Overview
We are a blank check company incorporated as a
Delaware corporation formed for the purpose of effecting a merger, share purchase, reorganization, capital stock exchange, asset acquisition,
reorganization or similar business combination with one or more businesses, which we refer to as our initial business combination. We
have generated no revenues to date and we do not expect that we will generate operating revenues until we consummate our initial business
combination at the earliest.
Although we may pursue an acquisition opportunity
in any business or industry, we focus on opportunities that transform traditional industries in positive ways and generate tangible improvements
to the well-being of the global population, particularly with respect to energy, transportation, buildings, manufacturing, and food
and agriculture.
Our primary focus is on solutions driving the
decarbonization of the economy, as nations, companies, stakeholder groups, and individuals increasingly demand the use of low-carbon and
resource-efficient solutions that will enable society to mitigate and adapt to climate change. To meet these demands, the global
energy ecosystem requires $69 trillion of capital investment through 2040, according to the IEA. “Impact investing,” “responsible
investing,” and capital flows into sustainable business generally are growing accordingly, with more than $1 trillion flowing into
sustainable investment funds in the first half of 2020, more than in all of 2019. Further, the speed with which investors, customers,
and employees are incorporating ESG factors into their decision-making processes has created an enormous opportunity. We believe
that businesses that meaningfully and successfully integrate ESG factors and sustainability-oriented innovation into their operations
will create differentiated value and achieve long-term competitive advantage with regard to the trends noted above.
At December 31, 2021, we had not commenced any
operations. All activity through December 31, 2021 relates to the Company’s formation and its initial public offering, and identifying
a target company for our initial business combination.
The Voltus Merger
On November 30, 2021, the Company entered
into an Agreement and Plan of Merger (the “Voltus merger agreement”) with Voltus, Inc., a Delaware corporation (“Voltus”),
and Velocity Merger Sub Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Company (“Merger Sub”).
The Voltus merger agreement provides
that, among other things and upon the terms and subject to the conditions thereof, the following transactions will occur (together with
the other agreements and transactions contemplated by the Voltus merger agreement, the “Business Combination”): (i) at the
closing of the transactions contemplated by the Voltus merger agreement (the “Closing”), upon the terms and subject to the
conditions of the Voltus merger agreement, Merger Sub will merge with and into Voltus, the separate corporate existence of Merger Sub
will cease and Voltus will be the surviving corporation and a wholly owned subsidiary of the Company (the “Merger”); (ii)
at the Closing, the Company will be renamed “Voltus Technologies, Inc.” (post-Merger Company is referred to herein as “Voltus
Technologies, Inc.”); (iii) as a result of the Merger, among other things, all shares of capital stock of Voltus outstanding as
of immediately prior to the effective time of the Merger will be canceled in exchange for the right to receive shares of our Class A common
stock; (iv) as a result of the Merger, all Voltus equity awards outstanding as of immediately prior to the effective time of the Merger
will be converted into awards based on our Class A common stock, upon substantially the same terms and conditions as are in effect with
respect to such option immediately prior to the effective time of the Merger; (v) at the Closing, the total number of shares of our Class
A common stock issuable to existing holders of Voltus capital stock or pursuant to the aforementioned converted equity awards shall be
equal to the quotient obtained by dividing (x) $750,000,000 (subject to increase by an amount equal to the aggregate exercise prices
of all converted equity awards) by (y) $10.00; and (vi) upon the Closing, existing holders of Voltus capital stock and equity awards will
have the right to receive up to an aggregate of 10,000,000 additional shares of our Class A common stock in three substantially
equal tranches which are issuable upon the achievement of share price thresholds for our Class A common stock of $12.50, $15.00 and
$17.50, respectively, as set forth in the Voltus merger agreement. The Closing contemplated by the Voltus merger agreement is subject
to customary closing conditions as set forth in the Voltus merger agreement.
Simultaneously with the execution
of the Voltus merger agreement, the Company entered into subscription agreements (the “Subscription Agreements”) with certain
investors (collectively, the “PIPE Investors”), pursuant to, and on the terms and subject to the conditions of which, the
PIPE Investors have collectively subscribed at a purchase price of $10.00 per share and $100 million in the aggregate for (i) 10 million
shares of our Class A common stock and (ii) in the case of certain PIPE Investors purchasing in excess of a specified number of shares
of our Class A common stock, an aggregate of 6,200,000 warrants exercisable for shares of our Class A common stock (the “PIPE Investment”).
The PIPE Investment will be consummated substantially concurrently with the Closing. The Subscription Agreements will terminate with no
further force and effect upon the earliest to occur of: (i) such date and time as the Voltus merger agreement is terminated in accordance
with its terms, (ii) the mutual written agreement of the parties to such Subscription Agreement, and (iii) September 30, 2022, if the
Closing has not occurred on or before such date.
Business Strategy
Our acquisition and value creation strategy involves
identifying, acquiring and, after our initial business combination, building a company focused on expediting the transition to a more
sustainable world that complements the experience of our management team and can benefit from their operational expertise and/or
executive oversight. Our acquisition strategy leverages our team’s network of potential proprietary and public transaction sources
where we believe a combination of our relationships, knowledge and experience in sustainable methodologies could create noteworthy value
for a target company.
We utilize the network and industry experience
of Messrs. Shapiro, Leff, Cohens, Hanna and the rest of our management team and sponsor in seeking an initial business combination and
employing our acquisition strategy. Over the course of their careers, the members of our management team and their affiliates have developed
a broad network of contacts and corporate relationships that serve as a useful source of acquisition opportunities. This network has been
developed through our management team’s extensive experience in both investing in and operating companies focused on both the transition
of traditional industries to more sustainable operations as well as various other transformations that have impacted financial services,
real estate, healthcare, technology, and energy. These networks provide our management team with a robust flow of acquisition opportunities.
In addition, target business candidates are brought to our attention from various unaffiliated sources, which may include investment market
participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises.
Acquisition Criteria
Consistent with our business strategy, we have
established the following general criteria and guidelines to evaluate prospective target businesses. We seek out companies that
present promising potential for further scalability in conjunction with the following attributes. Our team uses these criteria to guide
our assessment of opportunities, though we may decide to enter into our initial business combination with a company that does not meet
all of these criteria and guidelines not set forth below. We intend to identify a company or companies with the following attributes:
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Environmental Impact. Provides a direct impact to the energy transition, creating a clear positive environmental benefit; |
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High-Growth Total Addressable Market. Growing sectors aimed at solving the world’s sustainability challenge, where a massive amount of capital, growth and sector scale are required to achieve their business plan; |
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Strong Market Position. Competitively advantaged, with defensible factors such as high barriers
to entry, differentiated technology, entrenched customer relationships or other tangible qualities; |
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Societal Benefits. Considers all stakeholders’ views and, if not already in place, work to establish and follow best-in-class sustainability standards; |
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“Best in Class” Management Team. Sophisticated management team and inclusive governance structure that combines operational excellence with inspirational leadership capabilities; |
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Sourced through Proprietary Channels. We will seek to acquire a business by leveraging our broad and diverse sourcing platform and do not expect to rely on a broadly marketed process to find a target; |
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Partnership Approach. Accelerate success and drive ongoing value creation; and |
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Shareholder Value. Offers an attractive risk-adjusted returns for stockholders. |
These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination is based, to the extent relevant, on these general
criteria as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter
into our initial business combination with a target business that does not meet the above criteria, we will disclose that the target business
does not meet the above criteria in our stockholder communications related to our initial business combination, which, would be in the
form of tender offer documents or proxy solicitation materials that we would file with the Securities and Exchange Commission (the “SEC”).
Initial Public Offering
The registration statement for our initial public
offering was declared effective on February 11, 2021. On February 17, 2021, we consummated the initial public offering of 34,500,000
units, which included the full exercise by the underwriter of its over-allotment option in the amount of 4,500,000 units, at $10.00
per unit, generating gross proceeds of $345,000,000.
Simultaneously with the closing of the initial
public offering, we consummated the sale of 6,266,667 private placement warrants at a price of $1.50 per warrant in a private placement
to the sponsor generating gross proceeds of $9,400,000.
Following the closing of the initial public offering,
an amount of $345,000,000 ($10.00 per unit) from the net proceeds of the sale of the units in the initial public offering and the
sale of the private placement warrants was placed in a trust account and invested in U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”),
with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 of the Investment
Company Act which invest only in direct U.S. government treasury obligations until the earlier of: (i) the consummation of a
business combination or (ii) the distribution of the trust account.
Initial Business Combination
The NASDAQ listing rules require that our initial
business combination must be with one or more target businesses that together have an aggregate fair market value equal to at least 80%
of the value of the trust account (excluding any deferred underwriting fees and taxes payable on the interest earned on the trust account)
at the time of our signing a definitive agreement in connection with our initial business combination. We refer to this as the 80% of
net assets test. If our board of directors is not able to independently determine the fair market value of the target business or
businesses, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders
valuation opinions with respect to the satisfaction of the 80% of net assets test. While we consider it unlikely that our board of directors
will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to
do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty
as to the value of a target’s assets or prospects.
The structure of our proposed initial business
combination with Voltus is described above under “The Voltus Merger.” 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 outstanding 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 complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for it not to be required to register as an investment company under the Investment Company Act. Even if the post-transaction
company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to our initial business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the
business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange
for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However,
as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination
could own less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity
interests or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business
or businesses that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If our initial 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.
