company like ours, that does not complete its initial business combination within the proposed time
frame set forth in the proposed safe harbor rule. As indicated above, the registration statement for our Public Offering became effective
in December 2021 and we have operated as a blank check company searching for a target business with which to consummate an Initial Business
Combination since such time (or approximately 18 months after the effective date of our registration statement for our Public Offering).
If we were deemed to be an investment company for purposes of the Investment Company Act, we might be forced to abandon our efforts to
complete an Initial Business Combination and instead be required to liquidate the Company. If we are required to liquidate the Company,
our investors would not be able to realize the benefits of owning shares in a successor operating business, including the potential appreciation
in the value of our stock and Warrants following such a transaction, and our Warrants would expire worthless.
The funds in the Trust Account have, since our Public Offering, been
held only in mutual funds investing solely in treasury securities and meeting certain conditions under Rule 2a-7 under the Investment
Company Act. As of December 31, 2022, amounts held in the Trust Account included approximately $1.5 million of dividends earned. To mitigate
the risk of us being deemed to have been operating as an unregistered investment company under the Investment Company Act, we may, on
or prior to the 18-month anniversary of the effective date of the registration statement relating to our Public Offering, or June 20,
2023, instruct Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the mutual
funds held in the Trust Account and thereafter to hold all funds in the Trust Account in cash (i.e., in one or more bank accounts) until
the earlier of the consummation of an Initial Business Combination or our liquidation. Following such liquidation of the assets in our
Trust Account, we will likely receive minimal interest, if any, on the funds held in the Trust Account, which would reduce the dollar
amount our public stockholders would have otherwise received upon any redemption or liquidation of the Company if the assets in the Trust
Account had remained in mutual funds. This means that the amount available for redemption will not increase after such liquidation.
In addition, even prior to the 18-month anniversary of the effective
date of the registration statement relating to our Public Offering, we may be deemed to be an investment company. The longer that the
funds in the Trust Account are held in mutual funds invested exclusively in such securities, even prior to the 18-month anniversary, there
is a greater risk that we may be considered an unregistered investment company, in which case we may be required to liquidate. Accordingly,
we may determine, in our discretion, to liquidate the securities held in the Trust Account at any time, even prior to the 18-month anniversary,
and instead hold all funds in the Trust Account in cash, which would further reduce the dollar amount our public stockholders would receive
upon any redemption or our liquidation.
If we are deemed to be an investment company
under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted,
which may make it difficult for us to consummate our initial business combination.
If we are deemed to be an
investment company under the Investment Company Act, our activities may be restricted, including:
| · | restrictions on the nature of our investments; and |
| · | restrictions on the issuance of securities, each of which may make it difficult for us to consummate our
initial business combination. |
| · | In addition, we may have imposed upon us burdensome requirements, including: |
| · | registration as an investment company with the SEC; |
| · | adoption of a specific form of corporate structure; and |
| · | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that
we are currently not subject to. |
In order not to be regulated
as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged
primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government
securities and cash items) on an unconsolidated basis. Our business will be to identify and consummate an initial business combination
and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a
view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject
us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United States “government
securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185 days or less or in money
market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets.
By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses
for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to
avoid being deemed an “investment company” within the meaning of the Investment Company Act. Our Initial Public Offering was
not intended for persons who are seeking a return on investments in government securities or investment securities. The trust account
is intended as a holding place for funds pending the earliest to occur of: (i) the consummation of our initial business combination; (ii)
the redemption of any public shares properly submitted in connection with a stockholder vote to amend our amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination
or certain amendments to our charter prior thereto or to redeem 100% of our public shares if we do not consummate our initial business
combination within 18 months following the effectiveness of the Initial Public Offering or (B) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity; or (iii) absent an initial business combination within 18
months following the effectiveness of the Initial Public Offering, our return of the funds held in the trust account to our public stockholders
as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to
the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory
burdens would require additional expenses for which we have not allotted funds and may hinder our ability to consummate an initial business
combination or may result in our liquidation. If we are unable to consummate our initial business combination, our public stockholders
may receive only approximately $10.35 per public share on the liquidation of our trust account and our Warrants will expire worthless.
Our stockholders may be held liable for claims
by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account
distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial business
combination within 18 months following the effectiveness of the Initial Public Offering may be considered a liquidating distribution under
Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes
reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period
before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our
public shares as soon as reasonably possible following the 18th month following the effectiveness of the Initial Public Offering
in the event we do not consummate our initial business combination and, therefore, we do not intend to comply with the foregoing procedures.
Because we will not be complying with Section 280, Section 281(b) of
the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending
claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are a blank
check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to
acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will
properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary
of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of
our public shares in the event we do not consummate our initial business combination within 18 months following the effectiveness of the
Initial Public Offering is not considered a liquidating distribution under Delaware law and such redemption distribution is deemed to
be unlawful (potentially due to the imposition of legal proceedings that a party may bring or due to other circumstances that are currently
unknown), then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the
unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We may not hold an annual meeting of stockholders
until after the consummation of our initial business combination, which could delay the opportunity for our stockholders to elect directors.
In accordance with NYSE American
corporate governance requirements, we are not required to hold an annual meeting until no later than one full year after our first fiscal
year end following our listing on the NYSE American. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting
of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in
lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial
business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore,
if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt
to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
The grant of registration rights to our initial
stockholders may make it more difficult to consummate our initial business combination, and the future exercise of such rights may adversely
affect the market price of our common stock.
Pursuant to an agreement entered
into concurrently with the issuance and sale of the securities in the Initial Public Offering, our initial stockholders and their permitted
transferees can demand that we register the resale of the Placement Warrants, the shares of common stock issuable upon exercise of the
Placement Warrants and the Warrants, and the founder shares that may be issued upon conversion of working capital loans may demand that
we register the resale of such shares of common stock, warrants or the common stock issuable upon exercise of such warrants. We will bear
the cost of registering these securities. The registration and availability of such a significant number of securities for trading in
the public market may have an adverse effect on the market price of our common stock. In addition, the existence of the registration rights
may make our initial business combination more costly or difficult to consummate. This is because the stockholders of the target business
may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the
market price of our common stock that is expected when the securities owned by our initial stockholders or holders of working capital
loans or their respective permitted transferees are registered.
Because we are neither limited to evaluating
a target business in a particular industry sector, nor have we selected any specific target businesses with which to pursue our initial
business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
We will seek to consummate
an initial business combination with companies that have undervalued businesses which have developed or possess disruptive technology
but may also pursue other business combination opportunities, except that we will not, under our amended and restated certificate of incorporation,
be permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations.
Because we have not yet selected or approached any specific target business with respect to a business combination, there is no basis
to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows, liquidity,
financial condition or prospects. To the extent we consummate our initial business combination, we may be affected by numerous risks inherent
in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking
an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable
or a development stage company. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target
business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate
time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control
or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our securities
will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination
target. Accordingly, any stockholders who choose to remain stockholders following our initial business combination could suffer a reduction
in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to
successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed
to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials,
as applicable, relating to the business combination contained an actionable material misstatement or material omission.
We may seek business combination opportunities in industries or
sectors which may or may not be outside of our management’s area of expertise.
