Item
1. Business
Introduction
We
are a blank check company incorporated as a Delaware corporation on April 20, 2016 and formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses,
which we refer to throughout this Report as our initial business combination.
Objective
and Business Opportunity
While
we may pursue an acquisition opportunity in any industry or sector, we are focused on the consumer sector and consumer-related
businesses, which complements our management team’s expertise and which will benefit from our operational value add. We
believe that the experience and capabilities of our management team will make us an attractive partner to potential target businesses,
enhance our ability to complete a successful business combination, and bring value to the business post-business combination.
Not only does our management team bring a combination of operating, investing, financial and transaction experience, but also
has worked closely together in the past at multiple consumer companies, creating value for shareholders.
Our
acquisition and value creating strategy is to identify, acquire and build a company in the consumer sector that complements the
experience of our management team and can benefit from its operational expertise. After our initial business combination, we envision
our strategy may include additional mergers and acquisitions with a focus on generating attractive risk adjusted returns for our
stockholders. We will leverage our management team’s network of potential proprietary and public transaction sources where
we believe a combination of our relationships, knowledge and experience in the consumer sector could effect a positive transformation
or augmentation of existing businesses to improve their overall value.
We
believe that companies operating in the consumer sector have characteristics which make them attractive investments. Many companies
in the consumer industry generate high margins and strong free cash flow, maintain operational stability throughout economic cycles,
and serve as good platforms for future acquisitions. Furthermore, these companies can create significant value by introducing
new products and/or services to the marketplace, growing distribution, and building brands that resonate in households worldwide.
Our management team has executed on these growth strategies throughout their careers.
Recently,
many large consumer companies have announced plans to cut costs and divest non-core brands, which is expected to result in the
sale of assets. All members of our management team have had extensive experience undertaking mergers and acquisitions and overseeing
business integration and synergy realization. We believe that our management team of consumer industry veterans is uniquely capable
of identifying attractive businesses, executing acquisitions, and adding value post deal completion.
Our
management team is led by James M. Kilts, our Executive Chairman, and David J. West, our Chief Executive Officer. Mr. Kilts’
and Mr. West’s careers have centered on identifying and implementing value creation initiatives within the consumer industry.
They have collectively created approximately $50 billion in shareholder value throughout their combined 70+ year careers in the
consumer industry by relying on what we believe to be tried-and-true management strategies: cost management and productivity enhancement,
and reinvesting the savings behind product innovation, marketing, and brand building.
Mr.
Kilts is a renowned leader in the consumer industry, with over 40 years of experience leading a range of companies and iconic
brands. Mr. Kilts served as Chairman of the Board, Chief Executive Officer and President of The Gillette Company, or Gillette,
from 2001 until it merged with The Procter & Gamble Company in 2005; at that time he became Vice Chairman of the Board of
The Procter & Gamble Company. Before Mr. Kilts joined Gillette, the company’s sales had been flat for 4 years, and it
had missed earnings estimates for 14 consecutive quarters. Mr. Kilts took steps to rebuild the management team, cut costs and
reinvest the savings in innovation and marketing. During his tenure as Chief Executive Officer, Mr. Kilts oversaw the creation
of approximately $30 billion in equity value for Gillette’s public shareholders, with Gillette’s share price appreciating
110% while the S&P 500 declined 3% over the same time period. Under Mr. Kilts’ leadership, Gillette rejoined the top
ranks of consumer products companies as sales increased an average of 9% each year. The Harvard Business Review cited Mr. Kilts’
leadership as the driving force behind Gillette’s turnaround. Prior to Gillette, Mr. Kilts served as President and Chief
Executive Officer of the Nabisco Company, or Nabisco, from 1998 until its acquisition by The Philip Morris Companies in 2000.
Before joining Nabisco, Mr. Kilts was an Executive Vice President of The Philip Morris Companies from 1994 to 1997 and headed
the Worldwide Food group. In that role, Mr. Kilts was responsible for integrating Kraft and General Foods and for shaping the
group’s domestic and international strategy. Mr. Kilts had previously served as President of Kraft USA and Oscar Mayer.
More recently, Mr. Kilts served as Chairman of the Board of Nielsen Holdings N.V. from 2009 to 2014, during which time Mr. Kilts
worked closely with management to defend key existing customers and win new business. During their investment period, the investor
group’s equity value creation was nearly $7 billion.
Mr.
