References
in this report to “we,” “us” or the “Company” refer to InterPrivate III Financial Partners Inc. References
to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor”
refer to InterPrivate Acquisition Management III, LLC, a Delaware limited liability company. References to our “initial stockholders”
refer to the Sponsor and certain individuals that own shares of Class B common stock.
ITEM 1. BUSINESS.
Introduction
We are a Delaware blank check
company incorporated on September 10, 2020 formed for the purpose of entering into a merger, capital stock exchange, asset acquisition,
stock purchase, recapitalization, reorganization or other similar business combination with one or more target businesses.
On March 9, 2021, we consummated
our initial public offering (“IPO” or “Public Offering”) of 25,875,000 units (the “Units”) which includes
the full exercise by the underwriters of their over-allotment option in the amount of 3,375,000 Units. Each Unit consists of one share
of Class A common stock of the Company, par value $0.0001 per share (“Class A common stock”), and one-fifth of one redeemable
warrant of the Company (“Warrant”), with each whole Warrant entitling the holder thereof to purchase one share of Class A
common stock for $11.50 per share, subject to adjustment. The Units were sold at a price of $10.00 per Unit, generating gross proceeds
to the Company of $258,750,000.
On January 13, 2021, pursuant
to an agreement by and between the Company and InterPrivate Acquisition Management III, LLC (the “Sponsor”), our Sponsor purchased
5,750,000 shares of Class B common stock (the “founder shares”) for $25,000. Prior thereto, the company had no assets, tangible
or intangible. The number of founder shares outstanding was determined based on the expectation that the founder shares would represent
20% of the outstanding shares after the IPO. On March 4, 2021, the Company effected a 1.125 for 1 stock split of its Class B common stock
resulting in an aggregate of 6,468,750 founder shares issued and outstanding.
Simultaneously with the closing
of the IPO, pursuant to private placement units purchase agreements, the Company completed the private sale of an aggregate of 692,500
private placement units to the Sponsor and EarlyBirdCapital, Inc. (“EarlyBirdCapital”) at a purchase price of $10.00 per private
placement unit, generating gross proceeds to the Company of $6,925,000. The private placement units are identical to the Units sold in
the IPO, except that the private placement warrants underlying the private placement units (the “private placement warrants”)
will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited
exceptions. Additionally, the private placement warrants will be exercisable on a cashless basis and will be non-redeemable so long as
they are held by the initial purchasers or their permitted transferees. If the private placement warrants are held by someone other than
the initial purchasers or their permitted transferees, the private placement warrants will be redeemable by the Company and exercisable
by such holders on the same basis as the warrants underlying the Units sold in the IPO. The private placement was made pursuant to the
exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
A total of $258,750,000,
comprised of $251,825,000 of the proceeds from the IPO (which amount included $9,056,250 of the underwriters’ deferred discount)
and $6,925,000 of the proceeds of sales of the private placement units, was placed in a U.S.-based trust account at J.P. Morgan Chase
Bank, N.A. (the “Trust Account”) maintained by Continental Stock Transfer & Trust Company, acting as trustee. Except with
respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, the funds held
in the Trust Account will not be released from the Trust Account until the earliest of (i) the completion of the Company’s initial
business combination, (ii) the redemption of any Class A common stock included in the Units sold in the IPO (“public shares”)
properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation
to modify the substance or timing of the Company’s obligation to allow redemption in connection with its initial business combination
or to redeem 100% of the public shares if the Company does not complete its initial business combination by March 9, 2023 or with respect
to any other material provisions relating to stockholders’ rights or pre-initial business combination activity and (iii) the redemption
of the public shares if the Company is unable to complete an initial business combination by March 9, 2023, subject to applicable law.
After the payment of underwriting
discounts and commissions (excluding the deferred portion of $9,056,250 in underwriting discounts and commissions, which amount would
have been payable upon consummation of our initial business combination if consummated) and approximately $612,651 in expenses relating
to the Public Offering, $1,673,850 of the net proceeds of the Public Offering and private placement was not deposited into the Trust Account
and was retained by us for working capital purposes. The net proceeds deposited into the Trust Account remain on deposit in the Trust
Account earning interest. As of December 31, 2022 there was $29,705,790 in investments and cash held in the Trust Account and $7,592,144
of cash held outside the Trust Account available for working capital purposes. As of December 31, 2022, none of the funds had been withdrawn
from the Trust Account to fund the Company’s working capital expenses.
On August 18, 2021, we entered
into an agreement and plan of merger with our direct and wholly-owned subsidiaries, InterPrivate III Merger Sub Inc. (“Merger Sub”)
and InterPrivate III Merger Sub II LLC (“Merger Sub II”), and Aspiration Partners Inc., Inc. (“Aspiration”), relating
to a proposed business combination transaction between the Company and Aspiration, which agreement was subsequently amended and restated
first on December 15, 2021, then again on July 21, 2022, and further amended on December 29, 2022 (as amended, the “Merger Agreement”).
Pursuant to the Merger Agreement, Merger Sub will merge with and into Aspiration with Aspiration surviving such merger as a wholly owned
subsidiary of InterPrivate III (the “First Merger”) and, immediately following the First Merger and as part of the same overall
transaction as the First Merger, the surviving corporation will merge with and into Merger Sub II with Merger Sub II surviving such merger
(the “Second Merger”). The transactions contemplated by the Merger Agreement are referred to as the “Business Combination,”
and in connection with the consummation of the Business Combination, the Company will be renamed “Aspiration, Inc.” and is
referred to herein as “New Aspiration” as of the time following such change of name. The Business Combination has been approved
by the boards of directors or managing member, as applicable, of each of the Company, Merger Sub, Merger Sub II and Aspiration.
The Merger Agreement contains
customary representations, warranties and covenants by the parties thereto and the closing is subject to certain conditions as further
described in the Merger Agreement.
For additional information
regarding Aspiration, the Merger Agreement and the Business Combination, see the Current Reports on Form 8-K filed by the Company on August
19, 2021, December 16, 2021, July 22, 2022 and December 30, 2022 and the section entitled “Management’s Discussion and Analysis
of Financial Condition and Results Of Operations” of this Annual Report on Form 10-K.
Other than as specifically
discussed, this report does not assume the closing of the Business Combination.
On December 21, 2022, the
Company held a special meeting of stockholders (the “Special Meeting”). At the Special Meeting, the Company’s stockholders
approved an amendment to the Company’s Amended and Restated Certificate of Incorporation (the “Charter Amendment”) to
extend the date by which the Company must complete a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization
or similar business combination involving the Company and one or more businesses (a “business combination”) from March 9,
2023 (the “Original Outside Date”) to April 9, 2023 (the “Extended Date”), and to allow the Company to elect to
further extend in one-month increments up to two additional times, or a total of up to three months after March 9, 2023, until June 9,
2023 (the “Additional Extended Date”). In connection with the Special Meeting, stockholders holding an aggregate of 23,873,324
shares of the Company’s Class A common stock exercised their right to redeem their shares for approximately $10.10 per share of
the funds held in the Company’s trust account, leaving approximately $20.6 million in cash in the trust account after satisfaction
of such redemptions.
The Company will contribute funds from its working
capital account, or if such working capital account is depleted, then the Sponsor has agreed to lend to the Company an amount per month
of the extension of the date by which the Company must consummate a business combination (the “Extension”), determined by
multiplying $0.06 by the number of public shares outstanding following the redemptions of public shares effected in connection with the
Special Meeting, up to a maximum of $210,000 per month and $630,000 in the aggregate if all three extensions are implemented, which the
Company shall deposit into the Trust Account. Additionally, on March 4, 2023, in advance of the 24-month anniversary of its IPO, the Company
deposited the remaining amount of funds in its Trust Account into a variable interest bearing account currently expected to yield approximately
3.0% per annum.
Our Sponsor is controlled
by affiliates of Ahmed Fattouh, our Chairman and Chief Executive Officer, and InterPrivate, a private investment firm founded by Mr. Fattouh
that invests primarily in partnership with family offices and independent private equity and venture capital sponsors who have accumulated
substantial industry expertise and decades of experience from leading private equity firms. We believe the expertise and experience of
our management team in structuring complex transactions and accessing capital for growth for companies, combined with our unique access
to InterPrivate’s extensive network of relationships, will make us a partner of choice for potential business combination targets.
We intend to focus our efforts on evaluating business combination targets by leveraging InterPrivate’s network of independent sponsors,
family offices, venture capital firms, and private equity firms.
We believe our relationship
with InterPrivate will enable us to access a differentiated pipeline of business combination targets for us to evaluate. Specifically,
we will seek to leverage the following relationships within InterPrivate’s network for our sourcing efforts:
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Family Offices and Ultra High Net Worth Investors. InterPrivate maintains strong relationships with family offices and ultra high net worth investors with substantial direct private holdings and large investment mandates. InterPrivate frequently invites select family offices and ultra high net worth investors to review its potential investment opportunities on a joint basis, which has enabled InterPrivate to identify overlapping investment preferences with such family offices and investors and has led to co-investment opportunities in private transactions. In addition, some of these family offices are investors in fund vehicles that are managed by affiliates of InterPrivate Capital, and family offices have also invested in the sponsor entity of SPACs sponsored such affiliates of InterPrivate Capital. InterPrivate believes its network brings significant opportunity for a potential pipeline of referrals of privately owned businesses that are not well covered by the traditional investment banking community and may be considering strategic alternatives. |
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Independent Sponsors. Over the past three to five years, the private equity industry has experienced a significant evolution involving the emergence of a group of over 1,000 independent sponsors who have left some of the most prominent firms to pursue transactions outside of a committed fund construct. InterPrivate has established a network comprised of these veteran dealmakers, who bring decades of sector specific expertise, relationships and execution skills, and present investment opportunities to InterPrivate. |
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InterPrivate’s Network of Executives. Over the years, InterPrivate’s principals have collaborated with and backed a number of successful executives. These industry veterans will provide us with deep domain expertise and extensive relationship networks from which we intend to source and evaluate targets and develop post-acquisition operating strategies. |
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Private Equity Sponsors. In addition to management’s own experience and that of its network of independent sponsors, our team has strong relationships with a large number of traditional private equity firms as a result of our historical management of private equity fund of funds vehicles, as well as funds in which our family office clients had invested. We believe these relationships will be significant as we evaluate private equity owned companies seeking exits as potential business combination targets. |
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Venture
Capital & Growth Capital Firms. Certain members of our team have substantial relationships with venture capital and
growth capital firms, whose portfolio companies include high growth technology companies that may represent potential business
combination targets. In addition, a large and growing portion of the independent sponsor community are focused on pre-IPO growth
investments, which could be suitable targets. |
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InterPrivate Advisory Committee. InterPrivate’s advisory committee includes veteran private equity professionals and industry executives who will provide us with deep domain expertise and extensive relationship networks from which we intend to source and evaluate targets and develop post-acquisition operating strategies. |
We believe that the combination
of independent sponsors, family offices, private equity and venture capital firms will provide us with substantial and differentiated
access to potential business combination targets. We currently intend to concentrate our efforts in identifying businesses in the financial
services industry with a particular focus on tech-enabled companies where our expertise, experience, network and access to public markets
will allow us to identify differentiated merger opportunities. We believe that our management team, board of directors and network of
advisors can affect the outcome and accelerate growth and value creation. The financial services industry is a large (more than 12% of
the US economy), diverse and fragmented market sector that requires deep industry specialization and is currently undergoing a technology-driven
secular dislocation. We estimate that there are between 80 to 100 private tech-enabled financial services companies valued at more than
$1 billion that may seek access to the public markets. It is our expectation that the leading tech-enabled financial services companies
we are seeking to partner with will be able to effectively challenge large long-established financial services companies. In order to
achieve this goal, tech-enabled financial services companies will need to access competitively priced equity capital that is not readily
available to them from traditional sources. Venture capital is too expensive and often insufficient to fuel rapid growth. Traditional
public offerings markets are challenged without a trusted public market investor to validate valuation and simplify an often-complex investment
thesis. We believe we have a purpose-built team to shepherd these growing companies in the next step of their development.