Although we intend to focus
on identifying companies with innovative and emerging technologies, products or services that have the potential to transform major industries
and radically impact society, we will consider an initial business combination outside of our management’s area of expertise if
an initial business combination candidate is presented to us and we determine that such candidate offers an attractive business combination
opportunity for our Company or we are unable to identify a suitable candidate in this sector after having expanded a reasonable amount
of time and effort in an attempt to do so. Although our management will endeavor to evaluate the risks inherent in any particular business
combination candidate, we cannot assure you that we will adequately ascertain or assess all of the significant risk factors. We also cannot
assure you that an investment in our securities will not ultimately prove to be less favorable to investors than a direct investment,
if an opportunity were available, in an initial business combination candidate. In the event we elect to pursue a business combination
outside of the areas of our management’s expertise, our management’s expertise may not be directly applicable to its evaluation
or operation, and the information contained in this Annual Report regarding the areas of our management’s expertise would not be
relevant to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain
or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain stockholders following our initial business
combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction
in value.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and guidelines for evaluating
prospective target businesses, it is possible that a target business with which we enter into our initial business combination will not
have all of these positive attributes. If we consummate our initial business combination with a target that does not meet some or all
of these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria
and guidelines. In addition, if we announce a prospective business combination with a target that does not meet our general criteria and
guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing
condition with a target business that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder
approval of the transaction is required by applicable law or stock exchange requirements, or we decide to obtain stockholder approval
for business or other legal reasons, it may be more difficult for us to attain stockholder approval of our initial business combination
if the target business does not meet our general criteria and guidelines. If we are unable to consummate our initial business combination,
our public stockholders may receive only approximately $10.35 per public share on the liquidation of our trust account and our Warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.35 per public share on the redemption
of their shares. See “Risk Factors — If third parties bring claims against us, the proceeds held in the trust account could
be reduced and the per-share redemption amount received by stockholders may be less than $10.35 per public share” and other risk
factors herein.
We may seek business combination opportunities
with a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings, which could subject
us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we consummate
our initial business combination with a financially unstable business or an entity lacking an established record of revenues or earnings,
we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include volatile revenues
or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the
risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors
and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave
us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required to obtain a fairness opinion
and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our Company
from a financial point of view.
Unless we consummate our initial
business combination with an affiliated entity or our Board cannot independently determine the fair market value of the target business
or businesses, we are not required to obtain an opinion from an independent investment banking firm or another independent entity that
commonly renders valuation opinions that the price we are paying is fair to our Company from a financial point of view. If no opinion
is obtained, our stockholders will be relying on the judgment of our Board, who will determine fair market value based on standards generally
accepted by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable,
related to our initial business combination.
Resources could be wasted in researching business combinations that
are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
If we are unable to consummate our initial business combination, our public stockholders may receive only approximately $10.35 per public
share, or less than such amount in certain circumstances, on the liquidation of our trust account and our Warrants will expire worthless.
We anticipate that the investigation of each specific target business
and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants, attorneys, consultants and others. If we decide not to consummate
a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable.
Furthermore, if we reach an agreement relating to a specific target business, we may fail to consummate our initial business combination
for any number of reasons including those beyond our control. Any such event will result in a loss to us of the related costs incurred
which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to
consummate our initial business combination, our public stockholders may receive only approximately $10.35 per public share on the liquidation
of our trust account and our Warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.35
per public share, on the redemption of their shares. See “Risk Factors — If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.35 per public
share” and other risk factors herein.
Our Company has overlapping directors and management
with multiple entities, each of which may lead to conflicting interests. Additionally, certain of our officers and directors have, and
in the future may have, additional fiduciary or contractual obligations to one or more other entities which may lead to additional conflicting
interests.
All of our officers also serve
as executive officers of one or more of the related companies, and there are overlapping directors with such entities. Our officers and
members of our Board have fiduciary duties to our stockholders. Likewise, any such persons who serve in similar capacities at any of the
related companies have fiduciary duties to that company’s stockholders. Therefore, such persons may have conflicts of interest or
the appearance of conflicts of interest with respect to matters involving or affecting us and one or more of the related companies to
which they owe fiduciary duties.
Each of our officers and directors
has, and any of them in the future may have, additional fiduciary or contractual obligations to one or more other entities (including,
without limitation, the entities listed in the section entitled “Directors, Executive Officers and Corporate Governance –
Conflicts of Interest”) pursuant to which such officer or director may be required to present a business combination opportunity
to such entities before he or she presents such opportunity to us. Also, none of Ault Alliance, Inc. (formerly known as BitNile Holdings,
Inc.) (“Ault”), our Sponsor or any of our directors and officers is prohibited from sponsoring, investing or otherwise becoming
involved with, any other blank check companies, including in connection with their initial business combinations. Accordingly, if any
of our officers or directors becomes aware of a business combination opportunity to which he or she has then-current fiduciary or contractual
obligations to present such opportunity to another entity, he or she may only present such opportunity to us if such other entity rejects
the opportunity. 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; such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable
for us to pursue; and such person has no fiduciary or contractual obligation to present the opportunity to any other person or entity.
One or more of the related
companies may compete with us for acquisition opportunities. If these entities decide to pursue any such opportunities, we may be precluded
from procuring such opportunities. In addition, investment ideas generated within Ault may be suitable for both us and for one or more
other entities and may be directed to such entity rather than to us.
In addition, Ault adopted
a policy pursuant to which any business combination opportunity that is a corporate opportunity of Ault that may also be a business combination
opportunity for our Company will first be presented to a standing committee of the board of directors of Ault for consideration as to
whether Ault desires to pursue such business combination opportunity as a direct investment or to present such opportunity to our Company
for consideration. Howard Ash, an independent director of Ault, will be the sole member of that committee and will not serve in any fiduciary
capacity at our Company.
Ault has direct and indirect
interests in subsidiaries and other companies which are engaged in a broad array of industries, including cryptocurrency, defense-aerospace,
industrial, automobile, real estate, telecommunications, medical-biopharma and textiles. Conflicts may arise from Ault’s indirect
ownership of our Company, as well as from actions undertaken by any its subsidiaries. Additionally, Ault may take commercial steps which
may have an adverse effect on us, including with respect to any target we acquire in the initial business combination.
Moreover, most of our directors
and officers continue to own stock and options to purchase stock in one or more of the related companies. Additionally, our directors
or officers could own disproportionate interests (in percentage or value terms) in the related companies’ stocks. These ownership
interests and/or such disparity could create, or appear to create, potential conflicts of interest when the applicable individuals are
faced with decisions that could have different implications for our Company and the related companies.
Furthermore, we may enter
into transactions with one or more of the related companies. While any potential conflict that qualifies as a “related party transaction”
(as defined in Item 404 of Regulation S-K under the Securities Act) is subject to review by an independent committee of the applicable
issuer’s board of directors in accordance with its corporate governance guidelines, there can be no assurance that the terms of
any such transactions will be as favorable to us as would be the case where there is no overlapping officer or director. See “Risk
Factors — We may engage in a business combination with one or more target businesses that may be owned by our Sponsor or one or
more of the related companies, or its or their officers or directors, which may raise potential conflicts of interest.”
We are dependent upon our executive officers
and directors who must allocate their time among our business and other businesses. The departure of our executive officers or directors
or conflicts of interest in their determination as to how much time to devote to our affairs could have a negative impact on our ability
to consummate our initial business combination.