West is an established leader in the consumer industry, with nearly 30 years of experience leading a range of companies and well-known
brands. Mr. West served as Chief Executive Officer and President of Big Heart Pet Brands (formerly Del Monte Foods) from 2011
to 2015. Mr. West worked closely with Mr. Kilts during this time period, as Mr. Kilts was Chairman of the Board of Big Heart Pet
Brands. Mr. West repositioned the business to focus on growth and innovation, enhance distribution, and develop a marketing culture
to focus on brands and products. The J. M. Smucker Company purchased Big Heart Pet Brands in March 2015. During his tenure as
Chief Executive Officer of Big Heart Pet Brands, Mr. West oversaw the creation of approximately $2 billion of equity value for
investors. Prior to joining Big Heart Pet Brands, Mr. West served as the Chief Executive Officer, President and a director of
The Hershey Company, or Hershey, from 2007 to 2011. Under Mr. West’s leadership, Hershey enjoyed net sales and profit growth
and strong shareholder returns, and was recognized as one of the World’s 100 Most Innovative Companies by Forbes Magazine
in 2011. Under Mr. West’s leadership, Hershey enjoyed strong profits, net sales growth and shareholder returns, and was
recognized as one of the World’s 100 Most Innovative Companies by Forbes Magazine in 2011. The success created by Mr. West’s
leadership led to public shareholders of Hershey experiencing more than $5 billion of equity value creation during his tenure.
Hershey’s share price appreciated 68% during this time period, while the S&P 500 grew 0%. Prior to joining Hershey in
2001, Mr. West spent 14 years with Nabisco, where he worked closely with Mr. Kilts during Mr. Kilts’ tenure as Chief Executive
Officer.
Our
sponsor is an affiliate of Centerview Capital. Founded in 2006, Centerview Capital sponsors multiple investment funds, including
consumer (also known as Centerview Capital Consumer) and technology funds. Our management team, including James M. Kilts, David
J. West and Brian K. Ratzan, are all partners at Centerview Capital Consumer. Mr. Ratzan, our Chief Financial Officer, brings
over 20 years of private equity investing experience. The deep operating experience of Mr. Kilts and Mr. West complement Mr. Ratzan’s
financial and transactional expertise to create a team capable of identifying attractive investments and executing deals in the
consumer sector. Centerview Capital Consumer has made investments across the consumer industry spectrum, including the food and
beverage, household/personal care, and consumer services sectors. Centerview Capital Consumer has a track record of identifying
high-quality assets, businesses and management teams. Centerview Capital is associated with Centerview Partners. Certain partners
of Centerview Partners are partners (either directly or indirectly) in the ultimate general partner and the manager of Centerview
Capital Consumer’s investment funds, and serve on Centerview Capital Consumer’s investment committee. Centerview Partners
is a leading independent investment banking and advisory firm which provides advice on mergers and acquisitions, financial restructurings,
valuation, and capital structure to companies, institutions and governments. Since the founding of Centerview Partners in 2006,
the firm has advised on over $1 trillion of transactions. Centerview Partners’ clients include over 20% of the 50 largest
companies in the world by market capitalization, including many of the world’s most influential consumer companies, which
we believe further broaden our reach and network of deal contacts.
Our
management team’s proprietary deal sourcing network, ranging from industry executives, private owners, private equity funds,
and investment bankers, in addition to the extensive global industry and geographical reach of Centerview Capital Consumer and
Centerview Partners, enables us to pursue a broad range of opportunities across the entire consumer sector. Our management believes
that its ability to identify and implement operational value creation initiatives will remain central to its differentiated acquisition
strategy. Additionally, our network and current affiliations allow us to lean heavily on an existing infrastructure of resources
that will assist in due diligence and ultimately structuring an acquisition.
With
respect to the foregoing examples, past performance by our management team or Centerview Capital Consumer 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 record of our management’s or Centerview
Capital Consumer’s performance as indicative of our future performance. None of our officers or directors have had experience
with blank check companies or special purpose acquisition corporations in the past.
Strategy
and Execution
We
have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses.
We have and will continue to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter
into our initial business combination with a target business that does not meet these criteria and guidelines. We intend to acquire
companies that we believe:
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have
market and/or cost leadership positions in their respective consumer niches and would
benefit from our extensive networks and insights within the consumer sector;
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provide
enduring products or services, with the potential for revenue, market share and/or distribution
improvements;
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are
fundamentally sound companies that are not operating at their full potential but offer
compelling value;
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offer
the opportunity for our management team to partner with established management teams
or business owners to achieve long-term strategic and operational excellence;
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exhibit
unrecognized value or other characteristics, desirable returns on capital, and a need
for capital to achieve the company’s growth strategy, that we believe have been
misevaluated by the marketplace based on our analysis and due diligence review; and
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will
offer an attractive risk-adjusted return for our shareholders.
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These
criteria 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
management may deem relevant. In the event that we decide to enter into our initial business combination with a target business
that does not meet the above criteria 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 would be in the form of tender offer documents
or proxy solicitation materials that we would file with the SEC.