We plan to seek opportunities
in the following financial services sub-sectors: (i) Asset & Wealth Management; (ii) Banking (traditional banking services,
core banking infrastructure and platforms, BAAS, IAAS & SAAS); (iii) Non-Bank Lending (Commercial, Consumer, Mortgage, Auto-Finance,
etc.); (iv) Payments; (v) Insurance (Personal and Commercial Lines); and (vi) Other (Data & Analytics, RegTech,
Risk Management, etc.). We are not, however, required to complete our initial business combination in the financial services sector and,
as a result, we may pursue a business combination outside of that industry. Other factors may include focusing on target companies with
an enterprise value of $1 billion or more, although we will not necessarily be limited to pursuing transactions with companies of this
size.
If we elect to pursue an
investment outside of the financial services industry, our management’s expertise related to that industry may not be directly applicable
to its evaluation or operation, and the information contained in this Annual Report regarding that industry might not be relevant to an
understanding of the business that we elect to acquire.
Business Strategy
We will seek to capitalize
on the extensive networks and significant financial services, financial technology, transaction, investment and operating experience of
Ahmed Fattouh, our Chairman and Chief Executive Officer, Sunil Kappagoda, our Vice Chairman, and our board of directors to source, evaluate
and acquire a financial technology business, although we may pursue a business combination outside that industry.
We have identified the following
criteria that we intend to use in evaluating business transaction opportunities. We expect that no individual criterion will entirely
determine a decision to pursue a particular opportunity. Further, any particular business transaction opportunity which we ultimately
determine to pursue may not meet one or more of these criteria:
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Top-flight, complete management team. We will seek to acquire a business that has a strong, experienced management team. We will focus on management teams with a proven track record of success leading high growth companies to sustained profitability and creating value for their stockholders. |
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Participation in large attractive markets with secular tailwinds capable of supporting multiple successful competitors under a variety of macroeconomic environments. We plan to avoid winner-take-all market segments. We will seek to acquire a business in a market segment that has historically been able to support multiple, sizable competitors and is expected to enjoy segment-wide tailwinds that will support excess profitability and growth. While we expect the business we acquire to outperform relative to its competitors, we have a strong preference for businesses facing conducive micro and macro market environments. |
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Strategic and structural advantages relative to traditional market participants. We seek to acquire a business that has created a competitive advantage, relative to its competitors, by utilizing technology to re-engineer its workflow, reduce expenses, enhance its flexibility, accelerate innovation and improve its product offering and client service. Such companies are generally better able to endure economic downturns, industry consolidation, changing business preferences and other factors that may negatively impact their customers and competitors. |
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High growth, recurring revenue with easily understood drivers of organic growth. We will seek a business that is able to grow rapidly without sacrificing profitability. We will seek a company that can employ technology to operate at a lower cost while providing a higher quality product. |
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Profitability or a clear path to profitability with durable, simple unit economics, strong margins and good public market comparables. We will seek to acquire a business with proven, simple unit economics that are supported by industry experience and that is capable of generating stable, predictable revenue. If the business we acquire is not profitable the only barrier to profitability will be top line revenue growth that we are confident of achieving. |
These criteria and guidelines
are not intended to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to
the extent relevant, on these general guidelines as well as other considerations, factors, and criteria that our team may deem relevant.
In the event that we decide to enter into our initial business combination with a target business that does not meet the above criteria
and guidelines, we will disclose that the target business does not meet the above criteria in our stockholder communications related to
our initial business combination, which, as discussed in our prospectus, would be in the form of tender offer documents or proxy solicitation
materials that we would file with the SEC.
Competitive Strengths
We believe the reputation
and experience of our management team and our ability to leverage InterPrivate’s sourcing, valuation, diligence and execution capabilities
will provide us with a significant pipeline of opportunities from which to evaluate and select a business that will benefit from our expertise.
Our competitive strengths include the following:
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Proprietary Sourcing Channels and Deep Industry Relationships. We believe our management team’s and board’s financial services network in addition to InterPrivate’s network of relationships with independent sponsors, family offices, CEOs, founders, family-owned businesses, private equity and venture capital firms will provide us with a differentiated pipeline of acquisition opportunities that would be difficult for other participants in the market to replicate. |
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Strong Financial Services and Technology Expertise. We believe that our management and board possess a rare combination of financial services industry and technology expertise of operating and investing in tech-enabled financial services companies stretching into the 1990’s and the first wave of internet companies. This expertise and experience extend across investment stages and industry sub-sectors, having led companies from seed investment to IPO and post-IPO. We believe this extensive experience building financial services companies will make InterPrivate the preferred partner for growing companies in the industry. InterPrivate’s involvement can have a catalytic effect on a company’s strategy and partnership building efforts. |
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Transaction and Execution Experience. Our team has decades of experience in financial services, private equity investing and in sourcing and executing complex M&A transactions with private and public companies. Our team has a long professional relationship working with one another to develop creative solutions for complex M&A situations. Importantly the team has extensive experience shepherding targets through the SPAC/de-SPAC process. |
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Access to Our Capabilities Post-Initial Business Combination. We believe that potential sellers will be interested in a relationship with InterPrivate and look favorably upon our involvement in a transaction, including as a significant investor after an initial business combination. Potential sellers may also seek to engage with us to focus on value creation and to potentially facilitate access to capital markets for further growth and provide advice on and assist in execution of: (i) corporate strategy; (ii) acquisitions (such as roll-up strategies); and (iii) strategic alliances. |
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Alternative Path to Becoming Public. We believe our structure will make us an attractive business combination partner to prospective target businesses that desire to become publicly listed companies. A merger with us will offer a target business an alternative process to a public listing rather than the traditional initial public offering process. We believe that target businesses may favor this alternative, which we believe is less expensive, while offering greater certainty of execution than the traditional initial public offering. Furthermore, once a proposed business combination is approved by our stockholders and the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public, we believe the target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company. A public company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented management. With public company corporate governance standards, a target business may become attractive to public investors. |
Management Team
Our management team is an
accomplished group of executives and investment professionals with extensive and diverse track records of operating and investing in successful
companies. We believe our management team brings a compelling set of capabilities that, through their backgrounds and experience, will
acquire and enhance value in high-quality target companies. We believe high-quality target companies will significantly benefit from both
our management team’s breadth of knowledge and their expertise in operating and growing successful businesses at various stages
of maturity.
Mr. Fattouh, our Chairman
and Chief Executive Officer, has over 25 years of experience in private equity investing and sourcing and executing complex mergers
and acquisitions transactions. Mr. Fattouh is the founder of InterPrivate LLC, an investment firm founded in 2017 that pursues private
investment opportunities in partnership with leading family offices and private equity firms. Mr. Fattouh’s blank check company
experience includes serving as Chairman and Chief Executive Officer of InterPrivate Acquisition Corp., which closed a business combination
with Aeva Inc. in March 2021, senior advisor to Tuscan Holdings Corp., which closed a business combination with Microvast Inc. in July
2021, and Chairman and Chief Executive Officer of InterPrivate II Acquisition Corp., which closed a business combination with Getaround
Inc. in December 2022. Mr. Fattouh is a former member of the private equity group at Investcorp International and of the mergers and acquisitions
department of Morgan Stanley & Co. in New York. He has participated in notable transactions involving private and public
industry leaders including RJR Nabisco, Mobil Corporation, Ampolex, IBM, Elf Atochem, Tivoli Systems, Eagle Industries, Amerace, Washington
Energy, Puget Power, Synergy Gas, KKR, Saks Fifth Avenue, Werner Ladder, Falcon Building Products, LVMH Moet Hennessy Louis Vuitton, Bliss,
Eastern Software, Sumo Logic, and Fidelity National Information Systems.
Mr. Kappagoda, our Vice Chairman,
has over 30 years of banking, financial services and fintech experience. Mr. Kappagoda’s blank check company experience includes
serving as an advisor to InterPrivate Acquisition Corp., and he has also served as an advisor to other InterPrivate-affiliated investment
vehicles. Mr. Kappagoda currently serves as Chairman of F1 Payments and InterPayments, an InterPrivate portfolio company, where he has
worked closely with Mr. Fattouh. Mr. Kappagoda is also a Director at Linkly (a merger of PCEftpos, EFT Solutions and Premier Technologies),
an Advisor to Envestnet and an LP / Advisor at NYCA Partners. His recent fintech experience also includes being an advisor / board member
at 11 fintech companies, including Billtrust (NYSE: BTRS), Ondot Systems (acquired by Fiserv), and Earthport (acquired by Visa), amongst
others. Mr. Kappagoda’s previous experience includes serving as President of Asia-Pacific at Verifone Systems where he led a 14-country
business that spanned China, India, Japan, Korea, South-East Asia, Australia and New Zealand, and Senior Partner and Managing Director
at The Boston Consulting Group where he focused exclusively on Banks and Financial Institutions.
Mr. Fattouh and InterPrivate
founded InterPrivate Acquisition Corp. (“IPV I”), a blank check company formed for substantially similar purposes as our company.
IPV I completed its initial public offering in February 2020, in which it sold 21,000,000 units at $10.00 per unit, with each unit comprised
of one share of common stock and one-half of one redeemable warrant to purchase one share of common stock, generating gross proceeds of
$210,000,000. In November 2020, IPV I announced its proposed business combination with Aeva Inc. (“Aeva”), a provider of comprehensive
perception solutions for automated driving applications, for aggregate consideration of approximately $1.8 billion. Aeva is a perception
solutions company providing 4D LiDAR on a chip. The IPV I team assisted in raising a total of $320 million in PIPE capital for Aeva in
connection with the business combination. IPV I’s business combination transaction with Aeva closed in March 2021.
Additionally, InterPrivate
Capital LLC (“InterPrivate Capital”), an affiliate of our Sponsor, served as an advisor to Tuscan Holdings Corp. (“Tuscan
I”) (Nasdaq: THCB) in connection with Tuscan I’s business combination transaction with electric vehicle battery maker Microvast
Inc. (“Microvast”), which closed in July 2021. Microvast is a leader in next-generation battery technologies for commercial
and specialty use electric vehicles. InterPrivate also participated in arranging a bridge and PIPE financing as part of the transaction.
In addition, members of our
team have collaborated with co-sponsors, board members and operating partners from top-tier firms, including a former chairman of Blackstone
Canada, a former CEO of Nielsen BuzzMetrics, a former CEO of Lucent Technologies, a former CFO of Barracuda Networks, as well as former
partners from the Carlyle Group, Warburg Pincus, Norwest, Kleiner Perkins, Midlothian Capital Partners, Boston Consulting Group, Goldman
Sachs, Fiduciary Network, and Pine Brook.
Together, we believe our
management team possesses exceptional expertise that will enhance our ability to identify and execute our initial business combination
and enhance our ability to execute upon various value creation initiatives after successful completion of our initial business combination.
The past performance of our
management team or their respective affiliates, including InterPrivate, is not a guarantee either (i) of success with respect to
any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business
combination. An investment in us is not an investment in any of the companies affiliated with members of our management team. You should
not rely on the historical record of our management team’s or their respective affiliates’ performance as indicative of our
future performance. For more information on the experience and background of our management team, see Item 10. “Directors, Executive
Officers and Corporate Governance.”
Our Advisors
Jack Klinck serves as a Senior
Advisor. Mr. Klinck is an active angel and seed stage investor in fintech firms. He is also Managing Partner at Hyperplane Venture Capital,
a firm focused on emerging B2B technologies such as machine learning, blockchain and IOT. From 2015 to 2016, Mr. Klinck served as CEO
of Ouisa/ShareNett, a marketplace for family offices to share investment ideas and co-invest in private companies. From 2006 to 2015,
he was Executive Vice President and Head of Global Strategy and New Ventures at State Street Corporation, where he served on that firm’s
management committee and founded two business lines: Alternative Investment Solutions and Global Exchange. Before joining State Street,
Mr. Klinck was Vice Chairman and President of the Investment Manager Solutions Group at Mellon Financial Corporation and served as CEO
of Mellon Europe based in London. Before joining Mellon in 1997, he held various management positions at American Express. Mr. Klinck
serves as President of the Spirit of Adventure Council – Boy Scouts of America and Overseer of the Boston Symphony Orchestra. He
holds a B.A. from Middlebury College and an M.B.A from the Fuqua School of Business at Duke University.