Our Acquisition Process
In evaluating prospective business combinations,
we conduct a thorough due diligence review process that encompasses, among other things, a review of historical and projected financial
and operating data, meetings with management and their advisors (if applicable), inspection of facilities and assets, discussion with
customers and suppliers, legal reviews and other reviews as we deem appropriate.
We are not prohibited from pursuing an initial
business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek to complete our initial
business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee of independent directors,
will obtain an opinion from an independent investment banking firm, or, in applicable jurisdictions, from an independent accounting firm,
that our initial business combination is fair to us from a financial point of view.
Our sponsor, our directors and members of our management
team may directly or indirectly own our founder shares, Class A common stock and/or private placement warrants, and, accordingly, may
have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate our
initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating a
particular business combination if the retention or resignation of any such officer or director is made a condition to any agreement with
respect to our initial business combination.
Each of our officers and directors presently has,
and any of them in the future may have additional, fiduciary or contractual obligations to other entities pursuant to which such officer
or director is or will be required to present a business combination opportunity. Accordingly, if any of our officers or directors becomes
aware of a business combination opportunity which is suitable for an entity to which he or she has then-current fiduciary or contractual
obligations to present the opportunity to such entity, he or she will honor his or her fiduciary or contractual obligations to present
such opportunity to such entity. We do not believe, however, that the fiduciary duties or contractual obligations of our officers or directors
will materially affect our ability to complete our initial business combination. Our amended and restated certificate of incorporation
provides that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly
offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally
and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer
is permitted to refer that opportunity to us without violating another legal obligation.
Our officers, directors and any of their respective
affiliates may sponsor or form, or, in the case of individuals, serve as a director or officer of, other blank check companies similar
to ours. Any such companies may present additional conflicts of interest in pursuing an acquisition target. However, we do not believe
that any such potential conflicts would materially affect our ability to complete our initial business combination.
Our Management Team
Members of our management team are not obligated
to devote any specific number of hours to our matters, but they intend to devote as much of their time as they deem necessary to our affairs
until we have completed our initial business combination. The amount of time that any member of our management team will devote in any
time period will vary based on whether a target business has been selected for our initial business combination and the current stage
of the business combination process.
We believe our management team’s operating
and transaction experience and relationships with companies provides us with a substantial number of potential business combination targets.
Over the course of their careers, the members of our management team have developed a broad network of contacts and corporate relationships
around the world. This network has grown through the activities of our management team sourcing, acquiring and financing businesses, our
management team’s relationships with sellers, financing sources and target management teams and the experience of our management
team in executing transactions under varying economic and financial market conditions.
Corporate Information
Our executive offices are located at 1845 Walnut
Street, Suite 1111, Philadelphia, PA 19103 and our telephone number is (646) 849-9975. The information contained on or accessible through
our corporate website or any other website that we may maintain is not part of this Annual Report.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but
not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of
2002 (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 completion of the initial public offering,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the aggregate worldwide market value of our Class A common stock that is held by non-affiliates equals or exceeds
$700 million as of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
securities during the prior three-year period. References herein to emerging growth company will have the meaning associated with
it in the JOBS Act.
Additionally, we are a “smaller reporting
company” as defined in Item 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 prior June 30th, or (2) our annual revenues equal or exceed $100 million during such completed
fiscal year and the market value of our common stock held by non-affiliates equals or exceeds $700 million as of the prior June
30th.
Financial Position
With funds available for a business combination
in the amount of approximately $333 million (after payment of approximately $12 million of deferred underwriting commissions), 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 ratio. Because we are able to complete our initial
business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the
most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires.
However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us if needed
to complete a transaction.
Effecting our Initial Business Combination
The structure of our proposed initial business
combination with Voltus is described above under “The Voltus Merger.” We intend to effectuate our initial business combination
using cash from the proceeds of the initial public offering and the private placement of the private placement warrants, the proceeds
of the sale of our shares in connection with our initial business combination (pursuant to forward purchase agreements or backstop agreements
we may enter into), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a
combination of the foregoing. We may seek to complete our initial business combination with a company or business that may be financially
unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and
businesses.
If our initial business combination is paid for
using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration in
connection with our business combination or used for redemptions of purchases of our Class A common stock, we may apply the balance of
the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of
the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination,
to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through a
private offering of debt or equity securities in connection with the completion of our initial business combination, and we may effectuate
our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject
to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our
business combination. In the case of an initial business combination funded with assets other than the trust account assets, our tender
offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required
by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately, or through
loans in connection with our initial business combination. At this time, other than in connection with the Merger, 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.
Sources of Target Businesses
Target business candidates are brought to our attention
from various sources, including our global networks, as well as other sources such as investment bankers and investment professionals.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls
or mailings. These sources also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since
many of these sources know what types of businesses we are targeting. Our sponsor, officers and directors and their respective affiliates
also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal
or informal inquiries or discussions they may have. While we do not anticipate engaging the services of professional firms or other individuals
that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event
we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation
based on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may
bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential
transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion
of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event will our sponsor or
any of our existing officers or directors, or any entity with which our sponsor or officers are affiliated, be paid any finder’s
fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the company prior to, or in connection,
with any services rendered for any services they render in order to effectuate the completion of our initial business combination (regardless
of the type of transaction that it is). Although none of our sponsor, officers or directors, or any of their respective affiliates, will
be allowed to receive any compensation, finder’s fees or consulting fees from a prospective business combination target in connection
with a contemplated initial business combination, we do not have a policy that prohibits our sponsor, officers or directors, or any of
their respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses by a target business. 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 a company that is affiliated with our sponsor, officers or directors, or their respective affiliates. In the
event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors,
or their respective affiliates, we, or a committee of independent directors, to the extent required by applicable law or our board of
directors, would obtain an opinion from an independent investment banking firm or an independent accounting firm that such an initial
business combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other
context.
If any of our officers or directors becomes aware
of 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
NASDAQ listing rules require that our initial business
combination must be with one or more target businesses that together have an aggregate fair market value of at least 80% of the value
of the trust account (excluding any deferred underwriting fees and taxes payable on the income earned on the trust account) at the time
of our signing a definitive agreement in connection with our initial business combination. The fair market value of the target or targets
will be determined by our board of directors based upon one or more standards generally accepted by the financial community (such as actual
and potential sales, earnings, cash flow and/or book value). Even though our board of directors will rely on generally accepted standards,
our board of directors has the discretion to select the standards employed. In addition, the application of the standards generally involves
a substantial degree of judgment. Accordingly, investors are relying on the business judgment of the board of directors in evaluating
the fair market value of the target or targets. The proxy solicitation materials or tender offer documents used by us in connection with
any proposed transaction will provide public stockholders with our analysis of our satisfaction of the 80% of net assets test, as well
as the basis for our determinations. If our board of directors is not able to independently determine the fair market value of our initial
business combination, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly
renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors
will not be able to make an independent determination of the fair market value of our initial business combination, it may be unable to
do so if it is less familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty
as to the value of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction
with our initial business combination. Subject to this requirement, our management has virtually unrestricted flexibility in identifying
and selecting one or more prospective target businesses, although we are not permitted to effectuate our initial business combination
with another blank check company or a similar company with nominal operations.
In any case, we will only complete an initial business
combination in which we own or acquire 50% or more of the outstanding voting securities of the target or otherwise acquire a controlling
interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. If
we own or acquire less than 100% of the equity interests or assets of a target business or businesses, the portion of such business or
businesses that are owned or acquired by the post-transaction company is what will be valued for purposes of the 80% of net assets test.
There is no basis for our investors to evaluate the possible merits or risks of any target business with which we may ultimately complete
our business combination.
To the extent we effect our initial business combination
with a company or business that may be financially unstable or in its early stages of development or growth we may be affected by numerous
risks inherent in such company or business. Although our management will endeavor to evaluate the risks inherent in a particular target
business, we cannot assure you that we will properly ascertain or assess all significant risk factors.
In evaluating a prospective target business, we
expect to conduct a thorough due diligence review, which will encompass, among other things, meetings with incumbent management and key
employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a review of financial and other
information that will be made available to us.
The time required to select and evaluate a target
business and to structure and complete our initial business combination, and the costs associated with this process, are not currently
ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target
business with which our initial business combination is not ultimately completed will result in our incurring losses and will reduce the
funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period of time after the completion
of our initial business combination, the prospects for our success may depend entirely on the future performance of a single business.
Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries, it
is probable that we will not have the resources to acquire multiple businesses. In addition, we intend to focus our search for an initial
business combination in a single industry. By completing our business combination with only a single entity, our lack of diversification
may:
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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 |
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cause us to depend on the marketing and sale of a single product or limited number of products or services. |
Post-Combination Management Team
Although we intend to 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 business combination, it is unlikely that any
of them will devote their full efforts to our affairs subsequent to our business combination. Moreover, we cannot assure you that members
of our management team will have significant experience or knowledge relating to the operations of the particular target business.
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 a 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 law or applicable
stock exchange rule, or we may decide to seek stockholder approval for business or other 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 |
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Whether
Stockholder
Approval is
Required |
| Purchase of assets |
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No |
| Purchase of stock of target not involving a merger with the company |
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No |
| Merger of target into a subsidiary of the company |
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No |
| Merger of the company with a target |
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Yes |
Under NASDAQ’s listing rules, stockholder
approval would be required for our initial business combination if, for example:
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we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding; |
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any of our directors, officers or substantial stockholders (as defined by NASDAQ listing rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding shares of common stock or voting power of 5% or more; or |
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the issuance or potential issuance of common stock will result in our undergoing a change of control. |
The stockholder votes required for our proposed
initial business combination with Voltus are described above under “The Voltus Merger.”