We
have utilized and plan to continue to utilize the network and industry experience of Mr. Kilts, Mr. West, Mr. Ratzan, our sponsor
and their affiliates, and our association with Centerview Partners in seeking an initial business combination and employing our
acquisition strategy. Over the course of their careers, the members of our management team and their affiliates have developed
a broad network of contacts and corporate relationships that we believe will serve as a useful source of acquisition opportunities.
This network has been developed through our management team’s:
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extensive
experience in both investing in and operating across the consumer sector;
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experience
in sourcing, structuring, acquiring, operating, developing, growing, financing and selling
businesses;
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relationships
with sellers, financing providers and target management teams; and
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experience
in executing transactions in the consumer sector under varying economic and financial
market conditions.
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We
expect these networks will continue to provide our management team with a robust flow of acquisition opportunities. In addition,
we anticipate that target business candidates will continue to be brought to our attention from various unaffiliated sources,
which may include investment market participants, private equity groups, investment banking firms, consultants, accounting firms
and large business enterprises.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review that will encompass, among other
things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial
and other information that will be made available to us. We will also utilize our operational and capital allocation experience.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor,
officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm which is a member of FINRA or an independent accounting firm that our initial business combination is fair to our company
from a financial point of view.
Members
of our management team and our independent directors directly or indirectly own founder shares and/or private placement warrants
and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of
interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and
directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity.
Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an
entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or
contractual obligations to present such opportunity to such entity. We do not believe, however, that the fiduciary duties or contractual
obligations of our officers or directors will materially affect our ability to complete our business combination. In addition,
we may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director has a
fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial business
combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance to any such
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 our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
In
addition to the above, all of our executive officers have fiduciary and contractual duties to Centerview Capital Consumer and
to certain companies in which Centerview Capital Consumer has invested. As a result, our officers will have a duty to offer acquisition
opportunities to certain Centerview Capital Consumer funds before we can pursue such opportunities. However, we do not expect
these duties to present a significant conflict of interest with our search for an initial business combination. In addition, our
executive officers are not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts
of interest in allocating management time among various business activities, including identifying potential business combinations
and monitoring the related due diligence. Moreover, our executive officers have time and attention requirements for private investment
funds of which affiliates of Centerview Capital Consumer are the investment managers.
Our
officers and directors have agreed not to participate in the formation of, or become an officer or director of, any other blank
check company until we have entered into a definitive agreement regarding our initial business combination or we have failed to
complete our initial business combination within the required timeframe.
Significant
Activities Since Inception
On
July 20, 2016, we consummated our initial public offering of 40,250,000 units (“Public Units”), including the full
exercise of the underwriters’ over-allotment option of 2,750,000 units (the “Over-Allotment Units”; collectively
with the Public Units, the “Units”). Each Unit consists of one share of Class A common stock, $0.0001 par value per
share (“Class A Common Stock”), and one-third of one warrant (“Public Warrant”), to purchase one share
of Class A Common Stock. Each whole Public Warrant entitles the holder to purchase one share of Class A Common Stock at an exercise
price of $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $402,500,000
(before underwriting discounts and commissions and offering expenses). Simultaneously with the consummation of our initial public
offering and the sale of the Units, we consummated the private placement (“Private Placement”) of 6,700,000 warrants
(“Placement Warrants”) at a price of $1.50 per Placement Warrant, issued to our Sponsor, generating total proceeds
of $10,050,000.
Approximately
$402.5 million of the net proceeds from the IPO (including the over-allotment) and the private placements with our Sponsor were
deposited in a trust account established for the benefit of our public stockholders.
Our
units began trading on July 20, 2016 on the NASDAQ Capital Market under the symbol “CPAAU”. Commencing on September
2, 2016, the securities comprising the units began separate trading. The units, common stock, and warrants are trading on the
NASDAQ Capital Market under the symbols “CPAAU,” “CPAA” and “CPAAW,” respectively.
Initial
Business Combination
NASDAQ
rules require that 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 deferred underwriting commissions and
taxes payable on the income earned on the trust account) at the time of the agreement to enter into the initial business combination.
If our board 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 FINRA or an independent accounting firm with respect
to the satisfaction of such criteria.