Alexey Sokolin serves as
an Executive Advisor. Mr. Sokolin is a futurist and entrepreneur focused on the next generation of financial services. He is the Global
Fintech Co-Head and CMO at ConsenSys, a blockchain software company building the infrastructure, applications, and practices that enable
a decentralized world. He focuses on strategy, go-to-market, and product development across decentralized finance, tokenized digital assets,
and enterprise blockchain solutions in financial services. Previously, Mr. Sokolin was the Global Director of Fintech Strategy at Autonomous
Research, an equity research firm serving institutional investors (acquired by AllianceBernstein), where he covered artificial intelligence,
blockchain, neobanks, digital lenders, roboadvisors, paytech, and mixed reality. Before Autonomous, Mr. Sokolin was COO at AdvisorEngine,
a digital wealth management technology platform (acquired by Franklin Templeton), and CEO of NestEgg Wealth, a roboadvisor that partnered
with financial advisors (acquired by AdvisorEngine). Prior to NestEgg, Mr. Sokolin held roles in investment management and banking at
Barclays, Lehman Brothers, and Deutsche Bank. He earned a JD/MBA from Columbia University and a B.A. in Economics and Law from Amherst
College.
Notwithstanding the foregoing,
past performance of our management team and members of our advisory committee is not a guarantee either (i) of success with respect
to any business combination we may consummate or (ii) that we will be able to identify a suitable candidate for our initial business
combination. You should not rely on the historical performance record of our management team or advisors as indicative of our future performance.
Additionally, in the course of their respective careers, members of our management team have been involved in businesses and deals that
were unsuccessful.
Initial Business Combination
In accordance with the NYSE
American listing rules, our initial business combination must occur with one or more target businesses that together have an aggregate
fair market value of at least 80% of the assets held in the Trust Account (excluding the taxes payable on the interest earned on the Trust
Account) at the time of signing the agreement to enter into the initial business combination. We refer to this as the 80% of net assets
test. 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 will have discretion to select the standards employed.
In addition, the application of the standards generally involves a substantial degree of judgement. Accordingly, investors will be 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 the target business or businesses, we will obtain an opinion from an independent investment
banking firm that is a member of the Financial Industry Regulatory Authority (“FINRA”) or an independent valuation or appraisal
firm with respect to satisfaction of such criteria. If our board of directors is not able to independently determine the fair market value
of the target business or businesses, or if we are considering an initial business combination with an affiliated entity, we will obtain
an opinion with respect to the satisfaction of such criteria from an independent investment bank or an independent valuation or accounting
firm. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business combination.
We anticipate structuring
our initial business combination so that the post-transaction company in which our public stockholders own shares will own or acquire
100% of the equity interests or assets of the target business or businesses. We may, however, structure our initial business combination
such that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business, in order to
meet certain objectives of the prior owners of the target business, 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 of 1940, as amended, or the Investment Company Act. Even if the post-transaction
company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively
own a minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the business combination
transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the
outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result
of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own
less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests
or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses
that is owned or acquired is what will be valued for purposes of the 80% of net assets test. If the business combination involves more
than one target business, the 80% of net assets test will be based on the aggregate value of all of the target businesses and we will
treat the target businesses together as the initial business combination.
Other Considerations
We are not prohibited from
pursuing an initial business combination with a business that is affiliated with our Sponsor, officers or directors, or completing the
business combination through a joint venture or other form of shared ownership with our Sponsor, officers or directors. In the event we
seek to complete an initial business combination with a business that is affiliated with our Sponsor, officers or directors, we, or a
committee of independent directors, would obtain an opinion from an independent investment banking firm which is a member of FINRA, or
another independent entity that commonly renders valuation opinions, stating that the consideration to be paid by us in such an initial
business combination is fair to our company from a financial point of view.
Each of our directors and
officers, directly or indirectly, own founder shares and/or private placement units 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, such officers and directors may have a conflict of interest with respect to evaluating a particular business combination if the
retention or resignation of any such officers and directors was included by a target business as a condition to any agreement with respect
to our initial business combination.
Each of our officers and
directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations to another entity pursuant
to which such officer or director is or will be required to present a business combination opportunity to such entity. Accordingly, if
any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity to which he or she
has then current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual obligations to present
such business combination opportunity to such other entity. Our amended and restated certificate of incorporation provides that we renounce
our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person
solely in his or her capacity as a director or officer of the 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. We do not believe, however, that the fiduciary duties or contractual obligations
of our officers or directors will materially affect our ability to identify and pursue business combination opportunities or to complete
our initial business combination.
In addition, our Sponsor
and our officers and directors may sponsor or form other special purpose acquisition companies similar to ours or may pursue other business
or investment ventures during the period in which we are seeking an initial business combination. As a result, our Sponsor, officers and
directors could have conflicts of interest in determining whether to present business combination opportunities to us or to any other
special purpose acquisition company with which they may become involved. In particular, certain of our officers and directors are actively
engaged in InterPrivate IV InfraTech Partners Inc. (“IPV IV”) (Nasdaq: IPVI), a special purpose acquisition company that consummated
its initial public offering. IPV IV, like us, may pursue initial business combination targets in any business or industry and is expected
to have a similar window as us in which it may complete its initial business combination. Any such companies, businesses or investments,
including IPV IV, may present additional conflicts of interest in pursuing an initial business combination. Additionally, Ahmed Fattouh,
our Chairman and Chief Executive Officer, and Brandon Bentley, our General Counsel, are members of InterPrivate LLC, which is the managing
member of InterPrivate Capital LLC, which in turn is the sole managing member of our Sponsor. However, we do not believe that any such
potential conflicts would materially affect our ability to identify and pursue business combination opportunities or to complete our initial
business combination.
We have filed a Registration
Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). As a result, we are subject to the rules and regulations promulgated under the Exchange Act.
We have no current intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent
to the consummation of our initial business combination.
Financial Position
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.
Lack of Business Diversification
For an indefinite period
of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future performance
of a single business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or
several industries, it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in
a single line of business. By completing our initial business combination with only a single entity, our lack of diversification may:
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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. |
Limited Ability to Evaluate the Target’s
Management Team
Although we intend to closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future management
may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of
our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any
of the members of our management team will remain with the combined company will be made at the time of our initial business combination.
While it is possible that one or more of our directors will remain associated in some capacity with us following our initial business
combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial business combination.
Moreover, we cannot assure you that members of our management team will have significant experience or knowledge relating to the operations
of the particular target business.
We cannot assure you that
any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as to whether
any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following 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 subject to the provisions of our amended and restated certificate
of incorporation. 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 | |
WHETHER
STOCKHOLDER
APPROVAL IS
REQUIRED |
| Purchase of assets | |
No |
| Purchase of stock of target not involving a merger with the company | |
No |
| Merger of target into a subsidiary of the company | |
No |
| Merger of the company with a target | |
Yes |
Under the NYSE American’s
listing rules, stockholder approval would be required for our initial business combination if, for example:
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we issue shares of common stock that will be equal to or in excess of 20% of the number of our shares of common stock then outstanding (other than in a public offering); |
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any of our directors, officers or substantial security holders (as defined by the NYSE American rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of shares of common stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance in the case of any of our directors and officers or (b) 5% of the number of shares of common stock or 5% of the voting power outstanding before the issuance in the case of any substantial security holders; or |
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the issuance or potential issuance of common stock will result in our undergoing a change of control. |
Permitted Purchases of Our Securities
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to
the tender offer rules, our initial stockholders, directors, officers, advisors or their respective affiliates may purchase 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 respective
affiliates may purchase in such transactions, subject to compliance with applicable law and the NYSE American rules. However, they have
no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such
transactions. None of the funds in the Trust Account will be used to purchase shares or public warrants in such transactions. If they
engage in such transactions, they will be restricted from making 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.
In the event that our initial
stockholders, directors, officers, advisors or their respective affiliates purchase shares in privately negotiated transactions from public
stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their
prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject
to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange
Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers
will comply with such rules.
The purpose of any such purchases
of shares could be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining
stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires
us to have a minimum net worth or a certain amount of cash at the closing of our 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 Class A common stock or public 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 initial stockholders,
officers, directors and/or their respective affiliates anticipate that they may identify the stockholders with whom our initial stockholders,
officers, directors or their respective affiliates may pursue privately negotiated purchases by either the stockholders contacting us
directly or by our receipt of redemption requests submitted by stockholders (in the case of Class A common stock) following our mailing
of proxy materials in connection with our initial business combination. To the extent that our Sponsor, officers, directors, advisors
or their respective 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 but only if such shares
have not already been voted at the stockholder meeting related to our initial business combination. Our Sponsor, officers, directors,
advisors or any of their respective affiliates will select which stockholders to purchase shares from based on a negotiated price and
number of shares and any other factors that they may deem relevant, and will only purchase shares if such purchases comply with Regulation
M under the Exchange Act and the other federal securities laws. Our Sponsor, officers, directors and/or their respective affiliates will
be restricted from making purchases of shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
We expect any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchases
are subject to such reporting requirements.
Redemption Rights for Public Stockholders upon
Completion of Our Initial Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account calculated
as of two business days prior to the consummation of the initial business combination, including interest earned on the funds held in
the Trust Account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject
to the limitations and on the conditions described herein. Our initial stockholders, 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 public shares
they may hold in connection with the completion of our initial business combination.
Limitations on Redemptions
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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash
consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions. 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 in connection with such initial business combination, and all shares of Class A common
stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked
securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to
forward purchase agreements or backstop arrangements we may enter into following consummation of the Public Offering, in order to, among
other reasons, satisfy such net tangible assets or minimum cash requirements.
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination
either (i) in connection with a stockholder meeting called to approve the initial business combination or (ii) without a stockholder
vote by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed initial business combination
or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of
the transaction and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange
listing requirements. Asset acquisitions and stock purchases would not typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or seek to amend
our amended and restated certificate of incorporation would require stockholder approval. So long as we maintain a listing for our securities
on the NYSE American, we will be required to comply with the NYSE American’s stockholder approval rules.
The requirement that we provide
our public stockholders with the opportunity to redeem their public shares by one of the two methods listed above is contained in provisions
of our amended and restated certificate of incorporation and will apply whether or not we maintain our registration under the Exchange
Act or our listing on the NYSE American. Such provisions may be amended if approved by holders of 65% of our common stock entitled to
vote thereon.
If we provide our public
stockholders with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
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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. |
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 initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of
outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the
company entitled to vote at such meeting. Our initial stockholders will count towards this quorum and, pursuant to the letter agreement,
our Sponsor, officers and directors have agreed to vote any founder shares they hold and any public shares purchased after the Public
Offering (including in open market and privately-negotiated transactions) in favor of our initial business combination. For purposes of
seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our
initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder shares, the
private placement shares purchased by the Sponsor and the representative shares, we would not need any additional shares to be
voted in favor of an initial business combination in order to have our initial business combination approved (assuming all outstanding
shares are voted). 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 or whether they were a stockholder on the record date for the stockholder meeting
held to approve the proposed transaction.
If a stockholder vote is
not required and we do not decide to hold a stockholder vote for business or other reasons, we will:
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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. |
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 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. 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.
Upon the public announcement
of our initial business combination, if we elect to conduct redemptions pursuant to the tender offer rules, 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, in order
to comply with Rule 14e-5 under the Exchange Act.
We intend to require our
public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to
our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the
date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to
two business days prior to the date on which the vote on the proposal to approve the initial business combination is to be held. In addition,
if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public
shares to also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of
the beneficial owner of such shares is included. The 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 indicate whether we are requiring public stockholders
to satisfy such delivery requirements. We believe that this will allow our transfer agent to efficiently process any redemptions without
the need for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional
administrative cost. If the proposed initial business combination is not approved and we continue to search for a target company, we will
promptly return any certificates or shares delivered by public stockholders who elected to redeem their shares.