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 respective affiliates may purchase public shares or public
warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors or their affiliates may
purchase in such transactions, subject to compliance with applicable law and NASDAQ rules. If they engage in such transactions, they will
not make any such purchases when they are in possession of any material non-public information not disclosed to the seller or if
such purchases are prohibited by Regulation M under the Exchange Act. We do not 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 public shares or public warrants in such transactions prior to completion of our initial business combination.
The purpose of such purchases of shares would be
to vote such shares in favor of the initial business combination and thereby increase the likelihood of obtaining stockholder approval
of our 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 completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our shares of Class A common stock or warrants may be reduced
and the number of beneficial holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation,
listing or trading of our securities on a national securities exchange.
Our sponsor, directors, officers, advisors and/or
any of their affiliates anticipate that they may identify the stockholders with whom our sponsor, directors, officers, advisors or any
of 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, directors, officers, advisors or any of 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, advisors or any of 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 any of 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 any of their affiliates will not make purchases
of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. Any such purchases will be reported
pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting requirements.
Redemption Rights for Public Stockholders upon Completion of our
Initial Business Combination or Certain Stockholder Votes to Amend our Amended and Restated Certificate of Incorporation
We will provide our public stockholders with the
opportunity to redeem all or a portion of their shares of Class A common stock upon (i) the completion of our initial business combination
(including Voltus) or (ii) a stockholder vote to approve 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 to
redeem 100% of our public shares if we do not complete our initial business combination by February 17, 2023 or (B) with respect to any
other provision relating to stockholders’ rights or pre-initial business combination activity. Such redemption, if any,
will be made 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 event triggering the right to redeem, including interest earned on the funds held in the trust account and not previously
released to us to pay our franchise and income tax obligations, divided by the number of then outstanding public shares, subject to the
limitations described herein. The amount in the trust account is initially anticipated to be $10.00 per public share. The per share
amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred underwriting fees we will
pay to the underwriter. The redemption rights will include the requirement that a beneficial holder must identify itself in order to validly
redeem its public shares. There will be no redemption rights upon the completion of our initial business combination with respect to our
warrants. Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to
waive their redemption rights with respect to any founder shares and any public shares held by them in connection with the completion
of our initial business combination or a stockholder vote to approve an amendment to our amended and restated certificate of incorporation,
as described above.
Manner of Conducting Redemptions in Conjunction with a Stockholder
Vote on our Initial Business Combination
We will provide our public stockholders with the
opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination
(including Voltus) 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 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 NASDAQ 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 a business combination transaction
with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a stockholder
vote to approve the proposed business combination. We 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 the NASDAQ, we will be
required to comply with such rules.
If a stockholder vote is not required and we do
not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
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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 business combination,
we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A common stock in
the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions pursuant to
the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under the
Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period.
In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares which
are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and after payment
of deferred underwriting commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net
tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders
tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder approval of the transaction
is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval for business or other reasons, we
will, pursuant to our amended and restated certificate of incorporation:
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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 |
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file proxy materials with the SEC. |
In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval, we will complete
our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business
combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock
of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote
at such meeting. Our initial stockholders will count towards this quorum and pursuant to the letter agreement, our sponsor, officers and
directors have agreed to vote their founder shares and any public shares it may acquire 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. We intend to give 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.
Our amended and restated certificate of incorporation
provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001
upon consummation of our initial business combination and after payment of deferred underwriting 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 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 business combination. In the event
the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption
plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount
of cash available to us, we will not complete the business combination or redeem any shares, and all shares of Class A common stock submitted
for redemption will be returned to the holders thereof.
Limitation on Redemption upon Completion 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 Excess Shares. Such restriction
are 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 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. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares issued
in the initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us
or our management at a 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 issued in the initial public offering, we believe we will limit the ability of a small group
of stockholders to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection
with a 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 would not be restricting 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 a Tender Offer or
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 prior to the date set forth in the tender offer documents or proxy materials mailed to such holders
or up to two business days prior to the vote on the proposal to approve the business combination in the event we distribute proxy materials
or to deliver their shares to the transfer agent electronically using The Depository Trust Company’s DWAC (Deposit and Withdrawal
at Custodian) System, at the holder’s option. The tender offer or proxy materials, as applicable, 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 from the time we send out our tender offer materials
until the close of the tender offer period, or up to two days prior to the vote on the initial business combination if we distribute proxy
materials, as applicable, 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 $100.00 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 blank check 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 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” after
the completion 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 completion of the 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 business combination is approved.
Any request to redeem such shares, once made, may
be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting set forth in our
proxy materials, as applicable. 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 after the completion of our initial business combination.
If our initial business combination is not approved
or completed 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.
If our initial proposed business combination is
not completed, we may continue to try to complete a business combination with a different target until February 17, 2023 or during any
Extension Period.
Redemption of Public Shares and Liquidation if no Initial Business
Combination
Our amended and restated certificate of incorporation
provides that we will have until February 17, 2023 to complete our initial business combination. If we do not complete our initial business
combination within such 24-month period or any Extension Period, we will: (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the
trust account and not previously released to us to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire
worthless if we fail to complete our business combination within the 24-month time period, as may be extended by any Extension Period.
Our sponsor, officers and directors have entered
into a 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 complete our initial business combination within 24 months from the closing of
the initial public offering or during any Extension Period. However, if our sponsor, officers and directors acquired public shares in
or after the initial public offering, they will be entitled to liquidating distributions from the trust account with respect to such public
shares if we fail to complete our initial business combination within the allotted 24-month time period.
Our sponsor, officers and directors have agreed,
pursuant to a letter 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
to redeem 100% of our public shares if we do not complete our initial business combination by February 17, 2023 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 Class A 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 franchise and income tax obligations divided by the number
of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001 upon consummation of our initial business combination and after payment of deferred underwriting 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 remaining amounts held outside the
trust account, although we cannot assure you that there will be sufficient funds for such purpose. 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 franchise and income taxes on interest income earned on the trust account balance, we may request
the trustee to release to us an additional amount of up to $100,000 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 private 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 $10.00. 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 $10.00. 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 (other than our independent auditors), 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.
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 he will be liable to us if and
to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have
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) $10.00 per public share or (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 $10.00 per 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 underwriter 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, directors or members of our sponsor 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) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date
of the liquidation of the trust account, due to reductions in 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 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 $10.00 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 (other
than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will
also not be liable as to any claims under our indemnity of the underwriter of the initial public offering against certain liabilities,
including liabilities under the Securities Act. We will have access to any remaining amounts held outside the trust account with which
to pay any such potential claims (including costs and expenses incurred in connection with our liquidation). 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; however, such liability will not be greater than the amount of funds from
our trust account received by any such stockholder.
Under the DGCL, stockholders may be held liable
for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion
of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our
business combination within 24 months from the closing of the initial public offering or during any Extension Period 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 complete our business combination
by February 17, 2023 or during any Extension Period, 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 do not
complete our business combination by February 17, 2023 or during any Extension Period, we will: (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares,
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on
the funds held in the trust account and not previously released to us to pay our franchise and income tax obligations (less up to $100,000
of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of
creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably
possible following February 17, 2023 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 ten 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 (other than our independent auditors), 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) $10.00 per public share or (ii) such lesser amount per public share held
in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case
net of the amount of interest withdrawn to pay our franchise and income taxes and will not be liable as to any claims under our indemnity
of the underwriter 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 $10.00 per 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 of directors 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 completion 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 to redeem 100% of our public shares if we do not complete our initial business combination by February 17, 2023
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 do not complete our business combination by February 17, 2023 or during any
Extension Period, 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 that stockholder redeeming its shares 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.
Competition
In identifying, evaluating and selecting a target
business for our 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
acquisitions. 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 acquisition 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 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.
Facilities
Our executive offices are located at 1845 Walnut
Street, Suite 1111, Philadelphia, PA 19103. The cost for our use of this space is included in the $20,000 per month fee we will pay to
our sponsor or its affiliate for office space, utilities, secretarial support and administrative services. We consider our current office
space adequate for our current operations.
Employees and Human Capital
We currently have three officers. These individuals
are not obligated to devote any specific number of hours to our matters but they devote as much of their time as they deem necessary to
our affairs. The amount of time they devote in any time period varies based on whether a target business has been selected for our initial
business combination and the stage of the initial business combination process we are in.
Periodic Reporting and Financial Information
We have registered our units, Class A common stock
and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current
reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements audited
and reported on by our independent registered public accountants. The SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.
We will provide stockholders with audited financial
statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent to stockholders
to assist them in assessing the target business. In all likelihood, these financial statements will need to be prepared in accordance
with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial statements may be required to be audited
in accordance with the standards of the PCAOB. These financial statement requirements may limit the pool of potential targets we may conduct
an initial business combination with because some targets may be unable to provide such statements in time for us to disclose such statements
in accordance with federal proxy rules and complete our initial business combination within the prescribed timeframe. We cannot assure
you that any particular target business identified by us as a potential business combination candidate will have financial statements
prepared in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance
with the requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed
target business. While this may limit the pool of potential business combination candidates, we do not believe that this limitation will
be material.