We
may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity affiliated with Centerview Capital and/or
one or more investors in funds managed by Centerview Capital. Any such parties may co-invest with us in the target business at
the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified
future issuance to any such parties. The amount and other terms and conditions of any such specified future issuance would be
determined at the time thereof. We are not obligated to make any specified future issuance and may determine not to do so. Pursuant
to the anti-dilution provisions of our Class B common stock, any such specified future issuance would result in an adjustment
to the conversion ratio such that our initial stockholders and their permitted transferees, if any, would retain their aggregate
percentage ownership at 20% of the sum of the total number of all shares of common stock outstanding plus all shares issued in
the specified future issuance, unless the holders of a majority of the then-outstanding shares of Class B common stock agreed
to waive such adjustment with respect to the specified future issuance at the time thereof. They may waive such specified future
issuance due to (but not limited to) the following: (i) closing conditions which are part of the initial business combination;
(ii) during negotiations with Class A stockholders on structuring an initial business combination; (iii) during negotiations with
parties providing financing which would trigger the anti-dilution provisions of the Class B common stock; or (iv) as part of the
Affiliated Joint Acquisition. We cannot determine at this time whether a majority of the holders of our Class B common stock at
the time of any such specified future issuance would agree to waive such adjustment to the conversion ratio. If such adjustment
is not waived, the specified future issuance would not reduce the percentage ownership of holders of our Class B common stock,
but would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the specified
future issuance would reduce the percentage ownership of holders of both classes of our common stock.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons,
including an Affiliated Joint Acquisition. However, 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 for purposes of a tender offer or for seeking
stockholder approval, as applicable.
Our
Management Team
Members
of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much
of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time
that any member of our management team will devote in any time period will vary based on whether a target business has been selected
for our initial business combination and the current stage of the business combination process.
We
believe our management team’s operating and transaction experience and relationships with companies will provide us with
a substantial number of potential business combination targets. Over the course of their careers, the members of our management
team have developed a broad network of contacts and corporate relationships around the world. This network has grown through the
activities of our management team sourcing, acquiring and financing businesses, our management team’s relationships with
sellers, financing sources and target management teams and the experience of our management team in executing transactions under
varying economic and financial market conditions.
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination.
In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of
our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs
of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses
will find this method a more certain and cost effective method to becoming a public company than the typical initial public offering.
In a typical initial public offering, there are additional expenses incurred in marketing, road show and public reporting efforts
that may not be present to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Once public, we believe
the target business would then have greater access to capital and an additional means of providing management incentives consistent
with stockholders’ interests. It can offer further benefits by augmenting a company’s profile among potential new
customers and vendors and aid in attracting talented employees.
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 our initial public offering, (b) in which we have total annual gross revenue of at least $1.0 billion, or
(c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held
by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Financial
Position
With
funds available for a business combination currently in the amount of $ 388,707,087, after payment of $14,087,500 of deferred
underwriting fees before fees and expenses associated with our initial business combination, we offer a target business a variety
of options such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its
operations or strengthening its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our business
combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most
efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs and desires.
However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting
our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations for an indefinite period of time. We intend to effectuate
our initial business combination using cash from the proceeds of our initial public offering and the private placement of the
private placement warrants, our capital stock, debt or a combination of these as the consideration to be paid in our initial business
combination. We may seek to complete our initial business combination with a company or business that may be financially unstable
or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our business combination or used for redemptions of purchases
of our Class A common stock, we may apply the balance of the cash released to us from the trust account for general corporate
purposes, including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest
due on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working
capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination (which may include a specified future issuance), and we may effectuate our initial business combination
using the proceeds of such offering rather than using the amounts held in the trust account. Subject to compliance with applicable
securities laws, we would expect to complete such financing only simultaneously with the completion of our business combination.
In the case of an initial business combination funded with assets other than the trust account assets, our tender offer documents
or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required by law,
we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately, including
pursuant to any specified future issuance, or through loans in connection with our initial business combination. At this time,
we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through
the sale of securities or otherwise.
Sources
of Target Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment
market participants, private equity groups, investment banking firms, consultants, accounting firms and large business enterprises.
Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls
or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited
basis, since many of these sources will have read the prospectus relating to our initial public offering and know what types of
businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our attention target business
candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions
they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary deal
flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our officers
and directors. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize
in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we
may pay a finder’s fee, consulting fee or other compensation to be determined in an arm’s length negotiation based
on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder
may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with
a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily
tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no
event, however, will our sponsor or any of our existing officers or directors, or any entity with which they are affiliated, be
paid any finder’s fee, consulting fee or other compensation prior to, or for any services they render in order to effectuate,
the completion of our initial business combination (regardless of the type of transaction that it is). We have agreed to pay an
affiliate of our sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support and
to reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business
combination. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company
following our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion
in our selection process of an acquisition candidate.
We
are not prohibited from pursuing an initial business combination with a business combination target that is affiliated with our
sponsor, officers or directors or making the acquisition through a joint venture or other form of shared ownership with our sponsor,
officers or directors. In the event we seek to complete our initial business combination with a business combination target that
is affiliated with our sponsor, officers or directors, we, or a committee of independent directors, would obtain an opinion from
an independent investment banking firm which is a member of FINRA or an independent accounting firm that such an initial business
combination is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other
context.