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. In addition, our proposed initial business combination may impose a minimum cash requirement for: (i) cash
consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions. 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 in connection with such initial business combination, and all shares of Class A common
stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity-linked
securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to
forward purchase agreements or backstop arrangements we may enter into following consummation of the Public Offering, in order to, among
other reasons, satisfy such net tangible assets or minimum cash requirements.
Limitation on Redemption Upon Completion of
Our Initial Business Combination If We Seek Stockholder Approval
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, without our prior
consent. 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 sold in the Public Offering could threaten to
exercise its redemption rights if such holder’s shares are not purchased by us, our Sponsor 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 sold in the Public Offering without our prior consent, we believe we will limit the ability of a small group of stockholders to
unreasonably attempt to block our ability to 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.
Delivering Stock Certificates in Connection
with the Exercise of Redemption Rights
As described above, we intend
to require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in
“street name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver
their shares to our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system,
prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date
may be up to two business days prior to the date on which the vote on the proposal to approve the initial business combination is to be
held. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking
redemption of its public shares to also submit a written request for redemption to our transfer agent two business days prior to the vote
in which the name of the beneficial owner of such shares is included. The 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 indicate whether we are requiring
public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have up to two business days prior
to the vote on the initial business combination if we distribute proxy materials, or from the time we send out our tender offer materials
until the close of the tender offer period, as applicable, to submit or tender its shares if it wishes to seek to exercise its redemption
rights. In the event that a stockholder fails to comply with these or any other procedures disclosed in the proxy or tender offer materials,
as applicable, its shares may not be redeemed. 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 process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent
will typically charge the broker submitting or tendering shares a fee of approximately $80.00 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 submit or 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.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials or tender offer documents, 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 initial
business combination is not completed, we may continue to try to complete an initial business combination with a different target until
the Extended Date or Additional Extended Date, as applicable.
Redemption of Public Shares and Liquidation
if No Initial Business Combination
After the Special Meeting,
our amended and restated certificate of incorporation provides that we have only until the Extended Date or Additional Extended Date,
as applicable, to complete our initial business combination. If we are unable to complete our initial business combination by the Extended
Date or Additional Extended Date, as applicable, we will: (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust
Account and not previously released to us to pay our taxes (less up to $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), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate and dissolve, 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 initial business combination by the Extended Date or Additional Extended Date, as applicable.
Our initial stockholders,
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 they hold if we fail to complete our initial business combination by the Extended
Date or Additional Extended Date, as applicable. However, if our initial stockholders or management team acquire public shares after the
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 by the Extended Date or Additional Extended Date, as applicable.
Our initial stockholders,
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 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 the Extended Date
or Additional Extended Date, as applicable, or with respect to any other material provisions relating to stockholders’ rights or
pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their public shares
upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust
Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes, divided
by the number of then outstanding public shares. However, we may not redeem our public shares in an amount that would cause our net tangible
assets to be less than $5,000,001. 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, we would not proceed with the amendment or the related redemption of our
public shares at such time.
We expect that all costs and
expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts 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 taxes, 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. As of December 31, 2022, we held approximately $7,592,144 of cash
outside the Trust Account available for working capital purposes.
If we were to expend all
of the net proceeds of the Public Offering and the sale of the private placement units, other than the proceeds deposited in the Trust
Account, and without taking into account interest, if any, earned on the Trust Account and any tax payments or expenses for the dissolution
of the trust, 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 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, 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 consider whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party
if management believes that such third party’s engagement would be in the best interests of the company under the circumstances.
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. The
underwriters of the Public Offering and our independent registered public accounting firm have not executed agreements with us waiving
such claims to the monies held in the Trust Account. In addition, there is no guarantee that such entities will agree to waive any claims
they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse
against the Trust Account for any reason. In order to protect the amounts held in the Trust Account, 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 other 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 public
share due to reductions in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims
by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether
or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of the 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 we 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 or directors will indemnify us for claims by third parties including, without limitation, claims
by vendors and prospective target businesses.
In the event that the proceeds
in the Trust Account are reduced below 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, in each case less taxes payable, and our Sponsor asserts that it is unable to satisfy its indemnification obligations
or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take
legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors
would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. 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 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 underwriters of the Public Offering against certain liabilities,
including liabilities under the Securities Act. We have access to up to approximately $750,000 from the proceeds of the Public Offering
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.
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 the Extended Date or Additional Extended Date, as applicable 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 initial business combination by the Extended Date or Additional Extended Date, as applicable, is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that
a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute
of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as
in the case of a liquidating distribution. If we are unable to complete our initial business combination by the Extended Date or Additional
Extended Date, as applicable, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously
released to us to pay our taxes (less up to $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) 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 the Extended Date or Additional Extended Date, as applicable, and, therefore,
we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of
distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such
date.
Because we will not be complying
with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for
our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However,
because we are a blank check company, rather than an operating company, and our operations 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. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors,
service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in the Trust Account. As a result of this obligation, the claims that could
be made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the Trust
Account is remote. Further, our Sponsor may be liable only to the extent necessary to ensure that the amounts in the Trust Account are
not reduced below (i) $10.00 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 taxes and will not be liable as to any claims under our indemnity of the underwriters of the 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, and 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 (i) in the event of the redemption of our public shares if we do not complete
our initial business combination by the Extended Date or Additional Extended Date, as applicable, (ii) in connection with a stockholder
vote to amend our amended and restated certificate of incorporation 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 the Extended Date or Additional Extended Date, as applicable or with respect to any other material provisions relating
to stockholders’ rights or pre-initial business combination activity or (iii) if they redeem their respective shares for cash
upon the completion of our initial business combination. Public stockholders who redeem their shares of our Class A common stock
in connection with a stockholder vote described in clause (ii) in the preceding sentence shall not be entitled to funds from the
Trust Account upon the subsequent completion of an initial business combination or liquidation if we have not completed an initial business
combination by the Extended Date or Additional Extended Date, as applicable, with respect to such shares of our Class A common stock
so redeemed. 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
business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the
Trust Account. Such stockholder must have also exercised its redemption rights 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 initial business combination, we may encounter competition from other entities having a business
objective similar to ours, including other special purpose acquisition companies, private equity groups and leveraged buyout funds, public
companies 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 us. 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.
Employees
We currently have three executive
officers: Ahmed Fattouh, Brandon Bentley and Minesh Patel. These individuals 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 they will devote in any time period will vary based on the stage of the business combination
process we are in. We do not intend to have any full time employees prior to the completion of our initial business combination.
Periodic Reporting and Financial Information
Our Units, Class A common
stock and warrants are registered under the Exchange Act and we 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 accounting firm.
We will provide stockholders
with audited financial statements of the prospective target business as part of the proxy solicitation materials or tender offer documents
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 target
businesses 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
time frame. 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 the requirements outlined above, 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 are 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 business 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 voluntarily 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 have no current intention of filing a Form 15 to suspend our reporting
or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any
golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less
active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the Public
Offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated
filer, which means the market value of our shares of Class A common stock that are 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.
ITEM 1A. RISK FACTORS.
An investment in our securities
involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained
in this Annual Report on Form 10-K and the prospectus associated with our Public Offering, before making a decision to invest in our securities.
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.
RISKS RELATING TO OUR SEARCH FOR, AND CONSUMMATION
OF OR INABILITY TO
CONSUMMATE, A BUSINESS COMBINATION
Our stockholders may not be afforded an opportunity
to vote on our proposed initial business combination, and even if we hold a vote, holders of our founder shares will participate in such
vote, 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 if the business combination would not require stockholder approval under applicable law or stock
exchange listing requirement. Except for as required by applicable law or stock exchange requirement, 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. Even if we seek stockholder approval, the holders
of our founder shares will participate in the vote on such approval. Accordingly, we may complete our initial business combination even
if a majority of our public stockholders do not approve of the business combination we complete.
If we seek stockholder approval of our initial
business combination, our initial stockholders and management team have agreed to vote in favor of such initial business combination,
regardless of how our public stockholders vote.
Our initial stockholders
own approximately 69.1% of our outstanding common stock immediately following the redemptions in connection with the Special Meeting.
Our initial stockholders and management team also may from time to time purchase Class A common stock prior to our initial business combination.
Our amended and restated certificate of incorporation provides that, if we seek stockholder approval of an initial business combination,
such initial business combination will be approved if we receive the affirmative vote of a majority of the shares voted at such meeting,
including the founder shares, the private placement shares purchased by the Sponsor and the representative shares. As a result, in addition
to our initial stockholders’ founder shares, the private placement shares purchased by the Sponsor and the representative shares,
we would not need any additional shares to be voted in favor of an initial business combination in order to have our initial business
combination approved (assuming all outstanding shares are voted).
Your only opportunity to affect the investment
decision regarding a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
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 a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to
vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity to affect the investment decision
regarding our initial 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.
Because a substantial number of our stockholders have already elected
to redeem their public shares, it may not be possible for us to complete a business combination.
In the event the aggregate
cash consideration we would be required to pay for all shares of common stock that are validly submitted for redemption would exceed the
aggregate amount of cash available to us or cause us to have net tangible assets below $5,000,001 immediately prior to or upon consummation
of an initial business combination, under our amended and restated certificate of incorporation, we will not complete the business combination
or redeem any shares, all shares of common stock submitted for redemption will be returned to the holders thereof, and we instead may
search for an alternate business combination. If we are not able to complete a business combination or another initial business combination
by the applicable extension date, the latest of which is June 9, 2023 (assuming our board of directors approves all three one-month extensions
allowed under our amended and restated certificate of incorporation), we will cease all operations except for the purpose of winding up,
redeeming the public shares and liquidating the trust account, in which case our warrants will expire worthless.
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 a business combination with a target.
We may seek to enter into a business combination
transaction agreement with a minimum cash requirement for (i) cash consideration to be paid to the target or its owners, (ii) cash for
working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions. 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 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. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets
to be less than $5,000,001 or make us unable to satisfy a minimum cash 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 a business combination transaction 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 is 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 provision of the Class B common stock results in
the issues of shares of Class A common stock on a greater than one-to-one basis upon conversion of the shares of Class B common stock
at the time of our initial 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 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 shares.
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 funds in the Trust Account until we liquidate the Trust Account. If
you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares 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 your exercise of redemption rights until we liquidate or you are able
to sell your shares in the open market.
Our search for a business combination, and
any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus
(COVID-19) outbreak and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus
was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including
the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public
Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared
a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020
the World Health Organization characterized the outbreak as a “pandemic”. The COVID-19 outbreak has and a significant outbreak
of other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets
worldwide, and the business of any potential target business with which we consummate a business combination could be materially and adversely
affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 continues to restrict
travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers
are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business
combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may
emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed
by COVID-19 or other matters of global concern continue for an extensive period of time, our ability to consummate a business combination,
or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
In addition, our ability to consummate a transaction
may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including as a
result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable to us
or at all.
As the number of special purpose acquisition
companies evaluating targets increases, attractive targets may become scarcer and there may be more competition for attractive targets.
This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate
an initial business combination.
In recent years, the number of special purpose
acquisition companies that have been formed has increased substantially. Many potential targets for special purpose acquisition companies
have already entered into an initial business combination, and there are still many special purpose acquisition companies seeking targets
for their initial business combination, as well as many such companies currently in registration. As a result, at times, fewer attractive
targets may be available, and it may require more time, more effort and more resources to identify a suitable target and to consummate
an initial business combination.
In addition, because there are more special purpose
acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets
with attractive fundamentals or business models may increase, which could cause targets companies to demand improved financial terms.
Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or
increases in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could
increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and
may result in our inability to consummate an initial business combination on terms favorable to our investors altogether.
We may not be able to complete our initial
business combination by the Extended Date or Additional Extended Date, as applicable, in which case we would cease all operations except
for the purpose of winding up and we would redeem our public shares and liquidate.
We may not be able to find a suitable target business
and complete our initial business combination by the Extended Date or Additional Extended Date, as applicable. Our ability to complete
our initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and
the other risks described herein.
For example, the outbreak of COVID-19 continues
to grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it
could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased
market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of COVID-19
may negatively impact businesses we may seek to acquire. If we have not completed our initial business combination within such time period,
we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes
(less up to $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), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders
and our board of directors, liquidate and dissolve, subject in each case, to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law.