We will be required to evaluate our internal control
procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act. 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 have
our internal control procedures audited. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination. We have filed a registration
statement on Form 8-A with the SEC to register our securities under Section 12 of the Exchange Act. As a result, we are subject to
the rules and regulations promulgated under the Exchange Act.
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 completion of the initial public offering,
(b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the aggregate worldwide market value of our Class A common stock that is held by non-affiliates equals or
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 Item 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 prior June 30th, or (2) our annual revenues equal or exceed $100 million during such
completed fiscal year and the market value of our common stock held by non-affiliates equals or exceeds $700 million as of the
prior June 30th.
You should consider carefully all of the risks
described below, together with the other information contained in this Annual Report. If any of the following events occur, our business,
financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could
decline, and you could lose all or part of your investment. The risks described below do not include risk relating to our proposed Business
Combination with Voltus.
Risks Relating to Our Search for, and Consummation
of or Inability to Consummate, a Business Combination and Post-Business Combination Risks
Our public stockholders may not be afforded an opportunity to
vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority
of our public stockholders do not support such a combination.
We may 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 reasons. For instance, the NASDAQ
rules currently allow us to engage in a tender offer in lieu of a stockholder meeting but would still require us to obtain stockholder
approval if we were seeking to issue more than 20% of our outstanding shares to a target business as consideration in any business combination.
Therefore, if we were structuring a business combination that required us to issue more than 20% of our outstanding shares, we would seek
stockholder approval of such business combination. However, except as required by applicable law or stock exchange rules, the decision
as to whether we will seek stockholder approval of a proposed business combination or will allow stockholders to sell their shares to
us in a tender offer will be made by us, solely in our discretion, and 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 complete
our initial business combination even if holders of a majority of our public shares do not approve of the initial business combination
we complete.
If we seek stockholder approval of our initial business combination,
our initial stockholders have agreed to vote in favor of such initial business combination, regardless of how our public stockholders
vote.
Pursuant to a letter agreement, our sponsor, officers
and directors have agreed to vote their founder shares, as well as any public shares purchased during or after the initial public offering
(including in open market and privately negotiated transactions), in favor of our initial business combination. Our initial stockholders
own shares representing 20% of our outstanding shares of common stock. 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 will
not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination. Since our board of directors
may complete 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 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 in an amount
that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and after payment
of deferred underwriting 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 deferred underwriting commissions or such greater amount necessary to satisfy
a closing condition as described above, we would not proceed with such redemption and the related business combination and may instead
search for an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
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 complete the most desirable business combination or optimize our
capital structure.
At the time we enter into an agreement for our
initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will need to
structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our 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. Furthermore, this dilution would increase to the extent that the anti-dilution provisions of the Class B common stock
result in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock
at the time of our business combination. The above considerations may limit our ability to complete the most desirable business combination
available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriter will
not be adjusted for any shares that are redeemed in connection with 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 commissions
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.
The requirement that we complete our initial business combination
by February 17, 2023 may give potential target businesses leverage over us in negotiating an initial business combination and may decrease
our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine
our ability to complete our initial business combination on terms that would produce value for our stockholders.
Any potential target business with which we enter
into negotiations concerning an initial business combination will be aware that we must complete our initial business combination by February
17, 2023 or seek a stockholder approved extension of such period. Consequently, such target business may obtain leverage over us in negotiating
an initial business combination, knowing that if we do not complete our initial business combination with that particular target business,
we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to February
17, 2023. 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 ongoing coronavirus (COVID-19)
pandemic and the status of debt and equity markets.
The COVID-19 pandemic has resulted, and other
infectious diseases could result, in a widespread health crisis that has and will continue to adversely affect economies and financial
markets worldwide, and the business of any potential target business with which we consummate a business combination may also be materially
and adversely affected. Furthermore, we may be unable to complete 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, or if COVID-19 causes a prolonged economic downturn.
The effects of the COVID-19 pandemic on businesses, and the inability to accurately predict the future impact of the pandemic on
businesses, has also made determinations and negotiations of valuation more difficult, which could make it more difficult to consummate
a business combination transaction.
The extent to which COVID-19 ultimately impacts
our identification and consummation of 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 and spread of COVID-19 and actions to contain the
virus or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an
extended period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately
consummate a business combination, may be materially adversely affected.
In addition, our ability to consummate a business
combination may be dependent on the ability to raise equity and debt financing which may be adversely impacted by COVID-19 and other
events, including as a result of increased market volatility, decreased market liquidity and third-party financing being available
on terms acceptable to us or at all.
We may not be able to complete our initial business combination
by February 17, 2023, in which case we would cease all operations except for the purpose of winding up and we would redeem our public
shares and liquidate, in which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances,
and our warrants will expire worthless.
Our amended and restated certificate of incorporation
provides that we must complete our initial business combination by February 17, 2023. We may not be able to find a suitable target business
and complete our initial business combination within such time period. If we have not completed our initial business combination by February
17, 2023 or during any Extension Period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account
and not previously released to us to pay our franchise and income tax obligations (less up to $100,000 of interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. In such case, our public stockholders may only receive $10.00 per share, and our warrants will expire worthless.
In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares.
If we seek stockholder approval of our initial business combination,
our sponsor, directors, officers, advisors and their affiliates may elect to purchase public shares or public warrants from public
stockholders, which may influence a vote on a proposed initial business combination and reduce the public “float” of our Class A
common stock.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer
rules, our sponsor, directors, officers, advisors 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 completion of our initial business combination,
although they are under no obligation to do so. None of the funds in the trust account will be used to purchase public 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, advisors or their affiliates purchase public shares
in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such selling
stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote
such shares in favor of the 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 completion of our initial business combination that may not otherwise have been possible.
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.
In addition, if such purchases are made, the public
“float” of our Class A 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, which may include the requirement that a beneficial holder must identify itself. For
example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in the tender
offer documents mailed to such holders, or up to two business days prior to the initial 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, its shares may not be redeemed. See the section of this Annual Report entitled “Business —Tendering Stock
Certificates in Connection with a Tender Offer or Redemption Rights.”
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 private placement warrants are intended to be used to complete 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 had net tangible assets in excess of $5,000,000 upon the completion of the initial public offering and the sale of
the private 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 units were immediately tradable and
we have a longer period of time to complete our initial business combination than do companies subject to Rule 419. Moreover, offerings
subject to Rule 419 would prohibit the release of any interest earned on funds held in the trust account to us unless and until the
funds in the trust account were released to us in connection with our completion of an initial business combination.
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 Class A common stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A
common stock.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our 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 complete 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 complete our initial business combination. As a result, you
would 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.
Because of our special purpose acquisition company structure
and limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we do not complete our initial business combination, our public stockholders may receive only $10.00
per share on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless.
We expect to encounter 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 similar technical, human and other resources
to ours, 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, our ability to compete with respect to the acquisition of certain target
businesses that are sizable will be limited by our available financial resources. This inherent competitive limitation gives others an
advantage in pursuing the acquisition of certain target businesses. Furthermore, because we are obligated to pay cash for the shares of
Class A common stock which our public stockholders redeem in connection with our initial business combination, target companies will
be aware that this may present closing risk by reducing the resources available to us for our initial business combination. Additionally,
potential target companies may be less inclined to consummate a transaction with us because definitive documentation for such a transaction
will preclude any recourse against our trust account, meaning that potential counterparties may determine that they do not have adequate
contractual remedies in the event a transaction fails to close. These factors may place us at a competitive disadvantage in successfully
negotiating an initial business combination. If we do not complete our initial business combination, our public stockholders may receive
only $10.00 per share (based on the trust account balance as of December 31, 2021) on the liquidation of our trust account and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share upon our liquidation.
See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If the net proceeds of the initial public offering and the sale
of the private placement warrants not being held in the trust account are insufficient, we may be unable to complete our initial business
combination, in which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances,
and our warrants will expire worthless.
We believe that the funds available to us outside
of the trust account will be sufficient to allow us to operate until February 17, 2023; 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 on terms more favorable to such target businesses) with respect to a particular proposed initial business combination.
If we entered into a letter of intent or other 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 do not complete our initial business combination,
our public stockholders may receive only $10.00 per share (based on the trust account balance as of December 31, 2021) on the liquidation
of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00
per share upon our liquidation. See “— If third parties bring claims against us, the proceeds held in the trust account could
be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors
herein.
If the net proceeds of the initial public offering and the sale
of the private 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 complete 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 franchise and income tax obligations and to complete
our initial business combination. If we are unable to obtain these loans, we may be unable to complete our initial business combination.
Of the net proceeds of the initial public offering
and the sale of the private placement warrants, only $513,431 was available to us as of December 31, 2021 outside the trust account to
fund our working capital requirements. 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 completion of our initial business combination. Up to $2,000,000
of such loans may be convertible into private placement-equivalent warrants at a price of $1.50 per warrant at the option of the
lender. Prior to the completion 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 complete our
initial business combination. If we do not complete 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 $10.00
per share (based on the trust account balance as of December 31, 2021) on our redemption of our public shares, and our warrants will expire
worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their shares.
See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
If third parties bring claims against us, the proceeds held in
the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per
share.