Our operations are dependent
upon a relatively small group of individuals. We believe that our success depends on the continued service of our officers and directors,
at least until we have consummated our initial business combination. Our officers and directors are not required to, and will not, commit
their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations, including
our search for an initial business combination, and these other businesses. We do not intend to have any full-time employees prior to
the consummation of our initial business combination, nor do we have any employment agreement with, or key-man insurance on the life of
any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have a detrimental
effect on us.
In addition, certain of our
officers and directors are employed by or otherwise provide service to Ault or other companies that may make investments in, or operate
in, industries we may target for our initial business combination. Our independent directors also serve as officers and board members
for other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time
to such affairs, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to consummate
our initial business combination. For a complete discussion of our officers’ and directors’ other business affairs, see “Proposed
Business — Conflicts of Interest” and “Directors, Executive Officers and Corporate Governance –
Conflicts of Interest”.
From time to time, we and members of our management
team may be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses,
divert our management’s attention, and materially harm our financial condition.
From time to time, we may
be subject to claims, lawsuits, government investigations, and other proceedings involving competition and antitrust, securities, tax,
commercial disputes, and other matters that could adversely affect our financial condition. Litigation and regulatory proceedings may
be protracted and expensive, and the results are difficult to predict. Additionally, such litigation and regulatory proceedings require
a great deal of financial resources and attention from us and our management team. Adverse outcomes with respect to litigation or any
of these legal proceedings may result in significant settlement costs or judgments, or penalties and fines, and could negatively affect
our ability to identify and consummate an initial business combination and may have an adverse effect on the price of our securities.
Members of our management
team have been involved in a wide variety of businesses. Such involvement has, and may lead to, media coverage and public awareness. As
a result, members of our management team and the related companies may from time to time be involved in civil disputes or governmental
investigations unrelated to our business. Any such claims or investigations may be detrimental to our reputation and could negatively
affect our ability to identify and consummate an initial business combination and may have an adverse effect on the price of our securities.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to consummate an initial business combination, which may adversely affect our leverage and financial
condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments
as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose
to incur substantial debt to consummate our initial business combination. We have agreed that we will not incur any indebtedness unless
we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in the trust account.
As such, no issuance of debt will affect the per-share amount available for redemption from the trust account. Nevertheless, the incurrence
of debt could have a variety of negative effects, including:
| · | default and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations; |
| · | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments
when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation
of that covenant; |
| · | our immediate payment of all principal and accrued interest, if any, if the debt security is payable on
demand; |
| · | our inability to obtain necessary additional financing if the debt security contains covenants restricting
our ability to obtain such financing while the debt security is outstanding; |
| · | our inability to pay dividends on our common stock; |
| · | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce
the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions,
and fund other general corporate purposes; |
| · | limitations on our flexibility in planning for and reacting to changes in our business and in the industry
in which we operate; |
| · | increased vulnerability to adverse changes in general economic, industry and competitive conditions and
adverse changes in government regulation; |
| · | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, and execution of our strategy; and |
| · | other disadvantages compared to our competitors who have less debt. |
We may only be able to consummate one business
combination from the proceeds of the Initial Public Offering and the sale of the Placement Warrants, which will cause us to be solely
dependent on a single business which may have a limited number of services and limited operating activities. This lack of diversification
may negatively impact our operating results and profitability.
Of the net proceeds from the Initial Public
Offering, the sale of the Placement Warrants and income earned on the investments held in the trust, $118.2 million is available to consummate
our initial business combination and pay related fees and expenses (which includes taxes payable and up to $3,450,000 of the underwriters’
deferred discount).
We may effectuate our initial
business combination with a single target business or multiple target businesses simultaneously or within a short period of time. However,
we may not be able to effectuate our initial business combination with more than one target business because of various factors, including
the existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that
present operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By
completing our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic,
competitive and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading
of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different
industries or different areas of a single industry. In addition, we may ultimately search for an initial business combination in a single
industry. Accordingly, the prospects for our success may be:
| · | solely dependent upon the performance of a single business, asset or technology; or |
| · | dependent upon the development or market acceptance of a single or limited number of products, processes
or services. |
This lack of diversification may subject us to
numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry
in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously consummate
business combinations with multiple prospective targets, which may hinder our ability to consummate our initial business combination and
give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay
our ability, to consummate our initial business combination. We do not, however, intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination. With multiple business combinations, we could also face additional risks, including
additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers)
and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies
in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results
of operations.
We may attempt to consummate our initial business
combination with a private company about which little information is available, which may result in an initial business combination with
a company that is not as profitable as we suspected, if at all.
In pursuing our initial business
combination strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information
generally exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business
combination on the basis of limited information, which may result in an initial business combination with a company that is not as profitable
as we suspected, if at all.
Our management may not be able to maintain
control of a target business after our initial business combination.
We may structure an initial
business combination so that the post-transaction company in which our public stockholders own shares will own less than 100% of the equity
interests or assets of a target business, but we will only consummate such business combination if the post-transaction company owns or
acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient
for us not to be required to register as an investment company under the Investment Company Act. We will not consider any transaction
that does not meet this criterion. Even if the post-transaction company owns 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 business combination 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 of common stock in exchange for all of the outstanding capital stock of a target. In this case,
we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock,
our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent
to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or
group obtaining a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that
our management will not be able to maintain our control of the target business. We cannot provide assurance that, upon loss of control
of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We do not have a specified maximum redemption threshold. The absence
of such a redemption threshold may make it possible for us to consummate an initial business combination with which a substantial majority
of our stockholders do not agree.
Our amended and restated certificate
of incorporation does not provide for a specified maximum redemption threshold, except that in no event will we redeem our public shares
unless our net tangible assets are at least $5,000,001 either immediately prior to or upon consummation of our initial business combination
and after payment of underwriters’ fees and commissions (such that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. As a result, we may be able to consummate our initial business combination even though a substantial majority of our public
stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business
combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have
entered into privately negotiated agreements to sell their shares to our Sponsor, officers, directors or their affiliates. In the event
the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate
amount of cash available to us, we will not consummate the initial business combination or redeem any shares, all shares of common stock
submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
The Letter Agreement with the Sponsor, our
directors and officers may be amended without stockholder approval.
The Letter Agreement with
the Sponsor, our directors and officers contains provisions relating to transfer restrictions of our founder shares and Placement Warrants,
indemnification of the trust account, waiver of redemption rights and participation in liquidation distributions from the trust account.
The Letter Agreement may be amended without stockholder approval (although releasing the parties from the restriction not to transfer
our founder shares for a period of one year following the date we consummate our initial business combination except in certain circumstances
will require the prior written consent of the underwriters). While we do not expect our Board to approve an amendment to the Letter Agreement
prior to our initial business combination, it may be possible that our Board, in exercising its business judgment and subject to its fiduciary
duties, chooses to approve one or more amendments to this Letter Agreement. Any such amendments to the Letter Agreement would not require
approval from our stockholders and may have an adverse effect on the value of an investment in our securities.
In order to effectuate an initial business
combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments,
including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation
or governing instruments in a manner that will make it easier for us to consummate our initial business combination that our stockholders
may not support.