If
any of our officers or directors becomes aware of a business combination opportunity that falls within the line of business of
any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such
business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers
and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties
to us. We may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity to which an officer or director
has a fiduciary or contractual obligation. Any such entity may co-invest with us in the target business at the time of our initial
business combination, or we could raise additional proceeds to complete the acquisition by making a specified future issuance
to any such entity.
Selection
of a Target Business and Structuring of our Initial Business Combination
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 our assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the
income earned on the trust account) at the time of the agreement to enter into the initial business combination. The fair market
value of the target or targets will be determined by our board of directors based upon one or more standards generally accepted
by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board 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 FINRA, or from an independent accounting firm, with respect to the satisfaction of
such criteria. We do not intend to purchase multiple businesses in unrelated industries in conjunction with our initial business
combination. Subject to this requirement, our management will have virtually unrestricted flexibility in identifying and selecting
one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination with
another blank check company or a similar company with nominal operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets
of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction
company is what will be valued for purposes of the 80% of net assets test.
To
the extent we effect our business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will
endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review, which will encompass, among other
things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection
of facilities, as well as a review of financial and other information that will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our business combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. In addition, we intend to focus our search for an initial business
combination in a single industry. By completing our business combination with only a single entity, our lack of diversification
may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which
may have a substantial adverse impact on the particular industry in which we operate
after our initial business combination, and
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cause
us to depend on the marketing and sale of a single product or limited number of products
or services.
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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 business combination with that business, our assessment of the target business’ management may not prove to be correct.
In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company.
Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with
any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following
our business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our business
combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that those additional managers will have
the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder
approval if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business
or other legal reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we
may consider and whether stockholder approval is currently required under Delaware law for each such transaction.
Type of Transaction
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Whether Stockholder Approval is Required
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Purchase of assets
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No
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Purchase of stock of target not involving a merger with the company
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No
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Merger of target into a subsidiary of the company
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No
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Merger of the company with a target
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Yes
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Under
NASDAQ’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue shares of Class A common stock that will be equal to or in excess of 20% of the
number of shares of our Class A common stock then outstanding;
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any
of our directors, officers or substantial stockholders (as defined by NASDAQ rules) has
a 5% or greater interest (or such persons collectively have a 10% or greater interest),
directly or indirectly, in the target business or assets to be acquired or otherwise
and the present or potential issuance of common stock could result in an increase in
outstanding common shares or voting power of 5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change
of control.
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Permitted
Purchases of our Securities
In
the event we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares
in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination. 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 in such
transactions. They will not make any such purchases when they are in possession of any material non-public information not disclosed
to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual
acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof
and therefore agrees not to exercise its redemption rights. We have adopted an insider trading policy which requires insiders
to refrain from purchasing shares during certain blackout periods and when they are in possession of any material nonpublic information
and to clear all trades with our legal counsel prior to execution. We cannot currently determine whether our insiders will make
such purchases pursuant to a Rule 10b5-1 plan, as such purchases will be dependent upon several factors, including but not limited
to, the timing and size of such purchases. Depending on such circumstances, our insiders may either make such purchases pursuant
to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In
the event that our sponsor, directors, officers, advisors or their 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 such purchases would 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 business combination, where it
appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may
not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our common stock may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor,
officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly
or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into
a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem
their shares for a pro rata share of the trust account or vote against the business combination. Our sponsor, officers, directors,
advisors or their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the
other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the
Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe
harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical
requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers,
directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule
10b-5 of the Exchange Act.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest
earned on the funds held in the trust account and not previously released to us to pay up to $1,000,000 of our working capital
requirements as well as to pay our franchise and income taxes, divided by the number of then outstanding public shares, subject
to the limitations described herein. The amount in the trust account is initially anticipated to be approximately $10.00 per public
share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by the deferred
underwriting commissions we will pay to the underwriters. Our sponsor, officers and directors have entered into a letter agreement
with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any public
shares held by them in connection with the completion of our business combination.
Manner
of Conducting Redemptions
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 either (i) in connection with a stockholder meeting called to approve the business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business
combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under
the law or stock exchange listing requirement. Asset acquisitions and stock purchases would not typically require stockholder
approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20% of our
outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval.
If we structure a business combination transaction with a target company in a manner that requires stockholder approval, we will
not have discretion as to whether to seek a stockholder vote to approve the proposed business combination. We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock
exchange listing requirements or we choose to seek stockholder approval for business or other legal reasons.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will,
pursuant to our amended and restated certificate of incorporation:
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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.