Our placing of funds in the trust account may not
protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than
our independent registered public accounting firm), prospective target businesses 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. Making such a request of potential target businesses may
make our acquisition proposal less attractive to them and, to the extent prospective target businesses refuse to execute such a waiver,
it may limit the field of potential target businesses that we might pursue. WithumSmith+Brown, PC, our independent registered public accounting
firm, and the underwriter of the initial public offering, will 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. 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 do not complete
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 ten years following redemption. Accordingly, the per-share redemption amount received by public stockholders could
be less than the $10.00 per share initially held in the trust account, due to claims of such creditors. Pursuant to the letter agreement,
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) $10.00 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 $10.00 per 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 underwriter 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. As a result, if any such claims were successfully made against
the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00 per public
share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount per share
in connection with any redemption of your public shares. None of our officers, directors or members of our sponsor will indemnify us for
claims by third parties including, without limitation, claims by vendors and prospective target businesses.
The securities in which we invest the proceeds held in the trust
account could bear a negative rate of interest, which could reduce the interest income available for payment of taxes or reduce the value
of the assets held in trust such that the per share redemption amount received by public stockholders may be less than $10.00 per share.
The proceeds held in the trust account may only
be invested in direct U.S. government securities with a maturity of 185 days or less, or in certain money market funds which invest
only in direct U.S. 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 of very low or negative yields, the amount of interest income (which
we may withdraw to pay income taxes, if any) would be reduced. In the event that we are unable to complete our initial business combination,
our public stockholders are entitled to receive their 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 complete our initial business combination, $100,000 of interest for dissolution
expenses). Negative interest rates could reduce the value of the assets held in the trust account such that the per-share redemption
amount received by public stockholders may be less than $10.00 per share.
Our directors may decide not to enforce the indemnification obligations
of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution to our public stockholders.
In the event that the proceeds in the trust account
are reduced below the lesser of (i) $10.00 per 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 $10.00 per 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 our sponsor asserts that it is unable to satisfy its obligations or that
it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action
against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent
directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment 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 $10.00 per share.
We may not have sufficient funds to satisfy indemnification claims
of our directors and 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 (and any other persons who may become
an officer or director prior to the initial business combination will also be required to waive) any right, title, interest or claim of
any kind in or to any monies in the trust account and not to seek recourse against the trust account for any reason whatsoever (except
to the extent they are entitled to funds from the trust account due to their ownership of public shares). 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 may be exposed to claims of punitive damages.
If, after we distribute the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either
a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our
creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the trust account to
our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed,
the claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy
estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims
deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation
may be reduced.
If we are deemed to be an investment company under the Investment
Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it
difficult for us to complete our 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 complete our initial
business combination.
In addition, we may have imposed upon us burdensome
requirements, including:
| ● | registration as an investment company; |
| ● | adoption of a specific form of corporate structure; and |
| ● | reporting, record keeping, voting, proxy and disclosure requirements
and other rules and regulations. |
In order not to be regulated as an investment company
under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other
than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or
trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and
cash items) on an unconsolidated basis. Our business is to identify and complete 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 securities are 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 completion
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 to redeem 100% of our public shares if we do not complete our initial
business combination by February 17, 2023 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 by February 17, 2023 or during any Extension Period, 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 complete an initial business combination or may result in our liquidation. If we do not complete our
initial business combination, our public stockholders may receive only $10.00 per share (based on the trust account balance as of December
31, 2021) on the liquidation of our trust account and our warrants will expire worthless.
If we have not completed an initial business combination by February
17, 2023, our public stockholders may be forced to wait beyond February 17, 2023 before redemption from our trust account.
If we have not completed an initial business combination
by February 17, 2023 or during any Extension Period, the proceeds then on deposit in the trust account, including interest earned on the
funds held in the trust account and not previously released to us to pay our franchise and income tax obligations (less up to $100,000
of the interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further described herein. Any
redemption of public stockholders from the trust account will be effected automatically by function of our amended and restated certificate
of incorporation prior to any voluntary winding up. If we are required to wind-up, liquidate the trust account and distribute such amount
therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up, liquidation and distribution must
comply with the applicable provisions of the DGCL. In that case, investors may be forced to wait beyond February 17, 2023 or the expiration
of any Extension Period before the redemption proceeds of our trust account become available to them, and they receive the return of their
pro rata portion of the proceeds from our trust account. We have no obligation to return funds to investors prior to the date of our redemption
of public shares or liquidation unless we complete our initial business combination prior thereto and only then in cases where investors
have sought to redeem their Class A common stock. Only upon our redemption or any liquidation will public stockholders be entitled
to distributions if we do not complete our initial business combination.
Our stockholders may be held liable for claims by third parties
against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders may be held liable
for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion
of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our
initial business combination by February 17, 2023 or during any Extension Period 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 February 17, 2023 or the expiration of any Extension Period in the event we do
not complete 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 ten years following our dissolution.
However, because we are a blank check company, rather than an operating company, and our operations are limited to searching for prospective
target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or
prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders
with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution.
We cannot assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could
potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders
may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public
stockholders upon the redemption of our public shares in the event we do not complete our initial business combination by February 17,
2023 or during any Extension Period 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 NASDAQ corporate governance
requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our
listing on NASDAQ. 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 our consummation of a 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. Even if an annual meeting was held
for the purpose of electing directors prior to the consummation of a business combination, only holders of Class B common stock would
be entitled to notice of such meeting and to vote at such meeting.
The grant of registration rights to our initial stockholders
may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the
market price of our Class A 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 shares of Class A common stock into which the founder shares are convertible, the private placement
warrants, the shares of Class A common stock issuable upon exercise of the private placement warrants held, or to be held, by them,
and holders of warrants that may be issued upon conversion of working capital loans may demand that we register such warrants or the Class A
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 Class A
common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult
to conclude. 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 Class A 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 not limited to a particular industry, sector or
geographic area or any specific target businesses with which to pursue our initial business combination, you will be unable to ascertain
the merits or risks of any particular target business’s operations.
Although we focus our search for a target business
on opportunities that transform traditional industries in positive ways and generate tangible improvements to the well-being of the
global population, particularly with respect to energy, transportation, buildings, manufacturing, and food and agriculture, we may seek
to complete a business combination with an operating company of any size (subject to our satisfaction of the 80% of net assets test) and
in any industry, sector or geographic area. However, we will not be permitted to effectuate our initial business combination solely with
another blank check company or similar company with nominal operations. To the extent we complete 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 development stage entity. Although our directors and officers will endeavor to evaluate the
risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant
risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control
and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot
assure you that an investment in our units will not ultimately prove to be less favorable to our investors than a direct investment, if
such opportunity were available, in a business combination target. Accordingly, any stockholder or warrant holder who chooses to remain
a stockholder or warrant holder, respectively, following our initial business combination could suffer a reduction in the value of their
securities. Such stockholders and warrant holders 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 team’s area of expertise.
We will consider an initial business combination
outside of our management team’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 expended 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 units 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 team’s expertise, our management team’s
expertise may not be directly applicable to its evaluation or operation, and the information contained herein regarding the areas of our
management team’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 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 these positive attributes. If we complete 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 law, or we decide to obtain stockholder approval for business or other 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 do not complete our initial business combination, our public stockholders may receive only
$10.00 per share (based on the trust account balance as of December 31, 2021) on the liquidation of our trust account and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption of their
shares. See “— If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” 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 complete 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.
As the number of special purpose acquisition companies evaluating
targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase
the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business
combination.
In recent years, the number of special purpose
acquisition companies that have been formed has increased substantially. Many potential targets for special purpose acquisition companies
have already entered into an initial business combination, and there are still many special purpose acquisition companies seeking targets
for their initial business combination, as well as many such companies currently in registration. As a result, at times, fewer attractive
targets may be available, and it may require more time, more effort and more resources to identify a suitable target and to consummate
an initial business combination.
In addition, because there are more special purpose
acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets
with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive
deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases
in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could
increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and
may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
We are not required to obtain an opinion from an independent
investment banking firm or from an independent accounting firm, 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 complete 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 an independent accounting firm 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 of directors, 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.
We may issue additional common stock or preferred stock to complete
our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also
issue shares of Class A common stock upon the conversion of the Class B common stock at a ratio greater than one-to-one at the
time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated certificate
of incorporation. 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 Class A common stock, par value $0.0001 per share, 10,000,000 shares
of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share.
There are currently 65,500,000 and 1,375,000 authorized but unissued shares of Class A common stock and Class B common stock,
respectively, available for issuance, which amount does not take into account the shares of Class A common stock reserved for issuance
upon exercise of outstanding warrants. There are no shares of preferred stock issued and outstanding. Shares of Class B common stock
are convertible into shares of our Class A common stock initially at a one-for-one ratio but subject to adjustment as set forth
herein, including in certain circumstances in which we issue Class A common stock or equity-linked securities related to our
initial business combination. Shares of Class B common stock are also convertible at the option of the holder at any time.
We may issue a substantial number of additional
shares of common or preferred stock to complete our initial business combination or under an employee incentive plan after completion
of our initial business combination. We may also issue shares of Class A common stock to redeem the warrants or upon conversion of
the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the
anti-dilution provisions contained in our amended and restated certificate of incorporation. However, our amended and restated certificate
of incorporation provides, among other things, that prior to or in connection with 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 sponsor, officers
and directors have agreed, pursuant to a letter 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 to redeem 100% of our public shares if we do not complete our initial business combination by February 17, 2023
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 investors
in the initial public offering; |
| ● | may subordinate the rights of holders of 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; and |
| ● | may adversely affect prevailing market prices for our units,
Class A common stock and/or warrants. |
Resources could be wasted in researching business combinations
that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business.