In order to effectuate an initial business combination, blank check
companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including their warrant
agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds and
extended the time to consummate an initial business combination and, with respect to their Warrants, amended their warrant agreements
to require the Warrants to be exchanged for cash and/or other securities. Amending our amended and restated certificate of incorporation
will require the approval of holders of 65% of our common stock and amending our Warrant agreement will require a vote of holders of at
least a majority of the then outstanding public Warrants (which may include public Warrants acquired by our Sponsor). In addition, our
amended and restated certificate of incorporation requires us to provide our public stockholders with the opportunity to redeem their
public shares for cash if we propose an amendment to our amended and restated certificate of incorporation (A) to modify the substance
or timing of our obligation to allow redemption in connection with our initial business combination or certain amendments to our charter
prior thereto or to redeem 100% of our public shares if we do not consummate our initial business combination within 18 months following
the effectiveness of the Initial Public Offering or (B) with respect to any other provision relating to stockholders’ rights or
pre-initial business combination activity.
To the extent any such amendments
would be deemed to fundamentally change the nature of any securities offered in the Initial Public Offering, we would register, or seek
an exemption from registration for, the affected securities. We cannot assure you that we will not seek to amend our charter or governing
instruments or extend the time to consummate an initial business combination in order to effectuate our initial business combination.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing
the release of funds from our trust account), including an amendment to permit us to withdraw funds from the trust account such that the
per share amount investors will receive upon any redemption or liquidation is substantially reduced or eliminated, may be amended with
the approval of holders of at least 65% of our common stock, which is a lower amendment threshold than that of some other blank check
companies. It may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement
to facilitate the consummation of an initial business combination that some of our stockholders may not support.
Our amended and restated certificate
of incorporation provides that any of its provisions related to pre-initial business combination activity (including the requirement to
deposit proceeds of the Initial Public Offering and the sale of the Placement Warrants into the trust account and not release such amounts
except in specified circumstances, and to provide redemption rights to public stockholders as described herein and including to permit
us to withdraw funds from the trust account such that the per share amount investors will receive upon any redemption or liquidation is
substantially reduced or eliminated) may be amended if approved by holders of at least 65% of our common stock entitled to vote thereon,
and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by
holders of at least 65% of our common stock entitled to vote thereon. In all other instances, our amended and restated certificate of
incorporation may be amended by holders of a majority of our outstanding common stock entitled to vote thereon, subject to applicable
provisions of the DGCL or applicable stock exchange rules. We may not issue additional securities that can vote on amendments to our amended
and restated certificate of incorporation. Our initial stockholders, who collectively beneficially own approximately 20% of our common
stock as of the date of this Annual Report, will participate in any vote to amend our amended and restated certificate of incorporation
and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions
of our amended and restated certificate of incorporation which govern our pre-initial business combination behavior more easily than some
other blank check companies, and this may increase our ability to consummate an initial business combination with which you do not agree.
Our stockholders may pursue remedies against us for any breach of our amended and restated certificate of incorporation.
Our Sponsor, officers and directors have agreed, pursuant to a written
agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation (i) to modify the
substance or timing of our obligation to allow redemption in connection with our initial business combination or certain amendments to
our charter prior thereto or to redeem 100% of our public shares if we do not consummate our initial business combination within 18 months
following the effectiveness of the Initial Public Offering or (ii) with respect to any other provision relating to stockholders’
rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares
of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, divided by the number of then outstanding public shares. These agreements are contained in the Letter Agreement
that we have entered into with the Sponsor, our officers and directors. Our stockholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against the Sponsor, our officers or directors for
any breach of these agreements. As a result, in the event of a breach, our stockholders would need to pursue a stockholder derivative
action, subject to applicable law.
We may be unable to obtain additional financing
to consummate our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure
or abandon a particular business combination.
We have not selected any specific business combination target, but intend
to target businesses larger than we could acquire with the net proceeds of the Initial Public Offering and the sale of the Placement Warrants.
As a result, we may be required to seek additional financing to consummate such proposed initial business combination. We cannot assure
you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable
when needed to consummate our initial business combination, we would be compelled to either restructure the transaction or abandon that
particular business combination and seek an alternative target business candidate. Further, the amount of additional financing we may
be required to obtain could increase as a result of future growth capital needs for any particular transaction, the depletion of the available
net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from stockholders who
elect redemption in connection with our initial business combination and/or the terms of negotiated transactions to purchase shares in
connection with our initial business combination. If we are unable to consummate our initial business combination, our public stockholders
may receive only approximately $10.35 per public share, plus any pro rata interest earned on the funds held in the trust account and not
previously released to us to pay our taxes on the liquidation of our trust account and our Warrants will expire worthless. In addition,
even if we do not need additional financing to consummate our initial business combination, we may require such financing to fund the
operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued
development or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to
us in connection with or after our initial business combination. If we are unable to consummate our initial business combination, our
public stockholders may only receive approximately $10.35 per public share on the liquidation of our trust account, and our Warrants will
expire worthless. Furthermore, as described in the risk factor entitled “If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.35 per public
share” herein, under certain circumstances our public stockholders may receive less than $10.35 per public share upon the liquidation
of the trust account.
Our initial stockholders may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support.
Our initial stockholders collectively
beneficially own approximately 20% of our common stock as of the date of this Annual Report. Accordingly, they may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended
and restated certificate of incorporation and approval of major corporate transactions. If initial stockholders purchase any additional
shares of common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Factors that would
be considered in making such additional purchases would include consideration of the current trading price of our common stock. In addition,
our Board, whose members were elected by our initial stockholders, is and will be divided into three classes, each of which will generally
serve for a term of three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders
to elect new directors prior to the consummation of our initial business combination, in which case all of the current directors will
continue in office until at least the consummation of the initial business combination. If there is an annual meeting, as a consequence
of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our initial
stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders
will continue to exert control at least until the consummation of our initial business combination.
The Sponsor paid an aggregate of $25,000 for
the founder shares, or approximately $0.009 per founder share. As a result of this low initial price, our Sponsor, its affiliates and
our management team stand to make a substantial profit even if an initial business combination subsequently declines in value or is unprofitable
for our public stockholders.
As a result of the low acquisition
cost of our founder shares, the Sponsor, its affiliates and our management team could make a substantial profit even if we select and
consummate an initial business combination with an acquisition target that subsequently declines in value or is unprofitable for our public
stockholders. Thus, such parties may have more of an economic incentive for us to enter into an initial business combination with a riskier,
weaker-performing or financially unstable business, or an entity lacking an established record of revenues or earnings, than would be
the case if such parties had paid the offering price in the Initial Public Offering for their founder shares.
Because we must furnish our stockholders with
target business financial statements, we may lose the ability to consummate an otherwise advantageous initial business combination with
some prospective target businesses.
The federal proxy rules require
that a proxy statement with respect to a vote on an initial business combination meeting certain financial significance tests include
historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure
in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States
of America, or international financial reporting standards as issued by the International Accounting Standards Board, depending on the
circumstances and the historical financial statements may be required to be audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States). These financial statement requirements may limit the pool of potential target businesses we
may acquire because some targets may be unable to provide such financial statements in time for us to disclose such statements in accordance
with federal proxy rules and consummate our initial business combination within the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley
Act requires that we evaluate and report on our system of internal controls beginning with this Annual Report on Form 10-K. Only in the
event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth company, will
we be required to comply with the independent registered public accounting firm attestation requirement on our internal control over financial
reporting. Further, as long as we remain an emerging growth company, we will not be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are a blank check company
makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because
a target company with which we seek to consummate our initial business combination may not be in compliance with the provisions of the
Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control of any such entity to achieve
compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to consummate any such business combination.