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Upon
the public announcement of our business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through
a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to purchase will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not
tendering more than a specified number of public shares which are not purchased by our sponsor, which number will be based on
the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001
upon consummation of our initial business combination (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and
not complete the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of
the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the
tender offer rules, and
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file
proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the business combination. A quorum for such meeting will consist of the holders present
in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all
outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count toward
this quorum and have agreed to vote their founder shares and any public shares purchased during or after our initial public offering
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, we would need 15,093,750, or 37.5%, of the 40,250,000 public
shares outstanding to be voted in favor of a transaction (assuming all outstanding shares are voted) in order to have our initial
business combination approved. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior
written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These
quorum and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate
our initial business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote
for or against the proposed transaction.
Our
amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which
may be contained in the agreement relating to our initial business combination. For example, the proposed business combination
may require: (i) cash consideration to be paid to the target or its owners, (ii) cash to be transferred to the target for working
capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions in accordance with the
terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all
shares of Class A common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant
to the terms of the proposed business combination exceed the aggregate amount of cash available to us, we will not complete the
business combination or redeem any shares, and all shares of Class A common stock submitted for redemption will be returned to
the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our 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 10% of the shares sold in our initial public offering, which we refer to as the
“Excess Shares.” 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 10% of the shares sold
in our initial public offering could threaten to exercise its redemption rights if such holder’s shares are not purchased
by us or our management at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’
ability to redeem no more than 10% of the shares sold in our initial public offering, we believe we will limit the ability of
a small group of stockholders to unreasonably attempt to block our ability to complete our 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 business combination.
Tendering
Stock Certificates in Connection with a Tender Offer or Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in
the tender offer documents mailed to such holders, or up to two business days prior to the vote on the proposal to approve the
business combination in the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically
using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The tender
offer or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public
stockholder would have from the time we send out our tender offer materials until the close of the tender offer period, or up
to two days prior to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares
if it wishes to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders
to use electronic delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $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 tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection
with their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote
on an initial business combination, and a holder could simply vote against a proposed business combination and check a box on
the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination was
approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership.
As a result, the stockholder then had an “option window” after the completion of the business combination during which
he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he
or she could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation.
As a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would
become “option” rights surviving past the completion of the business combination until the redeeming holder delivered
its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials
or the date of the stockholders meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public
share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the applicable
date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate (physically
or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to redeem their
shares will be distributed promptly after the completion of our business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until July 20, 2018.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
sponsor, officers and directors have agreed that if we do not complete our initial business combination by July 20, 2018, 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
up to $1,000,000 of our working capital requirements as well as to pay our franchise and income taxes (less up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under
Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights
or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination
by July 20, 2018.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights
to liquidating distributions from the trust account with respect to any founder shares held by them if we fail to complete our
initial business combination by July 20, 2018. However, if our initial stockholders acquire public shares after our initial public
offering, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail
to complete our initial business combination by July 20, 2018.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by July 20, 2018, unless we provide our public
stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds
held in the trust account and not previously released to us to pay up to $1,000,000 of our working capital requirements as well
as to pay our franchise and income 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 upon consummation of our initial
business combination (so that we are not subject to the SEC’s “penny stock” rules).
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors,
will be funded from amounts remaining out of the approximately $954,102 of proceeds held outside the trust account (as of December
31, 2016), 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 up to $1,000,000 of our working capital requirements as well as to pay
franchise and income taxes on interest income earned on the trust account balance, we may request the trustee to release to us
an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses. The amount of interest available
to us from the trust account may be less than $1,000,000 as a result of the current interest rate environment.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other
than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account,
the per-share redemption amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited
in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims
of our public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not
be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against
us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These
claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend
to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’
claims.
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account
for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute
such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent
inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the
waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to
be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Our sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered
or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce
the amount of funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held
in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in
each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed
a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that
an executed waiver is deemed to be unenforceable against a third party, then our sponsor will not be responsible to the extent
of any liability for such third party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy
its indemnity obligations and believe that our sponsor’s only assets are securities of our company. We have not asked our
sponsor to reserve for such indemnification obligations. 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 will indemnify us for claims by third parties including, without limitation,
claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per
public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the
trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it
is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim,
our independent directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce
its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may
choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative
to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked
our sponsor to reserve for such indemnification obligations and we cannot assure you that our sponsor would be able to satisfy
those obligations. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption
price will not be less than $10.00 per public share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers, 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 our initial public offering against certain liabilities,
including liabilities under the Securities Act. We will have access to up to approximately $954,102 of proceeds held outside the
trust account (as of December 31, 2016) with which to pay any such potential claims (including costs and expenses incurred in
connection with our liquidation, currently estimated to be no more than approximately $100,000).