If we do not complete our initial business combination, our public stockholders may receive only $10.00 per 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
complete 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 complete 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 do not
complete our initial business combination, our public stockholders may receive only $10.00 per share (based on the trust account balance
as of December 31, 2021) on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our
public stockholders may receive less than $10.00 per share on the redemption of their shares. See “— If third parties bring
claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders
may be less than $10.00 per share” and other risk factors herein.
We may engage in an initial business combination with one or
more target businesses that have relationships with entities that may be affiliated with our sponsor, officers, directors or existing
holders which may raise potential conflicts of interest.
In light of the involvement of our sponsor, officers
and directors with other entities, we may decide to acquire one or more businesses with which our sponsor or one or more of our officers
or directors is affiliated. Our officers and directors also serve as officers and board members for other entities, including, without
limitation, those described under the section of this Annual Report entitled “Certain Relationships and Related Transactions; and
Director Independence — Conflicts of Interest.” Such entities may compete with us for business combination opportunities.
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 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 an
independent accounting firm regarding the fairness to our company from a financial point of view of an initial business combination with
one or more domestic or international businesses affiliated with our officers, directors or existing holders, potential conflicts of interest
still may exist and, as a result, the terms of the initial business combination may not be as advantageous to our public stockholders
as they would be absent any conflicts of interest.
Moreover, we may, at our option, pursue an affiliated
joint acquisition opportunity with entities to which an officer or director has a fiduciary, contractual or other obligation or duty.
Any such parties may co-invest with us in the target business at the time of our initial business combination, or we could raise
additional proceeds to complete the acquisition by issuing equity to any such parties, which may give rise to certain conflicts of interest.
Since our sponsor and its investors and our directors will lose
their entire at-risk investment in us if our initial business combination is not completed, a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
In November 2020, our sponsor purchased 150,000
founder shares for an aggregate purchase price of $25,000. We effected a 47.91667-for-1 stock split in December 2020 and
a stock dividend of 1.2 shares of Class B common stock for each share of Class B common stock outstanding prior to the dividend in
February 2021, and, as a result, our sponsor holds 8,625,000 founder shares. Prior to the initial investment in the company of $25,000
by our sponsor, the company had no assets, tangible or intangible. The split-adjusted number of founder shares was determined based
on the expectation that the founder shares would represent 20% of our issued and outstanding shares of common stock after the initial
public offering. As such, our sponsor collectively owns 20% of our issued and outstanding shares of common stock. All of the founder shares
will be worthless if we do not complete an initial business combination. In addition, our sponsor purchased an aggregate of 6,266,667
warrants at a price of $1.50 per warrant ($9,400,000 in the aggregate), which will also be worthless if we do not complete an initial
business combination. Our sponsor, officers and directors have entered into a letter agreement with us pursuant to which they have agreed
to vote any shares owned by them in favor of any proposed initial business combination and to waive their redemption rights with respect
to their founder shares and public shares in connection with (i) the completion of our initial business combination and (ii) any
stockholder vote to approve 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 to redeem 100% of our public shares
if we do not complete our initial business combination by February 17, 2023 or (B) with respect to any other provision relating to
stockholders’ rights or pre-initial business combination activity. In addition, we may obtain loans from our sponsor,
affiliates of our 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.
We may issue notes or other debt securities, or otherwise incur
substantial debt, to complete 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.
We may choose to incur substantial debt to complete
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 is payable on demand; |
| ● | our inability to obtain necessary additional financing if
the debt contains covenants restricting our ability to obtain such financing while the debt 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 complete one business combination with the proceeds of
the initial public offering and the sale of the private placement warrants which will cause us to be solely dependent on a single business
which may have a limited number of 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
and the sale of the private placement warrants, $345,000,000 is available to complete our initial business combination and pay related
fees and expenses (which includes $12,075,000 for the payment of deferred underwriting commissions).
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 intend to focus our 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,
property or asset, 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 complete business combinations
with multiple prospective targets, which may hinder our ability to complete 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 complete
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 complete 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. Furthermore, the relative lack of information about a private company may hinder our ability to properly assess the value of
such a company which could result in our overpaying for that company.
We do not have a specified maximum redemption threshold. The
absence of such a redemption threshold may make it possible for us to complete 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 a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and after payment
of deferred underwriting 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 complete 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, advisors or their affiliates. In the event the aggregate
cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for redemption plus
any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate
amount of cash available to us, we will not complete the initial business combination or redeem any shares, all shares of Class A
common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business combination, blank
check companies have, in the recent past, amended various provisions of their charters and other governing instruments. We cannot assure
you that we will not seek to amend our amended and restated certificate of incorporation or governing instrument in a manner that will
make it easier for us to complete our initial business combination that some of our stockholders or warrant holders 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 governing instruments, including their
warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds
and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements
to require the warrants to be exchanged for cash and/or other securities. We cannot assure you that we will not seek to amend our charter
or governing instruments, including to 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
65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier for us,
therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate the completion of an initial
business combination that some of our stockholders may not support.
Our amended and restated certificate of incorporation
provides that any of its provisions related to pre-initial business combination activity (including the requirement to deposit proceeds
of the initial public offering and the private placement of warrants into the trust account and not release such amounts except in specified
circumstances, and to provide redemption rights to public stockholders as described herein 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 65% of our common stock entitled to vote thereon, and corresponding provisions
of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common
stock entitled to vote thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders
of a majority of our outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock
exchange rules. 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 20% of our common stock, will participate in any vote to amend our amended
and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a
result, we may be able to amend the provisions of our amended and restated certificate of incorporation which govern our pre-initial business
combination behavior more easily than some other blank check companies, and this may increase our ability to complete 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 letter 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
to redeem 100% of our public shares if we do not complete our initial business combination by February 17, 2023 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 Class A 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 a letter agreement that we have entered into with our sponsor, officers and
directors. Persons who are not party to, or third-party beneficiaries of, these agreements will not have the ability to pursue remedies
against our sponsor, officers or directors for any breach of these agreements. As a result, in the event of a breach, such persons would
need to pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional financing to complete 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 intend to target businesses larger than we could
acquire with the net proceeds of the initial public offering and the sale of the private placement warrants. As a result, we may be required
to seek additional financing to complete 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 complete 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 public shares from stockholders who elect redemption in
connection with our initial business combination and/or the terms of negotiated transactions to purchase public shares in connection with
our initial business combination. If we do not complete our initial business combination, our public stockholders may receive only $10.00
per share (based on the trust account balance as of December 31, 2021) plus any pro rata interest earned on the funds held in the trust
account and not previously released to us to pay our franchise and income tax obligations, on the liquidation of our trust account, and
our warrants will expire worthless. In addition, even if we do not need additional financing to complete 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. 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 $10.00 per share,” under certain circumstances our
public stockholders may receive less than $10.00 per share upon the liquidation of the trust account.
Our initial stockholders hold a substantial interest in us and
will control the appointment of our board of directors until consummation of our initial business combination. As a result, they will
appoint all of our directors prior to our initial business combination and may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support.
Our initial stockholders own shares representing
20% of our issued and outstanding shares of common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation and
approval of major corporate transactions. If our initial stockholders purchase any additional shares of common stock in the aftermarket
or in privately negotiated transactions, this would increase their control. Factors that would be considered in making such additional
purchases would include consideration of the current trading price of our Class A common stock. In addition, prior to our initial
business combination, our initial stockholders will have the right to appoint all of our directors and may remove members of the board
of directors for any reason. Holders of our public shares will have no right to vote on the appointment of directors during such time.
These provisions of our amended and restated certificate of incorporation may only be amended by a resolution passed by holders of a majority
of the founder shares. As a result, you will not have any influence over the appointment of directors prior to our initial business combination.
All of our directors were appointed by our initial stockholders for two-year terms. Accordingly, our initial stockholders will continue
to exert control at least until the completion of our initial business combination.
A provision of our warrant agreement may make it more difficult
for us to consummate an initial business combination.
If (i) we issue additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our
initial business combination at a Newly Issued Price of less than $9.20 per share; (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 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 higher 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 higher
of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent)
to be equal to the higher 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.
Our warrants and founder shares may have an adverse effect on
the market price of our Class A common stock and make it more difficult to effectuate our initial business combination.
In the initial public offering, we issued warrants
to purchase 8,625,000 shares of Class A common stock as part of the public units and, simultaneously with the closing of the
initial public offering, we issued in a private placement warrants to purchase an aggregate of 6,266,667 shares of Class A common stock
at $11.50 per share. Our initial stockholders currently own an aggregate of 8,625,000 founder shares. The founder shares are convertible
into shares of Class A common stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor
makes any working capital loans, up to $2,000,000 of such loans may be convertible into warrants, at the price of $1.50 per warrant at
the option of the lender. Such warrants would be identical to the private placement warrants, including as to exercise price, exercisability
and exercise period.
To the extent we issue shares of Class A common
stock to effectuate an initial business combination, the potential for the issuance of a substantial number of additional shares of Class A
common stock upon exercise of these warrants and 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 Class A common stock and reduce the
value of the shares of Class A common stock issued to complete 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 private 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 our sponsor or its permitted
transferees, (i) they will not be redeemable by us, subject to certain limited exceptions , (ii) they (including the Class A
common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold
by our sponsor until 30 days after the completion of our initial business combination, (iii) they may be exercised by the holders
on a cashless basis and (iv) they are entitled to registration rights.