If we effect our initial business combination with a company with
operations outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.
If we effect our initial business
combination with a company with operations outside of the United States, we would be subject to any special considerations or risks associated
with companies operating in an international setting, including any of the following:
| · | higher costs and difficulties inherent in managing cross-border business operations and complying with
different commercial and legal requirements of overseas markets; |
| · | rules and regulations regarding currency redemption; |
| · | complex corporate withholding taxes on individuals; |
| · | laws governing the manner in which future business combinations may be effected; |
| · | tariffs and trade barriers; |
| · | regulations related to customs and import/export matters; |
| · | longer payment cycles and challenges in collecting accounts receivable; |
| · | tax issues, including but not limited to tax law changes and variations in tax laws as compared to the
United States; |
| · | currency fluctuations and exchange controls; |
| · | cultural and language differences; |
| · | crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; |
| · | deterioration of political relations with the United States; and |
| · | government appropriations of assets. |
If our management team following our initial
business combination is unfamiliar with United States securities laws, they may have to expend time and resources becoming familiar with
such laws, which could lead to various regulatory issues.
Following our initial business
combination, our founding team may resign from their positions as officers or directors of the Company and the management of the business
combination partner will may assume the roles of executive officers and directors of the Company. Such officers and directors may not
be familiar with United States securities laws. If our new management following our initial business combination is unfamiliar with United
States securities laws, they may have to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming
and could lead to various regulatory issues which may adversely affect our operations.
After our initial business combination, substantially
all of our assets may be located in a foreign country and substantially all of our revenue may be derived from our operations in such
country. Accordingly, our results of operations and prospects will be subject, to a significant extent, to the economic, political and
social conditions and government policies, developments and conditions in the country in which we operate.
As we may acquire a business
located outside of the United States as part of our initial business combination, the economic, political and social conditions, as well
as government policies, of the country in which our operations would be located following our initial business combination could affect
our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be
sustained in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected,
there may be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially
and adversely affect our ability to find an attractive target business with which to consummate our initial business combination and if
we effect our initial business combination, the ability of that target business to become profitable.
Exchange rate fluctuations and currency policies
may cause our target business’ ability to succeed in the international markets to be diminished.
In the event we acquire a
non-U.S. business as part of our initial business combination, all revenues and income would likely be received in a foreign currency,
and the dollar equivalent of our net assets and distributions, if any, could be adversely affected by reductions in the value of the local
currency. The value of the currencies in our target regions fluctuate and are affected by, among other things, changes in political and
economic conditions. Any change in the relative value of such currency against our reporting currency may affect the attractiveness of
any target business or, following consummation of our initial business combination, our financial condition and results of operations.
Additionally, if a currency appreciates in value against the dollar prior to the consummation of our initial business combination, the
cost of a target business as measured in dollars will increase, which may make it less likely that we are able to consummate such transaction.
We may reincorporate in another jurisdiction
in connection with our initial business combination, and the laws of such jurisdiction may govern some or all of our future material agreements
and we may not be able to enforce our legal rights.
In connection with our initial
business combination, we may relocate the home jurisdiction of our business from the United States to another jurisdiction. If we determine
to do this, the laws of such jurisdiction may govern some or all of our future material agreements. The system of laws and the enforcement
of existing laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability
to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities
or capital.
Risks Relating to the Sponsor and our Management
Team
Our ability to successfully effect our initial
business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us
following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our
post-combination business.
Our ability to successfully
effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target
business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management
or advisory positions following our initial business combination, it is likely that some or all of the management of the target business
will remain in place. While we intend to closely scrutinize any individuals we employ after our initial business combination, we cannot
assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with
such requirements. In addition, the officers and directors of an initial business combination candidate may resign upon the consummation
of our initial business combination. The departure of an initial business combination target’s key personnel could negatively impact
the operations and profitability of our post-combination business. The role of an initial business combination candidate’s key personnel
upon the consummation of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members
of an initial business combination candidate’s management team will remain associated with the initial business combination candidate
following our initial business combination, it is possible that members of the management of an initial business combination candidate
will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination
business.
We are dependent upon our executive officers and directors and their
departure could adversely affect our ability to operate.
Our operations are dependent
upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends
on the continued service of our executive officers and directors, at least until we have consummated our initial business combination.
We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected
loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide for
them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Our key personnel may be able
to remain with the Company following the consummation of our initial business combination only if they are able to negotiate employment
or consulting agreements in connection with the initial business combination. Such negotiations would take place simultaneously with the
negotiation of the initial business combination and could provide for such individuals to receive compensation in the form of cash payments
and/or our securities for services they would render to us following the consummation of the initial business combination. The personal
and financial interests of such individuals may influence their motivation in identifying and selecting a target business. However, we
believe the ability of such individuals to remain with us following the consummation of our initial business combination will not be the
determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty,
however, that any of our key personnel will remain with us following the consummation of our initial business combination. We cannot assure
you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any
of our key personnel will remain with us will be made at the time of the consummation of our initial business combination.
We may have a limited ability to assess the
management of a prospective target business and, as a result, may effect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the
value of our stockholders’ investment in us.
When evaluating the desirability
of effecting our initial business combination with a prospective target business, our ability to assess the target business’s management
may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management, therefore,
may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s
management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability
of the post-combination business may be negatively impacted. Accordingly, any stockholders who choose to remain stockholders following
the initial business combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy
for such reduction in value.
Our officers and directors will allocate their
time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This
conflict of interest could have a negative impact on our ability to consummate our initial business combination.
Our officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their
time between our operations and our search for an initial business combination and their other businesses. We do not intend to have any
full-time employees prior to the consummation of our initial business combination. Each of our officers is engaged in other business endeavors
for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours
per week to our affairs. Our independent directors may also serve as officers or board members for other entities. If our officers’
and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current
commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to consummate
our initial business combination. For a complete discussion of our officers’ and directors’ other business affairs, please
see the section entitled “Directors, Executive Officers and Corporate Governance”.
Certain of our officers and directors are now,
and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted
by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business
opportunity should be presented.
Until we consummate our initial
business combination, we intend to engage in the business of identifying and combining with one or more businesses. The Sponsor and officers
and directors are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are
engaged in a similar business and our officers and directors may become officers or directors of another special purpose acquisition company
with a class of securities intended to be registered under the Exchange Act, even prior to us entering into a definitive agreement for
our initial business combination. Our officers and directors also may become aware of business opportunities which may be appropriate
for presentation to us and the other entities to which they owe certain fiduciary or contractual duties.
Accordingly, they may have
conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be
resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. 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.
For a complete discussion
of our officers’ and directors’ business affiliations and the potential conflicts of interest that you should be aware of,
please see the sections entitled “Directors, Executive Officers and Corporate Governance – Conflicts of Interest” and
“Certain Relationships and Related Party Transactions.”
Our officers, directors, security holders and
their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy
that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial
interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact,
we may enter into an initial business combination with a target business that is affiliated with the Sponsor, our directors or officers,
although we do not intend to do so. We do not have a policy that expressly prohibits any such persons from engaging for their own account
in business activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests
and ours.
We may engage in a business combination with
one or more target businesses that may be owned by the Sponsor or one or more of the related companies, or its or their officers and directors,
which may raise potential conflicts of interest.