If we seek stockholder approval of our initial
business combination, our initial stockholders, directors, executive officers, advisors and their respective affiliates may elect to purchase
shares or public warrants from public stockholders, which may influence a vote on a proposed 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 initial stockholders, directors, executive officers, advisors or their respective affiliates may purchase 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, although they are under no obligation to do so. There is no limit on the number of shares our initial stockholders, directors,
officers, advisors or their respective affiliates may purchase in such transactions, subject to compliance with applicable law and the
NYSE American rules. However, other than as expressly stated herein, they have no current commitments, plans or intentions to engage in
such transactions and have not formulated any terms or conditions for any such transactions. None of the funds in the Trust Account will
be used to purchase shares or public warrants in such transactions. Such purchases may include a contractual acknowledgment 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 initial stockholders, directors,
executive officers, advisors or their respective affiliates purchase shares in privately negotiated transactions from public stockholders
who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections
to redeem their shares. The purpose of any such purchases of shares could be to vote such shares in favor of the business combination
and thereby increase the likelihood of obtaining stockholder approval of the 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. We expect 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 proxy rules or tender
offer 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 proxy materials or tender offer documents, 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 submit public shares for redemption. For example, we intend to require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to, at the holder’s option, either deliver their stock certificates to our transfer agent, or to deliver their shares to our transfer
agent electronically prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy
materials, this date may be up to two business days prior to the date on which the vote on the proposal to approve the initial business
combination is to be held. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public
stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business
days prior to the vote in which the name of the beneficial owner of such shares is included.
In the event that a stockholder fails to comply
with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed.
You will not be entitled to protections normally
afforded to investors of many other blank check companies.
Since the net proceeds of the Public Offering
and the sale of the private placement units are intended to be used to complete an initial business combination with a target business
that has not been selected, we may be deemed to be a “blank check” company under the United States securities laws. However,
because we have net tangible assets in excess of $5,000,000 upon the completion of the Public Offering and the sale of the private placement
units 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 are immediately tradable and we will have a longer period of time
to complete our initial business combination than do companies subject to Rule 419. Moreover, if the Public Offering were subject to Rule
419, that rule 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% 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. And as a result, you will continue to hold that number of shares exceeding
15% and, in order to dispose of such shares, would be required to sell your shares in open market transactions, potentially at a loss.
Because of our 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
are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion of the funds
in the Trust Account that are available for distribution to public stockholders, 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, domestic and international, 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 or greater
technical, human and other resources to ours or more local industry knowledge than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially
acquire with the net proceeds of the Public Offering and the sale of the private placement units, 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, we are obligated to offer
holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction
with a stockholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our
initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business
combination. If we are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the Trust Account that are available for distribution to public stockholders, and our warrants will expire worthless.
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 in ways adverse to us and our management
team. Fewer insurance companies are offering quotes for directors and officers liability coverage, the premiums charged for such policies
have generally increased and the terms of such policies have generally become less favorable. These trends may 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 may 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.
If the amount of our working capital held outside
of the Trust Account is insufficient to allow us to operate until at least the Extended Date or Additional Extended Date, as applicable,
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 and to complete our initial business combination.
We believe that the funds available to us outside
of the Trust Account will be sufficient to allow us to operate until at least the Extended Date or Additional Extended Date, as applicable;
however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available
to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down
payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses
from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses)
with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into
a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently
required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching
for, or conduct due diligence with respect to, a target business.
In the event that our offering expenses exceed
our estimate, we may fund such excess with funds not to be held in the Trust Account. In such case, the amount of funds we intend to be
held outside the Trust Account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less
than our estimate, the amount of funds we intend to be held outside the Trust Account would increase by a corresponding amount. The amount
held in the Trust Account will not be impacted as a result of such increase or decrease. 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. Neither
our Sponsor, members of our management team nor any of their respective 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 $1,500,000 of such loans may be convertible into private placement-equivalent units of the
post-business combination entity at a price of $10.00 per unit at the option of the lender. Such units would be identical to the private
placement units. 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 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 an estimated $10.00 per public share, or possibly less, on our redemption of our public shares,
and our warrants will expire worthless.
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 public share.
Our placing of funds in the Trust Account may
not protect those funds from third party claims against us. Although we will seek to have all vendors, service providers (except for 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 consider whether competitive alternatives are reasonably available to us
and will only enter into an agreement with such third party if management believes that such third party’s engagement would be in
the best interests of the company under the circumstances. The underwriters of the Public Offering as well as our registered independent
public accounting firm have not executed 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 are unable to
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 10 years following redemption. Accordingly, the per-share redemption amount received by public stockholders could
be less than the $10.00 per public share initially held in the Trust Account, due to claims of such creditors. Pursuant to the letter
agreement filed as an exhibit to the Registration Statement on Form S-1, 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 other 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 public share due to reductions in the value
of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party or prospective target
business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable)
nor will it apply to any claims under our indemnity of the underwriters of the 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 we 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
or directors will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce the
indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution
to our public stockholders.
In the event that the proceeds in the Trust Account
are reduced below the lesser of (i) $10.00 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 public share due to reductions in the value of the trust assets,
in each case less taxes payable, 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 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.
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 the members of our board of directors may be viewed as having
breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of punitive
damages.
If, after we distribute the proceeds in the Trust
Account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either
a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover
some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty
to our creditors and/or having acted in bad faith, by paying public stockholders from the Trust Account prior to addressing the claims
of creditors, thereby exposing itself and us to claims of punitive damages.
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.
Our private placement warrants are accounted
for as liabilities and the changes in value of our private placement 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 statement regarding the accounting
and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting
and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC
Statement”). Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers
following a business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result
of the SEC Statement, we reevaluated the accounting treatment of our 138,500 private placement warrants, and determined to classify the
private placement 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, 2022
contained elsewhere in this Annual Report are derivative liabilities related to our warrants. Accounting Standards Codification 815, Derivatives
and Hedging (“ASC 815”), 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 private placement warrants each reporting period and that the amount of such gains or losses could be material. The impact
of changes in fair value on earnings may have an adverse effect on the market price of our shares of common stock. In addition, potential
targets may seek a special purpose acquisition company that does not have warrants that are accounted for as liability, which may make
it more difficult for us to consummate an initial business combination with a target business.
If we are deemed to be an investment company
for purposes of the Investment Company Act, we may be forced to abandon our efforts to complete an initial business combination and instead
be required to liquidate the Company. To mitigate the risk of that result, on March 3, 2023, in advance of the 24-month anniversary of
the effective date of the registration statement relating to our IPO, we instructed Continental Stock Transfer & Trust Company to
liquidate the securities held in the trust account and instead hold all funds in the trust account in a variable interest bearing account
currently expected to yield approximately 3.0% per annum.
On March 30, 2022, the
SEC issued proposed rules (the “SPAC Rule Proposals”), relating, among other things, to circumstances in which SPACs such
as us could potentially be subject to the Investment Company Act and the regulations thereunder. The SPAC Rule Proposals would provide
a safe harbor for such companies from the definition of “investment company” under Section 3(a)(1)(A) of the Investment Company
Act, provided that a SPAC satisfies certain criteria. To comply with the duration limitation of the proposed safe harbor, a SPAC would
have a limited time period to announce and complete a de-SPAC transaction. Specifically, to comply with the safe harbor, the SPAC Rule
Proposals would require a company to file a report on Form 8-K announcing that it has entered into an agreement with a target company
for an initial business combination no later than 18 months after the effective date of the registration statement for its initial public
offering. The company would then be required to complete its initial business combination no later than 24 months after the effective
date of the registration statement for its initial public offering. We understand that the SEC has recently been taking informal positions
regarding the Investment Company Act consistent with the SPAC Rule Proposals.
There is currently uncertainty
concerning the applicability of the Investment Company Act to a SPAC, including a company like ours, that does not complete its initial
business combination within the proposed time frame set forth in the proposed safe harbor rule. As indicated above, we completed our IPO
on March 9, 2021 and have operated as a blank check company searching for a target business with which to consummate an initial business
combination since such time (or approximately 25 months after the effective date of our IPO, as of the date of this Annual Report). If
we were deemed to be an investment company for purposes of the Investment Company Act, we might be forced to abandon our efforts to complete
an initial business combination and instead be required to liquidate the Company. If we are required to liquidate the Company, our investors
would not be able to realize the benefits of owning shares in a successor operating business, including the potential appreciation in
the value of our shares and warrants following such a transaction, and our warrants would expire worthless.
Up until March 3, 2023, the
funds in the trust account have been held in U.S. government treasury obligations with a maturity of 185 days or less or in money market
funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under the Investment Company
Act. As of December 31, 2022, amounts held in the trust account included approximately $485,099 of accrued interest. To mitigate the risk
of us being deemed to have been operating as an unregistered investment company under the Investment Company Act, on March 3, 2023, in
advance of the 24-month anniversary of the effective date of the registration statement relating to our IPO, we instructed Continental
Stock Transfer & Trust Company, the trustee with respect to the trust account, to liquidate the U.S. government treasury obligations
or money market funds held in the trust account and, thereafter, to hold all funds in the trust account in a variable interest bearing
account currently expected to yield approximately 3.0% per annum.
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.
If we have not completed an initial business
combination by the Extended Date or Additional Extended Date, as applicable, our public stockholders may be forced to wait beyond such
date before redemption from our Trust Account.
If we have not completed
an initial business combination by the Extended Date or Additional Extended Date, as applicable, 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 taxes, if any (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 the Extended Date or Additional
Extended Date, as applicable, 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 liquidation unless we complete our initial business combination or amend certain material provisions of our amended and restated
certificate of incorporation 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 the Extended Date or Additional Extended Date, as applicable may be considered
a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL
intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party
claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a
liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our
intention to redeem our public shares as soon as reasonably possible following the Extended Date or Additional Extended Date, as applicable
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 10 years following our dissolution.
However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective
target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or
prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with
respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot
assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend
beyond the third anniversary of such date. Furthermore, if the pro rata portion of our Trust Account distributed to our public stockholders
upon the redemption of our public shares in the event we do not complete our initial business combination by the Extended Date or Additional
Extended Date, as applicable 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 the NYSE American’s 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 the NYSE American. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders
for the purposes of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a
meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination,
and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders
want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold
one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
Because we are neither limited to evaluating
a target business in a particular industry sector nor have we selected any specific target businesses with which to pursue our initial
business combination, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Our efforts to identify a prospective initial
business combination target will not be limited to a particular industry, sector or geographic region. While we may pursue an initial
business combination opportunity in any industry or sector, we intend to capitalize on the ability of our management team to identify,
acquire and operate a business or businesses that can benefit from our management team’s established global relationships and operating
experience. Our management team has extensive experience in identifying and executing strategic investments globally and has done so successfully
in a number of sectors. Our amended and restated certificate of incorporation prohibits us from effectuating a business combination with
another blank check company or similar company with nominal operations. Because we have not yet selected any specific target business
with respect to a business combination, there is no basis to evaluate the possible merits or risks of any particular target business’s
operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we 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 a development stage entity. Although our officers and directors will
endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess
all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may
be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target
business. We also cannot assure you that an investment in our Units will ultimately prove to be more favorable to investors than a direct
investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders or warrant holders who
choose to remain stockholders or warrant holders following our initial business combination could suffer a reduction in the value of their
securities. Such stockholders or 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 materials or tender offer documents, 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 that may be outside of our management’s areas of expertise.
We will consider a business combination outside
of our management’s areas of expertise if a business combination candidate is presented to us and we determine that such candidate
offers an attractive business combination opportunity for our company. 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 in
the Public Offering than a direct investment, if an opportunity were available, in a business combination candidate. In the event we elect
to pursue a business combination outside of the areas of our management’s expertise, our management’s expertise may not be
directly applicable to its evaluation or operation, and the information contained in this Annual Report on Form 10-K regarding the areas
of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As a result, our
management may not be able to ascertain or assess adequately all of the relevant risk factors. Accordingly, any stockholders who choose
to remain stockholders following our initial business combination could suffer a reduction in the value of their shares. Such stockholders
are unlikely to have a remedy for such reduction in value.