Because we must furnish our stockholders with target business
financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective
target businesses.
The federal proxy rules require that 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 would include the same financial statement disclosure in connection with any tender
offer documents. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles
generally accepted in the United States of America, or GAAP, or international financial reporting standards as issued by the International
Accounting Standards Board, or IFRS, depending on the circumstances and the historical financial statements may be required to be audited
in accordance with the standards of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial
statements in time for us to disclose such statements in accordance with federal proxy or tender offer rules and complete our initial
business combination within the prescribed timeframe.
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 our Annual Report on Form 10-K for the
year ending December 31, 2022. 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, for 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 complete 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 complete any such business combination.
Our warrants are accounted for as liabilities and the changes
in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the Acting Director of the Division
of Corporation Finance and Acting Chief Accountant of the SEC together issued a public statement (the “SEC Warrant Accounting Statement”)
on accounting and reporting considerations for warrants issued by special purpose acquisition companies (“SPACs”). The SEC
Warrant Accounting Statement regarding the accounting and reporting considerations for warrants issued by SPACs focused on certain settlement
terms and provisions related to certain tender offers following a business combination. The terms described in the SEC Warrant Accounting
Statement are common in SPACs and are similar to the terms contained in the warrant agreement governing our warrants. In response to the
SEC Warrant Accounting Statement, we reevaluated the accounting treatment of our public warrants and private placement warrants, and determined
to classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As a result, included on our balance sheet as of December 31, 2021 contained elsewhere in this Annual Report are derivative liabilities
related to embedded features contained within our warrants. ASC 815, Derivatives and Hedging, provides for the remeasurement of the fair
value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being
recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our financial statements and
results of operations may fluctuate quarterly based on factors which are outside of our control. Due to the recurring fair value measurement,
we expect that we will recognize non- cash gains or losses on our warrants each reporting period and that the amount of such gains or
losses could be material.
We have identified a material weakness in our internal control
over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and
financial condition accurately and in a timely manner.
Our management is responsible for establishing
and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Our management is likewise
required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses
identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or
interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this Annual Report, we
identified a material weakness in our internal control over financial reporting related to the accounting for our Class A common stock
subject to possible redemption at the closing of our initial public offering and the restatement of our earnings per share calculation.
As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as
of December 31, 2021.
To respond to this material weakness, we have devoted,
and plan to continue to devote, significant effort and resources to the remediation and improvement of our internal control over financial
reporting. While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance these processes
to better evaluate our research and understanding of the nuances of the complex accounting standards that apply to our financial statements.
Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication
among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our
remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended
effects. For a discussion of management’s consideration of the material weakness identified related to our accounting for our Class
A common stock subject to possible redemption and the restatement of our earnings per share calculation, see Note 2 to the accompanying
financial statements, as well as Part II, Item 9A: Controls and Procedures included in this Annual Report.
Any failure to maintain such internal control could
adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial
statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements
are not filed on a timely basis, we could be subject to sanctions or investigations by the stock exchange on which our common stock is
listed, the SEC or other regulatory authorities. In either case, there could result a material adverse effect on our business. Ineffective
internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect
on the trading price of our stock.
We can give no assurance that the measures we have
taken and plan to take in the future will remediate the material weakness identified or that any additional material weaknesses or restatements
of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial
reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in
the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair
presentation of our financial statements.
Changes in the market for directors and officers liability insurance
could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In recent months, the market for directors and
officers liability insurance for special purpose acquisition companies has changed. The premiums charged for such policies have generally
increased and the terms of such policies have generally become less favorable. There can be no assurance that these trends will not continue.
The increased cost and decreased availability of
directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination.
In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business
combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to obtain adequate directors
and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified
officers and directors.
In addition, even after we were to complete an
initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct
alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post-business
combination entity will likely need to purchase additional insurance with respect to any such claims (“run-off insurance”).
The need for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate
our ability to consummate an initial business combination on terms favorable to our investors.
Our management concluded that there is substantial doubt
about our ability to continue as a “going concern.”
As of December 31, 2021, the Company had $513,431 in its operating
bank accounts, $345,019,584 in securities held in the trust account to be used for a business combination or to repurchase or redeem its
common stock in connection therewith and a working capital deficit of approximately $1.7 million. As of December 31, 2021, approximately
$19,584 of the amount on deposit in the trust account represented interest income, which is available to pay the Company’s tax obligations.
If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could
include, but not necessarily be limited to, suspending the pursuit of a business combination. The Company cannot provide any assurance
that new financing will be available to it on commercially acceptable terms, if at all. Further, our plans to raise capital and to consummate
our initial business combination may not be successful. These factors, among others, raise substantial doubt about our ability to continue
as a going concern through our liquidation date. The financial statements contained elsewhere in this Annual Report do not include any
adjustments that might result from our inability to consummate a business combination or our inability to continue as a going concern.
If our management team pursues a company with operations or opportunities
outside of the United States for our initial business combination, we may face additional burdens in connection with investigating,
agreeing to and completing such combination, and if we effect such initial business combination, we would be subject to a variety of additional
risks that may negatively impact our operations.
If our management team pursues a company with operations
or opportunities outside of the United States for our initial business combination, we would be subject to risks associated with
cross-border business combinations, including in connection with investigating, agreeing to and completing our initial business combination,
conducting due diligence in a foreign market, having such transaction approved by any local governments, regulators or agencies and changes
in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination with
such a company, we would be subject to any special considerations or risks associated with companies operating in an international setting
(including how relevant governments respond to such factors), including any of the following:
| ● | costs and difficulties inherent in managing cross-border business
operations and complying with 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; |
| ● | tax consequences, such as tax law changes, including termination
or reduction of tax and other incentives that the applicable government provides to domestic companies, and variations in tax laws as
compared to the United States; |
| ● | currency fluctuations and exchange controls, including devaluations
and other exchange rate movements; |
| ● | rates of inflation, price instability and interest rate fluctuations; |
| ● | liquidity of domestic capital and lending markets; |
| ● | challenges in collecting accounts receivable; |
| ● | cultural and language differences; |
| ● | crime, strikes, riots, civil disturbances, terrorist attacks,
natural disasters, wars and other forms of social instability; |
| ● | deterioration of political relations with the United States; |
| ● | obligatory military service by personnel; and |
| ● | government appropriation of assets. |
We may not be able to adequately address these
additional risks. If we were unable to do so, we may be unable to complete such combination or, if we complete such combination, our operations
might suffer, either of which may adversely impact our results of operations and financial condition.
Subsequent to the completion of our initial business combination,
we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative
effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a
target business with which we combine, we cannot assure you that this diligence will surface all material issues that may be present inside
a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or
that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced
to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result
in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known
risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items
and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market
perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which
we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining 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.
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 complete such business combination if the post-transaction company owns or acquires
50% or more of the outstanding voting securities of the target or otherwise acquires 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 such criteria. 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 Class A 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 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 may have a limited ability to assess the management of a prospective
target business and, as a result, may affect our initial business combination with a target business whose management may not have the
skills, qualifications or abilities to manage a public company, which could, in turn, negatively impact the value of our stockholders’
investment in us.
When evaluating the desirability of effecting our
initial business combination with a prospective target business, our ability to assess the target business’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.
Risks Relating to Our Sponsor and Management
Team
Our ability to successfully effect our initial business combination
and to be successful thereafter will be totally 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 completion 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 completion 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 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 officers and directors. We believe that our success depends on the continued service
of our officers and directors, at least until we have completed 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 officers. The unexpected loss of the services of one or more of
our directors or officers could have a detrimental effect on us.
Our key personnel may negotiate employment or consulting agreements
as well as reimbursement of out-of-pocket expenses, if any, with a target business in connection with a particular business combination.
These agreements may provide for them to receive compensation or reimbursement for out-of-pocket expenses, if any, 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 after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements
in connection with the initial business combination. Additionally, they may negotiate reimbursement of any out-of-pocket expenses
incurred on our behalf prior to the consummation of our initial business combination, should they choose to do so. 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 after the completion of the initial business combination,
or as reimbursement for such out-of-pocket expenses. 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 after
the completion 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 after the completion
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 our initial business
combination.
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 complete 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. Each of our officers and directors is engaged in other
business endeavors for which he may be entitled to substantial compensation and our officers and directors 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 complete our initial business combination. For a complete discussion of our officers’ and directors’
other business affairs, please see the sections of this Annual Report entitled “Directors, Executive Officers and Corporate
Governance” and “Certain Relationships and Related Transactions, and Director Independence.”
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 will engage in the business of identifying and combining with one or more businesses. Our 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.
There could be overlap between companies that would
be suitable for a business combination with us and companies that present an attractive investment opportunity for our sponsor, our directors
or officers, and entities with which they currently are or may in the future be affiliated.
Our officers and directors also may become aware
of business opportunities which may be appropriate for presentation to us and other entities to which they owe certain fiduciary or contractual
duties. Any such opportunities may present additional conflicts of interest in pursuing an acquisition target, and our directors and officers
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
of this Annual Report entitled “Directors, Executive Officers and Corporate Governance” and “Certain Relationships
and Related Party Transactions; and Director Independence.”
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 our 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.