In light of the involvement
of the Sponsor, our officers and directors with other businesses, we may decide to acquire one or more businesses owned by the Sponsor
or any of the related companies, or its or their officers or directors, or make the acquisition through a joint venture or other form
of shared ownership with the Sponsor or any of the related companies, or its or their officer or directors. Any such parties may co-invest
with us in the target business at the time of our initial business combination, or we could raise additional proceeds to complete the
acquisition by making a future issuance to any such parties, which may give rise to certain conflicts of interest. Our directors and officers
also serve as officers and board members for other entities, including, without limitation, those described under the section entitled
“Directors, Executive Officers and Corporate Governance” Such entities may compete with us for business combination opportunities.
The Sponsor, our officers and directors are not currently aware of any specific opportunities for us to consummate our initial business
combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning an initial business
combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any
affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria for an initial business
combination as set forth in the section entitled “Business — Selection of a Target Business and Structuring of our Initial
Business Combination” and such transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain
an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions, regarding
the fairness to our stockholders from a financial point of view of a business combination with one or more businesses owned by the Sponsor
or any related companies, or its or their officers or directors or existing holders, potential conflicts of interest still may exist and,
as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts
of interest.
The Sponsor’s equity ownership may create or appear to create
conflicts of interest.
The Sponsor’s ownership,
and our officers’ and certain of our directors’ indirect ownership through Ault’s ownership of the Sponsor, of our common
stock may create or appear to create conflicts of interest when they are faced with decisions that could have different implications for
the holders of common stock, including the structure of our initial business combination, any financing or private placement in connection
with our initial business combination, the election of directors, amendments of our organizational documents and any merger, consolidation
or sale of all or substantially all of our assets.
Since the Sponsor, our officers and directors
will lose their entire investment in us if our initial business combination is not consummated, a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
On February 23, 2021, the Sponsor purchased an aggregate of 2,875,000
founder shares for an aggregate purchase price of $25,000, or approximately $0.009 per share. The number of founder shares issued was
determined based on the expectation that such founder shares would represent 20% of the outstanding shares after the Initial Public Offering
(excluding the Placement Warrants and underlying securities). The founder shares will be worthless if we do not consummate an initial
business combination. The Sponsor purchased an aggregate of 7,100,000 Placement Warrants at a price of $1.00 per unit for an aggregate
purchase price of $7,100,000. Once the Sponsor makes the Deposits in connection with the two three-month extensions to the time to complete
the initial business combination, it will have purchased an additional 2,300,000 Placement Warrants at a price of $1.00 per unit for an
aggregate purchase price of $2,300,000. Each Warrant is exercisable to purchase one share of common stock at $11.50 per share. These securities
will also be worthless if we do not consummate an initial business combination. Holders of founder shares have agreed (A) to vote any
shares owned by them in favor of any proposed initial business combination and (B) not to redeem any founder shares or Placement Warrants
held by them in connection with a stockholder vote to approve a proposed initial business combination. In addition, we may obtain loans
from the Sponsor, affiliates of the Sponsor or an officer or director. The personal and financial interests of our officers and directors
may influence their motivation in identifying and selecting a target business combination, completing an initial business combination
and influencing the operation of the business following the initial business combination.
Risks Relating to Our Securities
The securities in which we invest the funds held in the trust account
could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount
received by public stockholders may be less than $10.35 per public share.
The proceeds held in the trust account are invested only in U.S. government
treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations
currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe
and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the
possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to consummate our initial
business combination or make certain amendments to our amended and restated certificate of incorporation, our public stockholders are
entitled to receive their pro-rata share of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable
(less, in the case we are unable to consummate our initial business combination, $50,000 of interest). Negative interest rates could reduce
the value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.35
per public share.
The NYSE American may delist our securities
from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional
trading restrictions.
The continued listing of our
common stock and Warrants on the NYSE American is contingent on our compliance with the NYSE American’s conditions for continued
listing. We cannot assure you that our securities will continue to be listed on the NYSE American in the future or prior to our initial
business combination. In order to continue listing our securities on the NYSE American prior to our initial business combination, we must
maintain certain financial, distribution and share price levels. Generally, we must maintain a minimum average global market capitalization
and a minimum number of holders of our securities.
Additionally, in connection
with our initial business combination, we will be required to demonstrate compliance with the NYSE American’s initial listing requirements,
which are more rigorous than the NYSE American’s continued listing requirements, in order to continue to maintain the listing of
our securities on the NYSE American. For instance, our market capitalization would be required to be at least $50 million, the aggregate
market value of our publicly-held shares would be required to be at least $15 million and we would be required to have a minimum of 400
round lot holders and 1,100,000 publicly held shares. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If the NYSE American delists
our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect
our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences,
including:
| · | a limited availability of market quotations for our securities; |
| · | reduced interest from potential targets for our initial business combination; |
| · | reduced liquidity for our securities; |
| · | a determination that our common stock is a “penny stock” which will require brokers trading
in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading
market for our securities; |
| · | a limited amount of news and analyst coverage; and |
| · | a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets
Improvement Act of 1996 prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered
securities.” Our common stock and redeemable warrants are covered securities under the statute. Although the states are preempted
from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion
of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular
case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check
companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these
powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were
no longer listed on the NYSE American, our securities would not be covered securities and we would be subject to regulation in each state
in which we offer our securities, including in connection with our initial business combination.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders
are deemed to hold in excess of 15% of our common stock, you will lose the ability to redeem all such shares in excess of 15% of our common
stock.
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 amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate
of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under
Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the
shares sold in the Initial Public Offering without our prior consent, which we refer to as the “Excess Shares.” However, we
would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial
business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to consummate our initial
business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions.
Additionally, you will not receive redemption distributions with respect to the Excess Shares if we consummate our initial business combination.
And as a result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required
to sell your stock in open market transactions, potentially at a loss.
We have not registered the shares of common
stock issuable upon exercise of the Warrants under the Securities Act or any state securities laws, and such registration may not be in
place when an investor desires to exercise Warrants, thus precluding such investor from being able to exercise its Warrants, except on
a cashless basis. If the issuance of the shares upon exercise of Warrants is not registered, qualified or exempt from registration or
qualification, the holder of such Warrant will not be entitled to exercise such Warrant and such Warrant may have no value and expire
worthless.
We have not registered the
shares of common stock issuable upon exercise of the Warrants under the Securities Act or any state securities laws. However, under the
terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than 15 business days following the
consummation of our initial business combination, we will use our best efforts to file with the SEC a registration statement for the registration
under the Securities Act of the issuance of the shares of common stock issuable upon exercise of the Warrants and thereafter will use
our best efforts to cause the same to become effective within 60 business days following our initial business combination and to maintain
a current prospectus relating to the common stock issuable upon exercise of the Warrants, until the expiration of the Warrants in accordance
with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events
arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements
contained or incorporated by reference therein are not current, complete or correct or the SEC issues a stop order. If the shares of common
stock issuable upon exercise of the Warrants are not registered under the Securities Act, we will be required to permit holders to exercise
their Warrants on a cashless basis. However, no Warrant will be exercisable for cash or on a cashless basis, and we will not be obligated
to issue any shares to holders seeking to exercise their Warrants, unless the issuance of the shares upon such exercise is registered
or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding
the foregoing, if a registration statement covering the issuance of the common stock issuable upon exercise of the Warrants is not effective
within a specified period following the consummation of our initial business combination, warrant holders may, until such time as there
is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement,
exercise Warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such
exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their Warrants
on a cashless basis. We will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available. In no event will we be required to net cash settle any Warrant, or issue securities or other compensation in exchange
for the Warrants in the event that we are unable to register or qualify the shares underlying the Warrants under applicable state securities
laws and there is no exemption available. If the issuance of the shares upon exercise of the Warrants is not so registered or qualified
or exempt from registration or qualification, the holder of such Warrant will not be entitled to exercise such Warrant and such Warrant
may have no value and expire worthless. In such event, holders who acquired their Warrants as part of a purchase of Units will have paid
the full unit purchase price solely for the shares of common stock included in the Units. If and when the Warrants become redeemable by
us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the Warrants is not exempt from
registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will
use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states
in which the Warrants were offered by us in the Initial Public Offering. However, there may be instances in which holders of our public
Warrants may be unable to exercise such public Warrants but holders of our Placement Warrants may be able to exercise such Placement Warrants.