Although we have identified general criteria
and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business combination
with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria and
guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial business
combination will not have attributes consistent with our general criteria and guidelines. 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 are unable to complete our initial business combination, our
public stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for distribution to public
stockholders, and our warrants will expire worthless.
We are not required to obtain an opinion from
an independent investment banking firm or from a valuation or appraisal 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 stockholders from a financial point of view.
Unless we complete our initial business combination
with an affiliated entity or our board of directors cannot independently determine the fair market value of the target business or businesses
(including with the assistance of financial advisors), we are not required to obtain an opinion from an independent investment banking
firm which is a member of FINRA or from a valuation or appraisal firm that the price we are paying is fair to our stockholders 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 shares of Class A common
stock or shares of 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 founder shares 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 380,000,000 shares of Class A common stock, par value $0.0001 per share,
20,000,000 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. Immediately after the redemptions in connection with the Special Meeting, there were 377,105,824 and 13,531,250 authorized but
unissued shares of Class A common stock and Class B common stock, respectively, and 1,000,000 shares of preferred stock available for
issuance, which amount does not take into account shares reserved for issuance upon exercise of outstanding warrants or shares issuable
upon conversion of the Class B common stock. The Class B common stock is automatically convertible into Class A common stock concurrently
with or immediately following the consummation of our initial business combination, initially at a one-for-one ratio but subject to adjustment
as set forth herein and in our amended and restated certificate of incorporation. Immediately after the Public Offering, there were no
shares of preferred stock issued and outstanding.
We may issue a substantial number of additional
shares of Class A common stock or shares of 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 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
as set forth therein. However, our amended and restated certificate of incorporation provides, among other things, that prior to our initial
business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the Trust Account
or (ii) vote as a class with our public shares (a) on any initial business combination or (b) to approve an amendment to our amended and
restated certificate of incorporation to (x) extend the time we have to consummate a business combination beyond the Extended Date or
Additional Extended Date, as applicable or (y) amend the foregoing provisions. 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.
The issuance of additional shares of common stock or shares of preferred stock:
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may significantly dilute the equity interest of investors in the Public Offering; |
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may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock; |
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could cause a change in control if a substantial number of shares of Class A common stock is 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 |
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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 are unable to complete our initial business combination, our public stockholders may only receive their pro rata portion
of the funds in the Trust Account that are available for distribution to public stockholders, 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 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 are unable to
complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the Trust Account
that are available for distribution to public stockholders, and our warrants will expire worthless.
We may engage in a business combination with
one or more target businesses that have relationships with entities that may be affiliated with our Sponsor, executive officers, directors
or existing holders which may raise potential conflicts of interest.
In light of the involvement of our Sponsor, executive
officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our Sponsor, executive officers,
directors or existing holders. Our directors also serve as officers and board members for other entities. Such entities may compete with
us for business combination opportunities. Our Sponsor, officers and directors are not currently aware of any specific opportunities for
us to complete our initial business combination with any entities with which they are affiliated, and there have been no substantive discussions
concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any
transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria
for a business combination and such transaction was approved by a majority of our independent and disinterested directors. Despite our
agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA or a valuation or appraisal firm
regarding the fairness to our company from a financial point of view of a business combination with one or more domestic or international
businesses affiliated with our Sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist
and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent
any conflicts of interest.
Since our Sponsor, executive officers and directors
will lose their entire investment in us if our initial business combination is not completed (other than with respect to public shares
they may acquire after the Public Offering), a conflict of interest may arise in determining whether a particular business combination
target is appropriate for our initial business combination.
On January 13, 2021, our
Sponsor paid $25,000, or approximately $0.004 per share, in consideration of 5,750,000 founder shares. On February 4, 2021 our Sponsor
transferred 30,000 founder shares to each of Gordy Holterman, Rich McGinn, John McCoy and an estate planning vehicle managed by Howard
Newman, resulting in our Sponsor holding 5,630,000 founder shares. On March 4, 2021, we effected a 1:1.125 stock split of our Class B
common stock, resulting in our Sponsor holding an aggregate of 6,348,750 founder shares. Prior to the initial investment in the Company
of $25,000 by the Sponsor, the Company had no assets, tangible or intangible. The purchase price of the founder shares was determined
by dividing the amount of cash contributed to the company by the number of founder shares issued. The number of founder shares outstanding
was determined based on the expectation that the total size of the Public Offering would be a maximum of 25,875,000 Units if the underwriters’
over-allotment option was exercised in full, and therefore that such founder shares would represent 20% of the outstanding shares after
the Public Offering. The underwriters exercised the over-allotment in full simultaneously with the closing of the Public Offering, thus
no shares were forfeited. The founder shares will be worthless if we do not complete an initial business combination. In addition, our
Sponsor and EarlyBirdCapital have purchased an aggregate of 692,500 private placement units, for an aggregate purchase price of $6,925,000,
or $10.00 per unit, that will also be worthless if we do not complete our initial business combination. The personal and financial interests
of our executive 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. This risk may
become more acute as the Extended Date or Additional Extended Date, as applicable, nears, which is the deadline for our completion of
an initial business combination.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments
as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding debt following the
Public Offering, we may choose to incur substantial debt to complete our initial business combination. We and our officers 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:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
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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; |
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our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
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our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
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our inability to pay dividends on our Class A common stock; |
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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 Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
We may only be able to complete one business
combination with the proceeds of the Public Offering and the sale of the private placement units after the redemptions in connection with
the Special Meeting, which will cause us to be solely dependent on a single business which may have a limited number of products or services.
This lack of diversification may negatively impact our operations and profitability.
After effecting the redemptions in connection
with the Special Meeting, there was approximately $20.6 million left in the Trust Account that we may use to complete our initial business
combination and pay related fees and expenses.
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. Accordingly, the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset, or |
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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. 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 a business combination with a company
that is not as profitable as we suspected, if at all.
In pursuing our 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 a business combination with a company that is not as profitable as we suspected,
if at all.
We do not have a specified maximum redemption
threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination with which
a substantial majority of our stockholders or warrant holders 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. In addition, our proposed initial business combination may impose a minimum
cash requirement for: (i) cash consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions. 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 any of their respective 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 business combination exceed the aggregate amount of cash available to us, we will not complete the
business combination or redeem any shares in connection with such initial business combination, 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, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other governing
instruments, including their warrant agreements. We cannot assure you that we will not seek to further amend our amended and restated
certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination
that our stockholders may not support.
In order to effectuate a business combination,
special purpose acquisition companies have, in the recent past, amended various provisions of their charters and governing instruments,
including their warrant agreements. For example, special purpose acquisition 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. Following the Special Meeting,
we amended our amended and restated certificate of incorporation to extend the time to consummate our initial business combination. Amending
our amended and restated certificate of incorporation will require the approval of holders of 65% of our common stock, and amending our
warrant agreement will require a vote of holders of at least 50% of the public warrants and, solely with respect to any amendment to the
terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants, 50%
of the number of the then outstanding private placement warrants. In addition, our amended and restated certificate of incorporation will
require us to provide our public stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to
our amended and restated certificate of incorporation 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 an initial business combination by
the Extended Date or Additional Extended Date, as applicable or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity. To the extent any of such amendments would be deemed to fundamentally change the
nature of the securities offered through this registration statement, we would register, or seek an exemption from registration for, the
affected securities. We cannot assure you that we will not seek to amend our charter or governing instruments or extend the time to consummate
an initial business combination in order to effectuate our initial business combination.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing
the release of funds from our Trust Account) 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 special purpose acquisition companies. It may be easier for us, therefore, to amend our amended
and restated certificate of incorporation 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-business combination activity (including the requirement
to deposit proceeds of the 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) 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. Our initial stockholders, who
collectively beneficially own approximately 69.1% of our common stock after giving effect to the redemptions in connection with the Special
Meeting, may 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-business combination behavior more easily than some other special purpose acquisition companies,
and this may increase our ability to complete a 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, executive officers and directors
have agreed, pursuant to written agreements with us, that they will not propose any amendment to our amended and restated certificate
of incorporation 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 the Extended Date or Additional Extended
Date, as applicable or with respect to any other material provisions relating to stockholders’ rights or pre-initial business combination
activity, unless we provide our public stockholders with the opportunity to redeem their 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 taxes, divided by the number of then outstanding
public shares. Our stockholders are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have
the ability to pursue remedies against our Sponsor, executive officers or directors for any breach of these agreements. As a result, in
the event of a breach, our stockholders would need to pursue a stockholder derivative action, subject to applicable law.
We may be unable to obtain additional financing
to 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.
If the cash portion of the
purchase price of a business combination target exceeds the amount available from the Trust Account, net of amounts needed to satisfy
any redemption by public stockholders, 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, we may be required to obtain
additional financing in connection with the closing of our initial business combination for general corporate purposes, including for
maintenance or expansion of operations of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred
in completing our initial business combination, or to fund the purchase of other companies. If we are unable to complete our initial business
combination, our public stockholders may only receive their pro rata portion of the funds in the Trust Account that are available for
distribution to public stockholders, 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.
Our independent registered public accounting
firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going
concern.”
In connection with our assessment of going concern
considerations in accordance with Financial Accounting Standards Board’s Accounting Standards Update 2014-15, “Disclosures
of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” if we are unable to complete a business combination
by the Extended Date or Additional Extended Date, as applicable, our amended and restated certificate of incorporation provides that we
must cease all operations except for the purpose of liquidating. The date for mandatory liquidation and subsequent dissolution raise substantial
doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this report do not include any
adjustments that might result from our inability to continue as a going concern.
Our initial stockholders control a substantial
interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do
not support.
Upon effecting the redemptions
in connection with the Special Meeting, our initial stockholders own approximately 69.1% of our issued and outstanding shares of common
stock (including the private placement shares underlying the private placement units). 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. If our initial stockholders purchase any additional Class A common stock in the aftermarket or in privately
negotiated transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers
or directors, have any current intention to purchase additional securities, other than as disclosed in this Annual Report. 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, our board of directors, whose members were elected by our Sponsor, is and will be divided into three classes, each
of which will generally serve for a terms for three years with only one class of directors being elected in each year. We may not hold
an annual meeting of stockholders to elect new directors prior to the completion of our initial business combination, in which case all
of the current directors will continue in office until at least the completion of the business combination. If there is an annual meeting,
as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election
and our initial stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly,
our initial stockholders will continue to exert control at least until the completion of our initial business combination.
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 the proxy
statement with respect to the vote on an initial business combination include historical and pro forma financial statement disclosure.
We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they are required
under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America (“GAAP”) or international financial reporting standards as issued
by the International Accounting Standards Board (“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) (“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 rules and complete our
initial business combination within the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with 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 business 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.
We may seek business combination opportunities
with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our
desired results.
We may seek business combination opportunities
with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements,
to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the initial business combination may
not be as successful as we anticipate.
To the extent we complete our initial business
combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks inherent
in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although our
management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able to
properly ascertain or assess all of the significant risk factors until we complete our initial business combination. If we are not able
to achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the
gains that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability
to control or reduce the chances that those risks and complexities will adversely impact a target business. Such combination may not be
as successful as a combination with a smaller, less complex organization.
We may face risks related to businesses in
the financial services industry or businesses providing technology services to the financial industry.
Business combinations with businesses in the financial services industry or
businesses providing technology services to the financial industry may involve special considerations and risks. If we complete our initial
business combination with businesses in the financial services industry or businesses providing technology services
to the financial industry, we will be subject to the following risks, any of which could be detrimental to us and the business we acquire:
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If the company or business we acquire provides products or services which relate to the facilitation of financial transactions, such as funds or securities settlement system, and such products or services fail or are compromised, we may be subject to claims from both the firms to whom we provide our products and services and the clients they serve; |
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If we are unable to keep pace with evolving technology and changes in the financial services industry, our revenues and future prospects may decline; |
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Our ability to provide financial technology products and services to customers may be reduced or eliminated by regulatory changes; |
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Any business or company we acquire could be vulnerable to cyberattack or theft of individual identities or personal data; |
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Difficulties with any products or services we provide could damage our reputation and business; |
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A failure to comply with privacy regulations could adversely affect relations with customers and have a negative impact on business; and |
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We may not be able to protect our intellectual property and we may be subject to infringement claims. |
Any of the foregoing could have an adverse impact
on our operations following a business combination. However, our efforts in identifying prospective target businesses will not be limited
to businesses in the financial services industry or businesses providing technology services to the financial industry. Accordingly, if
we acquire a target business in another industry, these risks will likely not affect us and we will be subject to other risks attendant
with the specific industry in which we operate or target business which we acquire, none of which can be presently ascertained.