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our business combination by July 20, 2018 may be considered a liquidating
distribution under Delaware law. Delaware law provides that 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.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our business combination by July 20, 2018, is not considered a liquidating distribution under Delaware
law and such redemption distribution is deemed to be unlawful, 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 business combination by July 20, 2018, 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 up
to $1,000,000 of our working capital requirements as well as to pay our franchise and income taxes (less up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem
our public shares as soon as reasonably possible following July 20, 2018 and, therefore, we do not intend to comply with those
procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them
(but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers and investment bankers) 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 our initial public offering against certain liabilities,
including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third
party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held
in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the
trust account, we cannot assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received
by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have
acted in bad faith, 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 in the event of the redemption of our public
shares if we do not complete our business combination by July 20, 2018 or if they redeem their respective shares for cash upon
the completion of the initial business combination. 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.
Competition
In
identifying, evaluating and selecting a target business for our business combination, we have encountered, and may continue to
encounter, intense competition from other entities having a business objective similar to ours, including other blank check companies,
private equity groups and leveraged buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities
are well established and have extensive experience identifying and effecting business combinations directly or through affiliates.
Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to
acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an
advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public
stockholders who exercise their redemption rights may reduce the resources available to us for our initial business combination
and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target
businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business
combination.
Employees
We
currently have two officers. Members of our management team are not obligated to devote any specific number of hours to our matters
but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business
combination. The amount of time that any such person will devote in any time period will vary based on whether a target business
has been selected for our initial business combination and the current stage of the business combination process.
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 contain financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these
financial statements will need to be prepared in accordance with GAAP. We cannot assure you that any particular target business
identified by us as a potential acquisition candidate will have financial statements prepared in accordance with GAAP or that
the potential target business will be able to prepare its financial statements in accordance with GAAP. To the extent that this
requirement cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential
acquisition candidates, we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the year ending December 31, 2017 as required by the Sarbanes-Oxley
Act. 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. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the
internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
Item
1A. Risk Factors
You
should consider carefully all of the risks described below, together with the other information contained in this Report, including
the financial statements. If any of the following risks occur, our business, financial condition or results of operations may
be materially and adversely affected. The risk factors described below are not necessarily exhaustive and you are encouraged to
perform your own investigation with respect to us and our business.
We
are a recently formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability
to achieve our business objective.
We
are a recently formed company with no operating results. Because we lack an operating history, you have no basis upon which to
evaluate our ability to achieve our business objective of completing our initial business combination with one or more target
businesses. We may be unable to complete our business combination. If we fail to complete our business combination, we will never
generate any operating revenues.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete
our initial business combination even if a majority of our public stockholders do not support such a combination.
We
may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder
approval under applicable law or the Nasdaq rules or if we decide to hold a stockholder vote for business or other legal reasons.
Except as required by law or the NASDAQ rules, the decision as to whether we will seek stockholder approval of a proposed business
combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion,
and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would
otherwise require us to seek stockholder approval. Accordingly, we may complete our initial business combination even if holders
of a majority of our public shares do not approve of the business combination we complete.
If
we seek stockholder approval of our initial business combination, after approval of our board, our initial stockholders have agreed
to vote in favor of such initial business combination, regardless of how our public stockholders vote.
Unlike
many other blank check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority
of the votes cast by the public stockholders in connection with an initial business combination, after approval of our board,
our initial stockholders have agreed to vote their founder shares, as well as any public shares purchased during or after our
initial public offering, in favor of our initial business combination. As a result, in addition to our initial stockholders’
founder shares, we would need 15,093,750, or 37.5%, of the 40,250,000 public shares outstanding to be voted in favor of a transaction
(assuming all outstanding shares are voted) in order to have our initial business combination approved. Our initial stockholders
own shares representing 20% of our outstanding shares of common stock. Accordingly, if we seek stockholder approval of our initial
business combination, after approval of our board, it is more likely that the necessary stockholder approval will be received
than would be the case if our initial stockholders agreed to vote their founder shares in accordance with the majority of the
votes cast by our public stockholders.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.