If you exercise your public Warrants on a “cashless
basis,” you will receive fewer shares of common stock from such exercise than if you were to exercise such Warrants for cash.
There are circumstances in
which the exercise of the public Warrants may be required or permitted to be made on a cashless basis. First, if a registration statement
covering the issuance of the shares of common stock issuable upon exercise of the Warrants is not effective by the 60th business day following
the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement,
exercise Warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. Second, if a registration
statement covering the common stock issuable upon exercise of the Warrants is not effective within a specified period following the consummation
of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any
period when we shall have failed to maintain an effective registration statement, exercise Warrants on a cashless basis pursuant to the
exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available; if that exemption, or another
exemption, is not available, holders will not be able to exercise their Warrants on a cashless basis. Third, if we call the public Warrants
for redemption, our management will have the option to require all holders that wish to exercise Warrants to do so on a cashless basis.
In the event of an exercise on a cashless basis, a holder would pay the Warrant exercise price by surrendering the Warrants for that number
of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of common stock underlying
the Warrants, multiplied by the difference between the exercise price of the Warrants and the “fair market value” (as defined
in the next sentence) by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported
last sale price of the common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise
is received by the warrant agent or on which the notice of redemption is sent to the holders of Warrants, as applicable. As a result,
you would receive fewer shares of common stock from such exercise than if you were to exercise such Warrants for cash.
We may issue additional common stock or preferred stock to consummate
our initial business combination or under an employee incentive plan following the consummation of our initial business combination. Any
such issuances would dilute the interest of our stockholders and likely present other risks.
Our amended and restated certificate of
incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $0.001 per share and 1,000,000 shares of
preferred stock, par value $0.001 per share. As of the date of this Annual Report, there are 68,750,000 authorized but unissued shares
of common stock available for issuance and no shares of preferred stock issued and outstanding, taking into account the 8,625,000 and
8,250,000 shares of common stock reserved for issuance upon exercise of the Warrants and Placement Warrants, respectively.
We may issue a substantial number of additional shares of common or
preferred stock to consummate our initial business combination or under an employee incentive plan following the consummation of our initial
business combination (although our amended and restated certificate of incorporation provides that we may not issue securities that can
vote with common stockholders on matters related to our pre-initial business combination activity). However, our amended and restated
certificate of incorporation provides, among other things, that prior to our initial business combination, we may not issue additional
shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial
business combination. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and
restated certificate of incorporation, may be amended with the approval of our stockholders. However, our executive officers and directors
have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination
or certain amendments to our charter prior thereto or to redeem 100% of our public shares if we do not consummate our initial business
combination within 18 months following the effectiveness of the Initial Public Offering or (B) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity
to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number
of then outstanding public shares.
The issuance of additional
shares of common or preferred stock:
| · | may significantly dilute the equity interest of our stockholders; |
| · | may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior
to those afforded our common stock; |
| · | could cause a change of control if a substantial number of shares of our common stock are issued, which
may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors; |
| · | may have the effect of delaying or preventing a change of control of us by diluting the stock ownership
or voting rights of a person seeking to obtain control of us; and |
| · | may adversely affect prevailing market prices for our common stock and/or Warrants. |
Unlike many other similarly structured special
purpose acquisition companies, our initial stockholders will receive additional shares of common stock if we issue shares to consummate
an initial business combination.
In the case that additional
shares of common stock, or equity-linked securities convertible or exercisable for common stock, are issued or deemed issued in excess
of the amounts sold in our IPO and related to the consummation of the initial business combination, the amount of founder shares will
be adjusted so that the number of shares of common stock will equal, in the aggregate, 20% of the total number of all outstanding shares
of common stock upon consummation of the initial business combination, the Placement Warrants and underlying securities, and any shares
or equity-linked securities issued, or to be issued, to any seller in the business combination and any private placement-equivalent units
and their underlying securities issued to our Sponsor or its affiliates upon conversion of loans made to us. This is different from most
other similarly structured blank check companies in which the initial stockholder will only be issued an aggregate of 20% of the total
number of shares to be outstanding prior to the initial business combination. Additionally, the aforementioned adjustment will not take
into account any shares of common stock redeemed in connection with the business combination. Accordingly, the holders of the founder
shares could receive additional shares of common stock even if the additional shares of common stock, or equity-linked securities convertible
or exercisable for common stock, are issued or deemed issued solely to replace those shares that were redeemed in connection with the
business combination. The foregoing may make it more difficult and expensive for us to consummate an initial business combination.
We may amend the terms of the Warrants in a
manner that may be adverse to holders of public Warrants with the approval by the holders of at least a majority of the then outstanding
public Warrants. As a result, the exercise price of your Warrants could be increased, the exercise period could be shortened and the number
of shares of our common stock purchasable upon exercise of a Warrant could be decreased, all without your approval.
The Warrants sold the Initial
Public Offering were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant
agent, and us. The warrant agreement provides that the terms of the Warrants may be amended without the consent of any holder to cure
any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description of the terms of
the Warrants and the warrant agreement, or defective provision, but requires the approval by the holders of at least a majority of the
then outstanding public Warrants to make all other modifications or amendments (which may include public Warrants acquired by the Sponsor
or its affiliates in the Initial Public Offering or thereafter in the open market). Accordingly, we may amend the terms of the public
Warrants in a manner adverse to a holder if holders of at least a majority of the then outstanding public Warrants approve of such amendment.
Although our ability to amend the terms of the public Warrants with the consent of at least a majority of the then outstanding public
Warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the Warrants,
convert the Warrants into cash or stock, shorten the exercise period or decrease the number of shares of our common stock purchasable
upon exercise of a Warrant.
Our warrant agreement designate the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our Warrants, which could limit the ability of Warrant holders
to obtain a favorable judicial forum for disputes with our Company.
Our warrant agreement provides
that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement
will be brought and enforced in the courts of the State of New York or the United States District Court for the Southern District of New
York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding
or claim. We will waive any objection to such jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding the foregoing,
these provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act
or any other claim for which the federal district courts of the United States are the sole and exclusive forum. Any person or entity purchasing
or otherwise acquiring any interest in any of our Warrants shall be deemed to have notice of and to have consented to the forum provisions
in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement,
is filed in a court other than a court located within the State of New York or the United States District Court for the Southern District
of New York (a “foreign action”) in the name of any holder of our Warrants, such holder shall be deemed to have consented
to: (x) the personal jurisdiction of the state and federal courts located within the State of New York in connection with any action brought
in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such
warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such
warrant holder.