RISKS RELATING TO THE POST-BUSINESS COMBINATION
COMPANY
Subsequent to our 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 the price of our securities, 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 identify all material issues that may be present
with 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 or thereafter. Accordingly, any stockholders or warrant holders who choose to remain stockholders
or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or
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 materials or tender offer documents, as applicable, relating to the business
combination contained an actionable material misstatement or material omission.
The officers and directors of an acquisition
candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel
could negatively impact the operations and profitability of our post-combination business.
The role of an acquisition 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 acquisition candidate’s management team will remain associated with the acquisition candidate following our initial
business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Our management may not maintain control of
a target business after our initial business combination. 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 structure our 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 our 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 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 Class A common stock,
our stockholders immediately prior to such transaction could own less than a majority of our outstanding Class A 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 shares than we initially acquired. Accordingly, this may make it more likely that
our management will not maintain control of the target business.
We may have a limited ability to assess the
management of a prospective target business and, as a result, may effect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company.
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 business’s management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target
business’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 or warrant holders who choose
to remain stockholders or warrant holders following the business combination could suffer a reduction in the value of their securities.
Such stockholders or 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.
RISKS RELATING TO ACQUIRING AND OPERATING A
BUSINESS IN FOREIGN COUNTRIES
If we effect our initial business combination
with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely affect us.
If we pursue a target 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 initial business 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 we pursue a target 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 jurisdiction, 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 any of the following:
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costs and difficulties inherent in managing cross-border business operations; |
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rules and regulations regarding currency redemption; |
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complex corporate withholding taxes on individuals; |
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laws governing the manner in which future business combinations may be effected; |
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exchange listing and/or delisting requirements; |
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tariffs and trade barriers; |
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regulations related to customs and import/export matters; |
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local or regional economic policies and market conditions; |
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unexpected changes in regulatory requirements; |
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challenges in managing and staffing international operations; |
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tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
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currency fluctuations and exchange controls; |
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challenges in collecting accounts receivable; |
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cultural and language differences; |
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employment regulations; |
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underdeveloped or unpredictable legal or regulatory systems; |
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protection of intellectual property; |
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social unrest, crime, strikes, riots and civil disturbances; |
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regime changes and political upheaval; |
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natural disasters and widespread health emergencies; |
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terrorist attacks and wars; and |
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deterioration of political relations with the United States. |
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 initial business combination, or, if we complete such
initial business combination, our operations might suffer, either of which may adversely impact our business, financial condition and
results of operations.
RISKS RELATING TO OUR MANAGEMENT TEAM
We are dependent upon our executive officers
and directors and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued
service of our officers and directors, at least until we have completed our initial business combination. In addition, our executive officers
and directors are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest
in allocating their time among various business activities, including identifying potential business combinations and monitoring the related
due diligence. We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers.
The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Involvement of members of our management
and companies with which they are affiliated in civil disputes and litigation or governmental investigations unrelated to our business
affairs could materially impact our ability to complete an initial business combination.
Members of our management team and companies with
which they are affiliated have been, and in the future will continue to be, involved in a wide variety of business affairs, including
transactions, such as sales and purchases of businesses, and ongoing operations. As a result of such involvement, members of our management
and companies with which they are affiliated in past have been, and may in the future be, involved in civil disputes and litigation and
governmental investigations relating to their business affairs unrelated to our company. Any claims or investigations involving members
of our management and companies with which they are affiliated may be detrimental to our reputation and could negatively affect our ability
to identify and complete an initial business combination in a material manner and may have an adverse effect on the price of our securities.
Our ability to successfully effect our initial
business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom may join us
following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our
post-combination business.
Our ability to successfully effect our initial
business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however,
cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory
positions following our initial business combination, it is likely that some or all of the management of the target business will remain
in place. While we intend to closely scrutinize any individuals we engage 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.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business combination
may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation
following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular
business combination is the most advantageous.
Our key personnel may be able to remain with our
company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements
in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the 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 business combination. Such negotiations also could make such key personnel’s retention
or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their motivation
in identifying and selecting a target business, subject to their fiduciary duties under Delaware law.
Our executive 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 executive 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 a business combination and their other businesses. We do not intend to have any full-time employees prior
to the completion of our initial business combination. Each of our executive officers is engaged in several other business endeavors for
which he may be entitled to substantial compensation, and our executive officers and non-independent directors are not obligated to contribute
any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members for other entities.
If our executive 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.
Our officers and directors presently have,
and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly, may have conflicts
of interest in determining to which entity a particular business opportunity should be presented.
Following the completion
of the Public Offering and until we consummate our initial business combination, we intend to engage in the business of identifying and
combining with one or more businesses. 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 to such entity. Accordingly, they may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented
to another entity prior to its presentation to us. Our amended and restated certificate of incorporation provides that we renounce our
interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely
in his or her capacity as a director or officer of the 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. In addition, our Sponsor and our officers and directors may sponsor or form
other special purpose acquisition companies similar to ours or may pursue other business or investment ventures during the period in which
we are seeking an initial business combination. As a result, our Sponsor, officers and directors could have conflicts of interest in determining
whether to present business combination opportunities to us or to any other special purpose acquisition company with which they may become
involved. In particular, certain of our officers and directors are actively engaged in IPV IV, a special purpose acquisition company.
IPV IV, like us, may pursue an initial business combination target in any business or industry and is expected to have a similar window
as us in which it may complete its initial business combination. Any such companies, businesses or ventures, including IPV IV, may present
additional conflicts of interest in pursuing an initial business combination. Additionally, Ahmed Fattouh, our Chairman and Chief Executive
Officer, and Brandon Bentley, our General Counsel, are members of InterPrivate LLC, which is the managing member of InterPrivate Capital
LLC, which in turn is the sole managing member of our Sponsor. However, we do not believe that any such potential conflicts would materially
affect our ability to complete our initial business combination.
Our executive 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, executive 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 a business combination with a target business that is affiliated with our Sponsor, our directors or executive officers, although
we do not intend to do so. Nor do we 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.
The personal and financial interests of our directors
and officers may influence their motivation in timely identifying and selecting a target business and completing a business combination.
Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business may result in
a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate
and in our stockholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us as a matter
of Delaware law and we or our stockholders might have a claim against such individuals for infringing on our stockholders’ rights.
However, we might not ultimately be successful in any claim we may make against them for such reason.
We may not have sufficient funds to satisfy
indemnification claims of our directors and executive officers.
We have agreed to indemnify our officers and directors
to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right, title, interest or claim of
any kind in or to any monies in the Trust Account and to not seek recourse against the Trust Account for any reason whatsoever. Accordingly,
any indemnification provided will be able to be satisfied by us only if (i) we have sufficient funds outside of the Trust Account or (ii)
we consummate an initial business combination. Our obligation to indemnify our officers and directors may discourage stockholders from
bringing a lawsuit against our officers or directors for breach of their fiduciary duty. These provisions also may have the effect of
reducing the likelihood of derivative litigation against our officers and directors, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay
the costs of settlement and damage awards against our officers and directors pursuant to these indemnification provisions.
Certain agreements related to the Public Offering
may be amended without stockholder approval.
Each of the agreements related to the Public Offering
to which we are a party, other than the warrant agreement and the investment management trust agreement, may be amended without stockholder
approval. Such agreements are: the underwriting agreement; the letter agreement among us and our initial stockholders, officers and directors;
the registration rights agreement among us and our initial stockholders; the private placement units purchase agreement between us and
our Sponsor; and the administrative services agreement among us, our Sponsor and an affiliate of our Sponsor. These agreements contain
various provisions that our public stockholders might deem to be material. For example, our letter agreement and the underwriting agreement
contain certain lock-up provisions with respect to the founder shares, private placement units and other securities held by our initial
stockholders, officers and directors. Amendments to such agreements would require the consent of the applicable parties thereto and would
need to be approved by our board of directors, which may do so for a variety of reasons, including to facilitate our initial business
combination. While we do not expect our board of directors to approve any amendment to any of these agreements prior to our initial business
combination, it may be possible that our board of directors, in exercising its business judgment and subject to its fiduciary duties,
chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection with the consummation of our
initial business combination will be disclosed in our proxy materials or tender offer documents, as applicable, related to such initial
business combination, and any other material amendment to any of our material agreements will be disclosed in a filing with the SEC. Any
such amendments would not require approval from our stockholders, may result in the completion of our initial business combination that
may not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities. For example, amendments
to the lock-up provision discussed above may result in our initial stockholders selling their securities earlier than they would otherwise
be permitted, which may have an adverse effect on the price of our securities.
RISKS RELATING TO OUR SECURITIES
You will not have any rights or interests in
funds from the Trust Account, except under certain limited circumstances. Therefore, to liquidate your investment, 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 earlier 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 tendered in connection with a stockholder vote to amend
our amended and restated certificate of incorporation 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
the Extended Date or Additional Extended Date, as applicable or with respect to any other material provisions relating to stockholders’
rights or pre-initial business combination activity, and (iii) the redemption of our public shares if we are unable to complete an initial
business combination by the Extended Date or Additional Extended Date, as applicable, subject to applicable law and as further described
herein. In addition, if our plan to redeem our public shares if we are unable to complete an initial business combination by the Extended
Date or Additional Extended Date, as applicable is not completed for any reason, compliance with Delaware law may require that we submit
a plan of dissolution to our then-existing stockholders for approval prior to the distribution of the proceeds held in our Trust Account.
In that case, public stockholders may be forced to wait beyond the Extended Date or Additional Extended Date, as applicable, before they
receive funds from our Trust Account. 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.
There can be no assurance that we will be able
to comply with the continued listing standards of the NYSE American or any other exchange on which our securities may be listed in the
future.
Our Units, Class A common
stock and warrants are currently listed on the NYSE American.
Our eligibility for continued listing may depend
on, among other things, the number of our shares that are redeemed and the resulting market capitalization, public float and number of
round lot holders of our shares immediately after the Business Combination, each of which may drop below the required amount due to redemptions. If,
in connection with the Business Combination or any other business combination, the NYSE American delists our common stock from
trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse
consequences including:
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a limited availability of market quotations for our securities; |
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reduced liquidity for our securities; |
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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; |
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a limited amount of news and analyst coverage; and |
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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 the NYSE American, our Units,
Class A common stock and warrants qualify as covered securities under the statute. Although the states are preempted from regulating the
sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there
is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we
are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other
than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten
to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on
the NYSE American, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each
state in which we offer our securities.
The determination of the offering price of
our Units, the size of the Public Offering and terms of the Units was more arbitrary than the pricing of securities and size of an offering
of an operating company in a particular industry. You may have less assurance, therefore, that the offering price of our Units properly
reflects the value of such Units than you would have in a typical offering of an operating company.
Prior to the Public Offering
there was no public market for any of our securities. The public offering price of the Units and the terms of the warrants were negotiated
between us and the underwriters. In determining the size of the Public Offering, management held customary organizational meetings with
the representatives of the underwriters, both prior to our inception and thereafter, with respect to the state of capital markets, generally,
and the amount the underwriters believed they reasonably could raise on our behalf. Factors considered in determining the size of the
Public Offering, prices and terms of the Units, including the Class A common stock and warrants underlying the Units, include:
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the history and prospects of companies whose principal business is the acquisition of other companies; |
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prior offerings of those companies; |
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our prospects for acquiring an operating business at attractive values; |
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a review of debt to equity ratios in leveraged transactions; |
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an assessment of our management and their experience in identifying operating companies; |
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general conditions of the securities markets at the time of the Public Offering; and |
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other factors as were deemed relevant. |
Although these factors were considered, the determination
of our offering size, price and terms of the Units was more arbitrary than the pricing of securities of an operating company in a particular
industry since we have no historical operations or financial results.