Risks Relating to our Securities
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 completion of an initial business combination, and then
only in connection with those shares of Class A 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 to redeem 100% of our public shares if we do not complete our initial business combination
by February 17, 2023 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 do not complete an initial business combination by February
17, 2023 or during any Extension Period, 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 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.
NASDAQ 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.
We cannot assure you that our securities will continue
to be listed on NASDAQ in the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ
prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. In general, we must
maintain an average global market capitalization and a minimum of 300 public holders. Additionally, in connection with our initial
business combination, we will be required to demonstrate compliance with NASDAQ’s initial listing requirements, which are more rigorous
than NASDAQ’s continued listing requirements, in order to continue to maintain the listing of our securities on NASDAQ. For instance,
our stock price would generally be required to be at least $4.00 per share and we would be required to have a minimum of 400 round lot
holders (with at least 50% of such round lot holders holding securities with a market value of at least $2,500). We cannot assure
you that we will be able to meet those initial listing requirements at that time. If NASDAQ delists any of our securities from trading
on its exchange and we are not able to list such securities on another national securities exchange, we expect such 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 liquidity for our securities; |
| | | |
| ● | a determination that our Class A common stock is a “penny stock” which will require
brokers trading in our Class A 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, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred
to as “covered securities.” Because our units, Class A common stock and warrants are listed on NASDAQ, our units, Class A
common stock and warrants are covered securities. 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 NASDAQ, 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.
Holders of Class A common stock will
not be entitled to vote on any election of directors we hold prior to our initial business combination.
Prior to our initial business combination, only
holders of our founder shares will have the right to vote on the election of directors. Holders of our public shares will not be entitled
to vote on the election of directors during such time. In addition, prior to the completion of an initial business combination, holders
of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, you may not have any say
in the management of our company prior to the consummation of an initial business combination.
We are not registering the shares of Class A
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, 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 are not registering the shares of Class A
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. 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 after the
closing of our initial business combination, we will use our commercially reasonable efforts to file with the SEC a registration statement
for the registration under the Securities Act of the shares of Class A common stock issuable upon exercise of the warrants and thereafter
will use our commercially reasonable 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 Class A 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 or correct or the SEC
issues a stop order. If the shares of Class A 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, in which case the number of shares of our Class A
common stock that you will receive upon cashless exercise will be based on a formula subject to a maximum number of shares equal to 0.361 shares
of our Class A common stock per warrant (subject to adjustment). 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 state
registration is available. If an exemption is not available, holders will not be able to exercise their warrants on a cashless basis.
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 Class A common stock included in the units. If and when the warrants become redeemable by us, we may
exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state
securities laws.
The warrants may become exercisable and redeemable
for a security other than the shares of Class A common stock, and you will not have any information regarding such other security
at this time.
In certain situations, including if we are not
the surviving entity in our initial business combination, the warrants may become exercisable for a security other than the shares of
Class A common stock. As a result, if the surviving company redeems your warrants for securities pursuant to the warrant agreement,
you may receive a security in a company of which you do not have information at this time. Pursuant to the warrant agreement, the surviving
company will be required to use commercially reasonable efforts to register the issuance of the security underlying the warrants within
15 business days of the closing of an initial business combination.
If you exercise your public warrants on a
“cashless basis,” you will receive fewer shares of Class A 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
shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after
the closing 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. If this exemption,
or another exemption is not available, holders will not be able to exercise their warrants on a cashless basis. In the event of an exercise
on a cashless basis under these circumstances, a holder would pay the warrant exercise price by surrendering the warrants for that number
of shares of Class A common stock equal to the lesser of (A) the quotient obtained by dividing (x) the product of the number
of shares of Class A common stock underlying the warrants, multiplied by the excess of the “fair market value” of our
Class A common stock (defined below) over the exercise price of the warrants by (y) the fair market value and (B) 0.361 shares
of Class A common stock per whole warrant, and the number of shares of our Class A common stock received by a holder upon exercise
will be fewer than it would have been had such holder exercised the warrant for cash. The “fair market value” as used in this
paragraph shall mean the average last reported sale price of the Class A common stock for the ten trading days ending on the third
trading day prior to the date on which the notice of exercise is received by the warrant agent.
Second, if we call the public warrants for redemption
at a price of $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption, holders who wish to exercise
their warrants may do so on a cashless basis. In the event of an exercise on a cashless basis under those circumstances, a holder would
receive that number of shares determined by reference to an agreed table based on the redemption date and the “fair market value”
of Class A common stock. In either case, this will have the effect of reducing the potential “upside” of the holder’s
investment in our company because the warrant holder will hold a smaller number of shares of our Class A common stock upon a cashless
exercise of the warrants they hold.
Unlike many other similarly structured blank
check companies, our initial stockholders will receive additional shares of Class A common stock if we issue shares to consummate
an initial business combination.
The founder shares will automatically convert into
Class A common stock at the time of our initial business combination, or earlier at the option of the holders, on a one-for-one basis,
subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities convertible into
or exercisable or exchangeable for Class A common stock, are issued or deemed issued in excess of the amounts offered in the initial
public offering and related to the closing of the initial business combination, the ratio at which founder shares shall convert into Class A
common stock will be adjusted so that the number of Class A common stock issuable upon conversion of all founder shares will equal,
in the aggregate, on an as-converted basis, 20% of the sum of (i) the total number of all outstanding shares of common stock
upon completion of the initial public offering, plus (ii) all shares of Class A common stock and equity-linked securities
issued, or deemed issued in connection with the initial business combination (excluding any shares or equity-linked securities issued,
or to be issued, to any seller in the business combination, and any private placement-equivalent warrants 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.
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 50% 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 Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants 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 defective provision,
but requires the approval by the holders of at least 50% of the then outstanding public warrants to make any change that adversely affects
the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse
to a holder if holders of at least 50% 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 50% 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 Class A common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior
to their exercise at a time that is disadvantageous to you, thereby making your 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 last reported
sales price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like and certain issuances of Class A common stock and equity-linked securities) for any 20 trading
days within a 30 trading-day period ending on the third trading 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 exercise our redemption right
even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption
of the outstanding warrants could force you (i) to exercise your warrants and pay the exercise price therefor at a time when it may
be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish
to hold your 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 your warrants.
In addition, we have the ability to redeem the
outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant upon
a minimum of 30 days’ prior written notice of redemption provided that the closing price of our Class A
common stock equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise
price of a warrant) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice
of such redemption and provided that certain other conditions are met, including that holders will only be able to exercise
their warrants prior to redemption for a number of shares of Class A common stock determined based on the redemption date and the
fair market value of shares of our Class A common stock. The value received upon exercise of the warrants (1) may be less than
the value the holders would have received if they had exercised their warrants at a later time where the underlying share price is higher
and (2) may not compensate the holders for the value of the warrants, including because the number of shares received is capped at
0.361 shares of Class A common stock per whole warrant (subject to adjustment) irrespective of the remaining life of the warrants.
None of the private placement warrants will be
redeemable by us, subject to certain limited exceptions, so long as they are held by our sponsor or its permitted transferees.
Because each unit contains one-fourth of
one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than units of other blank check companies.
Each unit contains one-fourth of one redeemable
warrant. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you
purchase at least four units, you will not be able to receive or trade a whole warrant. This is different from other offerings similar
to ours whose units include one share of common stock and one warrant to purchase one whole share. We have established the components
of the units in this way in order to reduce the dilutive effect of the warrants upon completion of an initial business combination since
the warrants will be exercisable in the aggregate for one-fourth of the number of shares compared to units that each contain a whole
warrant to purchase one share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless, this
unit structure may cause our units to be worth less than if they included a warrant to purchase one whole share.
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 Class A 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 the ability of the board of directors to designate the terms of and issue new series of preferred stock, and the fact
that prior to the completion of our initial business combination, only holders of shares of our Class B common stock will vote for
the election of directors, 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 other similar 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, which may have the effect of discouraging lawsuits against our directors, officers, other
employees or stockholders.
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 other similar 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, (C) for which the Court of Chancery does not have subject matter
jurisdiction, or (D) any action created by the Exchange Act or any other claim for which the federal courts have exclusive 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 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 discourage lawsuits with respect to such claims, although our stockholders will not
be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. 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.
General Risk Factors
Past performance by our management team,
directors, advisors and their respective affiliates may not be indicative of future performance of an investment in the company or in
the future performance of any business we may acquire.
Information regarding
performance by, or businesses associated with, our management team, directors, advisors and their respective affiliates is presented for
informational purposes only. Past performance by our management team, directors, advisors and such affiliates is not a guarantee (i) either
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 performance of our management team, directors and advisors
or that of their respective affiliates as indicative of the future performance of an investment in the company or the returns the company
will, or is likely to, generate going forward. Our management team, directors and advisors and their respective affiliates have had limited
past experience with blank check and special purpose acquisition companies.
We are an early stage 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 an early stage
company with no operating results, and we will not commence operations until the completion of our initial business combination, at the
earliest. 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 may be unable to complete our initial business combination.
If we fail to complete our initial business combination, we will never generate any operating revenues.
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 complete 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 are 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 complete our initial business combination and results
of operations.
We are an emerging growth company and
a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements
available to emerging growth companies or 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 Securities Act, 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 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 aggregate
worldwide market value of our Class A common stock held by non-affiliates equals or 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 Item 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 prior June 30th, or (2) our annual revenues equal
or exceed $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates equals
or 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 and other disclosures with other public companies difficult or impossible.
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 business
and lead to financial loss.