This choice-of-forum provision
may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company,
which may discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations
and result in a diversion of the time and resources of our management and Board.
We may redeem unexpired Warrants prior to their
exercise at a time that is disadvantageous to the holder, thereby making the Warrants worthless.
We have the ability to redeem
outstanding Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per Warrant, provided
that the reported last sale price of our common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period commencing once the Warrants become
exercisable and ending on the third day prior to the date on which we give proper notice of such redemption and provided certain other
conditions are met. If and when the Warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares
of common stock upon exercise of the Warrants is not exempt from registration or qualification under applicable state blue sky laws or
we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of common
stock under the blue sky laws of the state of residence in those states in which the Warrants were offered by us in the Initial Public
Offering. Redemption of the outstanding Warrants could force the holder (i) to exercise the Warrants and pay the exercise price therefor
at a time when it may be disadvantageous for the holder to do so, (ii) to sell the Warrants at the then-current market price when the
investor might otherwise wish to hold the Warrants or (iii) to accept the nominal redemption price which, at the time the outstanding
Warrants are called for redemption, is likely to be substantially less than the market value of the Warrants. None of the Placement Warrants
will be redeemable by us so long as they are held by the Sponsor or its permitted transferees.
The Warrants and founder shares may have an
adverse effect on the market price of our common stock and make it more difficult to effectuate our initial business combination.
We issued Warrants to purchase
8,625,000 shares of our common stock as part of the Units in our Initial Public Offering and, simultaneously with the closing of the Initial
Public Offering, we issued Placement Warrants, in a private placement, consisting of an aggregate of 7,100,000 Placement Warrants. Our
initial stockholders currently own an aggregate of 2,875,000 founder shares. In addition, if the Sponsor makes any working capital loans,
up to $1,500,000 of such loans may be converted into warrants, at a price of $1.00 per warrant at the option of the lender, upon consummation
of the initial business combination. Such warrants would be identical to the Placement Warrants. To the extent we issue shares of common
stock to effectuate an initial business combination, the potential for the issuance of a substantial number of additional shares of common
stock upon exercise of these Warrants and loan conversion rights could make us a less attractive business combination vehicle to a target
business. Any such issuance will increase the number of issued and outstanding shares of our common stock and reduce the value of the
shares of common stock issued to consummate the initial business combination. Therefore, our Warrants and founder shares may make it more
difficult to effectuate an initial business combination or increase the cost of acquiring the target business.
The Placement Warrants are
identical to the Warrants sold as part of the Units in the Initial Public Offering except that, so long as they are held by the Sponsor
or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including the common stock issuable upon exercise of these
Warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days following the
consummation of our initial business combination, (iii) they may be exercised by the holders on a cashless basis, and (iv) will be entitled
to registration rights.
A provision of our warrant agreement may make
it more difficult for us to consummate an initial business combination.
Unlike most blank check companies,
if
(i) we
issue additional shares of common stock or equity-linked securities for capital raising purposes in connection with the consummation of
our initial business combination at an issue price or effective issue price of less than $9.20 per share of common stock (with such issue
price or effective issue price to be determined in good faith by our Board and, in the case of any such issuance to our Sponsor or its
affiliates, without taking into account any founder shares held by our Sponsor or such affiliates, as applicable, prior to such issuance)
(the “Newly Issued Price”);
(ii) the
aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for
the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions);
and
(iii) the
volume weighted average trading price of our common stock during the 20 trading day period starting on the trading day prior to the day
on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share;
then the exercise price of the Warrants will be
adjusted to be equal to 115% of the greater of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger
price will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the Newly Issued Price. This may
make it more difficult for us to consummate an initial business combination with a target business.
Provisions in our amended and restated certificate
of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future
for our common stock and could entrench management.
Our amended and restated certificate
of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their
best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms
of and issue new series of preferred shares, which may make the removal of management more difficult and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions
under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management more
difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.
Our amended and restated certificate
of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors,
officers, other employees or stockholders for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery
in the State of Delaware and, if brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service
of process on such stockholder’s counsel except any action (A) as to which the Court of Chancery in the State of Delaware determines
that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent
to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive
jurisdiction of a court or forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter
jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have
notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision
may limit or make more costly a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes
with us or any of our directors, officers, other employees or stockholders, which may have the effect of discouraging lawsuits with respect
to such claims against our directors, officers, other employees or stockholders. Alternatively, if a court were to find the choice of
forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we
may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results
and financial condition.
Our amended and restated certificate
of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject
to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty
or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not
apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have
exclusive jurisdiction. In addition, our amended and restated certificate of incorporation provides that, unless we consent in writing
to the selection of an alternative forum, the federal district courts of the United States of America shall, to the fullest extent permitted
by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, or the
rules and regulations promulgated thereunder. We note, however, that there is uncertainty as to whether a court would enforce this provision
and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the
Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created
by the Securities Act or the rules and regulations thereunder.
General Risk Factors
We are a newly formed company with no operating
history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a newly formed company
with no operating results, and we only recently commence operations following the Initial Public Offering. Because we lack an operating
history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination
with one or more target businesses. We have no plans, arrangements or understandings with any prospective target business concerning an
initial business combination and may be unable to consummate our initial business combination. If we fail to consummate our initial business
combination, we will never generate any operating revenues.
Our independent registered public accounting
firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going
concern.”
As of the date of this Annual Report, we
had approximately $207,000 of cash available and working capital of approximately $537,000. Further, we have incurred and expect to continue
to incur significant costs in pursuit of our initial business acquisition. We cannot assure you that our plans to consummate an initial
business combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going
concern. The financial statements contained elsewhere in this Annual Report do not include any adjustments that might result from our
inability to continue as a going concern.
Changes in laws or regulations, or a failure
to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and consummate our initial
business combination and results of operations.
We are subject to laws and
regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other
legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those
laws and regulations and their interpretation and application may also change from time to time and those changes could have a material
adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations,
as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and consummate our
initial business combination and results of operations.
Past performance by our management team may
not be indicative of future performance of an investment in us.
Past performance by our management
team is not a guarantee either (i) of success with respect to any business combination we may consummate or (ii) that we will be able
to locate a suitable candidate for our initial business combination. You should not rely on the historical record of our management team’s
performance as indicative of our future performance of an investment in the Company or the returns the Company will, or is likely to,
generate going forward. None of our directors has experience with blank check companies or special purpose acquisition companies. Additionally,
in the course of their respective careers, members of our management team have been involved in businesses and deals that were unsuccessful.
Cyber incidents or attacks directed at us could
result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies,
including information systems, infrastructure and cloud applications and services, including those of third parties with which we may
deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure
of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential
data. As an early-stage company without significant investments in data security protection, we may not be sufficiently protected against
such occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability
to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our ability
to consummate a business combination and lead to financial loss.
We are an emerging growth company and a smaller
reporting company within the meaning of the rules adopted by the SEC, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the rules adopted by the SEC, as modified by the JOBS Act, and we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including,
but not limited to, not being required to comply with the auditor internal controls 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 nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be
an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market
value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer
be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive
because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions,
the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities
and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging
growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period,
which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an
emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may
make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth
company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Additionally, we are a “smaller
reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller
reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equals
or exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during such
completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th.
To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other
public companies difficult or impossible.