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 shares of 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 a staggered board of directors and the ability of the board of directors to designate the terms of and issue new series
of preferred stock, which may make more difficult the removal of management 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 initial business combination and our structure
thereafter may not be tax-efficient to our stockholders and warrant holders. As a result of our business combination, our tax obligations
may be more complex, burdensome and uncertain.
Although we will attempt to structure our initial
business combination in a tax-efficient manner, tax structuring considerations are complex, the relevant facts and law are uncertain and
may change, and we may prioritize commercial and other considerations over tax considerations. For example, in connection with our initial
business combination and subject to any requisite stockholder approval, we may structure our business combination in a manner that requires
stockholders and/or warrant holders to recognize gain or income for tax purposes, effect a business combination with a target company
in another jurisdiction, or reincorporate in a different jurisdiction (including, but not limited to, the jurisdiction in which the target
company or business is located). We do not intend to make any cash distributions to stockholders or warrant holders to pay taxes in connection
with our business combination or thereafter. Accordingly, a stockholder or a warrant holder may need to satisfy any liability resulting
from our initial business combination with cash from its own funds or by selling all or a portion of the shares received. In addition,
stockholders and warrant holders may also be subject to additional income, withholding or other taxes with respect to their ownership
of us after our initial business combination.
In addition, we may effect a business combination
with a target company that has business operations outside of the United States, and possibly, business operations in multiple jurisdictions.
If we effect such a business combination, we could be subject to significant income, withholding and other tax obligations in a number
of jurisdictions with respect to income, operations and subsidiaries related to those jurisdictions. Due to the complexity of tax obligations
and filings in other jurisdictions, we may have a heightened risk related to audits or examinations by U.S. federal, state, local and
non-U.S. taxing authorities. This additional complexity and risk could have an adverse effect on our after-tax profitability and financial
condition.
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 Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants are 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 for the purpose of (i) curing any ambiguity or to correct any
defective provision or mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants
and the warrant agreement, (ii) adjusting the provisions relating to cash dividends on shares of common stock as contemplated by and in
accordance with the warrant agreement or (iii) adding or changing any provisions with respect to matters or questions arising under the
warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect
the rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the then outstanding
public warrants is required to make any change that adversely affects the interests of the registered holders of the 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 (at a ratio different than initially provided), shorten the
exercise period or decrease the number of shares of Class A common stock purchasable upon exercise of a warrant.
Our warrant agreement designates the courts
of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum for
certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders
to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that, subject to
applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for
the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive
forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum.
Notwithstanding the foregoing, these provisions
of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim
for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing
or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions
in our warrant agreement. If any action, the subject matter of which is within the scope of the forum provisions of the warrant agreement,
is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York
(a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the
personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such
court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant
holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant
holder.
This choice-of-forum provision may limit a warrant
holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage
such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect
to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters
in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result
in a diversion of the time and resources of our management and board of directors.
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 the outstanding
public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that
the closing price of our Class A common stock equals or exceeds $18.00 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. 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. As a result, we may redeem the warrants as set forth above even if the holders are otherwise
unable to exercise the warrants. Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise
price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when
you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants
are called for redemption, we expect would be substantially less than the market value of your warrants. None of the private placement
warrants will be redeemable by us so long as they are held by our Sponsor or its permitted transferees.
Our warrants may have an adverse effect on
the market price of our shares of Class A common stock and make it more difficult to effectuate our initial business combination.
We issued warrants to purchase 5,175,000 shares
of Class A common stock as part of the Units offered in the Public Offering and, simultaneously with the closing of the Public Offering,
we issued in a private placement an aggregate of 692,500 private placement units, which have underlying warrants, each exercisable to
purchase one share of Class A common stock, at $11.50 per share. In addition, if our Sponsor or an affiliate of our Sponsor or certain
of our officers and directors makes any working capital loans, such lender may convert those loans into up to an additional 150,000 private
placement units, at the price of $10.00 per unit. To the extent we issue common stock to effectuate our 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 could
make us a less attractive acquisition vehicle to a target business. Such warrants, when exercised, will increase the number of issued
and outstanding shares of Class A common stock and reduce the value of the Class A common stock issued to complete our initial business
combination. Therefore, our warrants may make it more difficult to effectuate our initial business combination or increase the cost of
acquiring the target business.
Because each Unit contains one-fifth of one
warrant and only a whole warrant may be exercised, the Units may be worth less than units of other special purpose acquisition companies.
Each Unit contains one-fifth of one warrant. Pursuant
to the warrant agreement, no fractional warrants were issued upon separation of the Units, and only whole Units trade. If, upon exercise
of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round down to the nearest
whole number the number of shares of Class A common stock to be issued to the warrant holder. 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 a business combination since the warrants
will be exercisable in the aggregate for one-fifth 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 it included a warrant to purchase one whole share.
The grant of registration rights to our initial
stockholders and holders of our private placement units 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 shares of Class A common stock.
Pursuant to an agreement, our initial stockholders,
the holders of our private placement units, the holders of warrants that may be issued upon conversion of working capital loans and their
permitted transferees can demand that we register the shares of Class A common stock into which founder shares are convertible, the private
placement units and the Class A common stock issuable upon exercise of the private placement warrants or the Class A common stock issuable
upon conversion of warrants that may be issued upon conversion of working capital loans and any other securities of the company acquired
by them prior to the consummation of our initial business combination. 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 shares of common stock owned by our initial stockholders, holders of our private placement units or holders of our
working capital loans or their respective permitted transferees are registered.
You will not be permitted to exercise your
warrants unless we register and qualify the underlying Class A common stock or certain exemptions are available.
If the issuance of the Class A common stock upon
exercise of the warrants is not registered, qualified or exempt from registration or qualification under the Securities Act and applicable
state securities laws, holders of warrants will not be entitled to exercise such warrants and such warrants 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 Class A common stock included in the Units.
We registered the shares of Class A common stock
issuable upon exercise of the warrants in the Registration Statement on Form S-1 because the warrants will become exercisable 30 days
after the completion of our initial business combination, which may be within one year of the Public Offering. However, because the warrants
will be exercisable until their expiration date of up to five years after the completion of our initial business combination, in order
to comply with the requirements of Section 10(a)(3) of the Securities Act following the consummation of our initial business combination,
under the terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 20 business days, after
the closing of our initial business combination, we will use our commercially reasonable efforts to file with the SEC a post-effective
amendment to the registration statement or a new registration statement covering the registration under the Securities Act of the Class
A common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within
60 business days following our initial business combination and to maintain a current prospectus relating to the 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, under the terms of the warrant agreement, holders of warrants
who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be required to do so on a cashless basis
in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants be exercisable for cash
or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance
of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
from registration or qualification is available.
If our shares of Class A common stock are at the
time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered
securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of warrants who seek to exercise
their warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities
Act; in the event we so elect, we will not be required to maintain in effect a registration statement or register or qualify the shares
underlying the warrants under applicable state securities laws, and in the event we do not so elect, we will use our best efforts to register
or qualify the shares underlying the warrants under applicable state securities laws to the extent an exemption is not available.
In no event will we be required to net cash settle
any warrant, or issue securities (other than upon a cashless exercise as described above) 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 the Securities Act or applicable state
securities laws.
You may only be able to exercise your public
warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of Class A common
stock from such exercise than if you were to exercise such warrants for cash.
The warrant agreement provides that in the following
circumstances holders of warrants who seek to exercise their warrants will not be permitted to do for cash and will, instead, be required
to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the shares of Class A common stock issuable
upon exercise of the warrants are not registered under the Securities Act in accordance with the terms of the warrant agreement; and (ii)
if we have so elected and the shares of Class A common stock is at the time of any exercise of a warrant not listed on a national securities
exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities Act. If you
exercise your public warrants on a cashless basis under the circumstances described in clauses (i) and (ii) in the preceding sentence,
you would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal to 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 shares of Class A common stock (as defined in the next sentence) over the exercise price
of the warrants by (y) the fair market value. The “fair market value” is the average reported closing price of the shares
of Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of exercise is received
by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, you would receive
fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
GENERAL RISK FACTORS
We are a blank check company with no operating
history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check company incorporated under
the laws of the State of Delaware with no operating results, and we did not commence operations until obtaining funding through the Public
Offering. Because we lack an operating history, you have no basis upon which to evaluate our ability to achieve our business objective
of completing our initial business combination. We have no plans, arrangements or understandings with any prospective target business
concerning a business combination and 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.
Past performance by our management team and
their respective affiliates may not be indicative of future performance of an investment in us or in the future performance of any business
that we may acquire.
Information regarding performance by, or businesses
associated with, our management team or businesses associated with them is presented for informational purposes only. Past performance
by our management team or the other companies referred to in this Annual Report is not a guarantee either (i) of success with respect
to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate for our initial business combination.
You should not rely on the historical record of the performance of our management team’s or businesses associated with them as indicative
of our future performance of an investment in us or the returns we will, or is likely to, generate going forward. An investment in us
is not an investment in any of the companies associated with our management team.
Past performance by our management team and their
affiliates, including investments and transactions in which they have participated and businesses with which they have been associated,
may not be indicative of future performance of an investment in the company.
We
have identified material weaknesses in our internal control over financial reporting as of December 31, 2022. If we are unable to develop
and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and
financial results, including our ability to consummate an initial Business Combination.
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 and corrected on a timely
basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
We
have identified material weaknesses in our internal control over financial reporting as of
December 31, 2022 related to the classification of redeemable common stock as components
of either permanent or temporary equity, remeasurement of Class A common stock subject to
redemption, and accounting for accruals of certain expenses including tax liabilities.
While we have expanded and improved our review process for complex
securities and related accounting standards and our previous material weaknesses have been remediated, if we identify any new material
weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our
accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may
be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable
stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result,
all of which could delay or disrupt our efforts to consummate an initial business combination. We cannot assure you that the measures
we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
We may face litigation and other risks as a
result of the material weaknesses in our internal control over financial reporting.
As
a result of the material weaknesses in our internal control over financial reporting related
to the classification of redeemable common stock as components of either permanent or temporary
equity, remeasurement of Class A common stock subject to redemption, and accounting for accruals
of certain expenses including tax liabilities, and other matters raised or that may in the
future be raised by the SEC, we may face litigation or other disputes which may include,
among others, claims invoking the federal and state securities laws, contractual claims or
other claims arising from the material weaknesses and the preparation of our financial statements.
As of the date of this Annual Report on Form 10-K, we have no knowledge of any such litigation
or dispute. However, we can provide no assurance that such litigation or dispute will not
arise in the future. Any such litigation or dispute, whether successful or not, could have
a material adverse effect on our business, results of operations and financial condition
or our ability to complete a business combination.
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.
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 internal controls attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth
company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our
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 exceeded $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 with other public companies difficult
or impossible.
Provisions in our amended and restated certificate
of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of incorporation
requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought
on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or
our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision
of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against us, our directors,
officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware,
except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject
to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of
Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than
the Court of Chancery, or (C) for which the Court of Chancery does not have subject matter jurisdiction. If an action is brought outside
of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel.
Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits
to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may
have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived
our compliance with federal securities laws and the rules and regulations thereunder.
Additionally, unless we consent in writing to
the selection of an alternative forum, the federal courts shall be the exclusive forum for the resolution of any complaint asserting a
cause of action arising under the Securities Act against us or any of our directors, officers, other employees or agents. Section 22 of
the Securities Act, however, created concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or
liability created by the Securities Act or the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court
would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents
has been challenged in legal proceedings. While the Delaware courts have determined that such exclusive forum provisions are facially
valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions,
and there can be no assurance that such provisions will be enforced by a court in those other jurisdictions. Any person or entity purchasing
or otherwise acquiring any interest in our securities shall be deemed to have notice of and consented to these provisions; however, we
note that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Notwithstanding the foregoing, our amended and
restated certificate of incorporation provides that the exclusive forum provision will not apply to suits brought to enforce a duty or
liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. 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.