At
the time of your investment in us, you were not be provided with an opportunity to evaluate the specific merits or risks of one
or more target businesses. 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, if we do not seek stockholder approval, your only opportunity to affect the investment decision regarding a
potential business combination may be limited to exercising your redemption rights within the period of time (which will be at
least 20 business days) set forth in our tender offer documents mailed to our public stockholders in which we describe our initial
business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 upon consummation of our initial business combination (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less
than $5,000,001 upon consummation of our initial business combination or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for
an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
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 business combination agreement requires us to use a portion of the cash in the trust
account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion
of the cash in the trust account to meet such requirements, or arrange for third party financing. In addition, if a larger number
of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater
portion of the cash in the trust account or arrange for third party financing. Raising additional third party financing may involve
dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. The above considerations may limit
our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount
of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed in
connection with a business combination. The per-share amount we will distribute to stockholders who properly exercise their redemption
rights will not be reduced by the deferred underwriting commission and after such redemptions, the per-share value of shares held
by non-redeeming stockholders will reflect our obligation to pay the deferred underwriting commissions.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
our business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
is increased. If our initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account
until we liquidate the trust account. If you are in need of immediate liquidity, you could attempt to sell your stock in the open
market; however, at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either
situation, you may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption
until we liquidate or you are able to sell your stock in the open market.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses
leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business
combination targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination
on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination by July 20, 2018. Consequently, such target business may obtain leverage over us in negotiating
a business combination, knowing that if we do not complete our initial business combination with that particular target business,
we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer
to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial
business combination on terms that we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public
stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire
worthless.
Our
sponsor, officers and directors have agreed that we must complete our initial business combination by July 20, 2018. We may not
be able to find a suitable target business and complete our initial business combination by such date. If we have not completed
our initial business combination by such date, 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 up to $1,000,000 of our working capital requirements as well as
to pay our franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of
then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law. In such case, our public stockholders may only receive $10.00 per share, and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption
of their shares. See “— If third parties bring claims against us, the proceeds held in the trust account could be
reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors
below.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates
may elect to purchase shares 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 business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares
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. Such a purchase may include a contractual acknowledgement that such
stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not
to exercise its redemption rights. In the event that our sponsor, directors, officers, advisors or their affiliates purchase shares
in privately negotiated transactions from public stockholders who have already elected to exercise their redemption rights, such
selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such purchases could
be to vote such shares in favor of the 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 business combination, where it appears that such requirement would
otherwise not be met. This may result in the completion of our 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 and the number of beneficial
holders of our securities may be reduced, possibly making it difficult to 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 business combination, or
fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business
combination. Despite our compliance with these rules, if a stockholder fails to receive our tender offer or proxy materials, as
applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents
or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
For example, we may require our public stockholders seeking to exercise their redemption rights, whether they are record holders
or hold their shares in “street name,” to either tender their certificates to our transfer agent prior to the date
set forth in the tender offer documents or proxy materials mailed to such holders, or up to two business days prior to the vote
on the proposal to approve the business combination in the event we distribute proxy materials, or to deliver their shares to
the transfer agent electronically. In the event that a stockholder fails to comply with these or any other procedures, its shares
may not be redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders are entitled to receive funds from the trust account only upon the earliest to occur of: (i) our completion
of an initial business combination, (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 redeem
100% of our public shares if we do not complete our initial business combination by July 20, 2018 and (iii) the redemption of
our public shares if we are unable to complete an initial business combination by July 20, 2018, subject to applicable law and
as further described herein. In addition, if we are unable to complete an initial business combination by July 20, 2018 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
July 20, 2018 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. Accordingly, to liquidate your investment, you may be forced to sell your public
shares or warrants, potentially at a loss.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete
an initial business combination with a target business, 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, 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 that we will have a longer period of time to complete our business
combination than do companies subject to Rule 419. Moreover, if our initial 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 10% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 10% 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 10% of the shares sold in our initial public offering, 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 business combination. Your inability to redeem the Excess Shares will reduce your
influence over our ability to complete our 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 business combination. And as a result, you will continue to hold that number of shares
exceeding 10% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially
at a loss.
Because
of our 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 approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances,
and our warrants will expire worthless.
We
have encountered and expect to encounter intense competition from other entities having a business objective similar to ours,
including private investors (which may be individuals or investment partnerships), other blank check companies and other entities,
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 greater technical, human and other
resources or more local industry knowledge than we do and our financial resources are 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 our initial public offering and the sale of the private placement warrants, our ability to compete with respect
to the acquisition of certain target businesses that are sizable is limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, because
we are obligated to pay cash for the shares of Class A common stock which our public stockholders redeem in connection with our
initial business combination, target companies will be aware that this may reduce the resources available to us for our initial
business combination. This 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 approximately $10.00 per share
on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share upon our liquidation. See “— If third parties bring claims against us, the
proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors below.
If
the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account
are insufficient to allow us to operate until July 20, 2018, we may be unable to complete our initial business combination, in
which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our
warrants will expire worthless.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate until July 20, 2018, assuming
that our initial business combination is not completed during that time. We believe that the funds available to us outside of
the trust account are sufficient to allow us to operate until July 20, 2018; 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 designed to keep target businesses from “shopping” around for transactions
with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination,
although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive
exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or
otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.00 per
share on the liquidation of our trust account and our warrants will expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share upon our liquidation. See “— If third parties bring claims against us, the
proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share” and other risk factors below.
If
the net proceeds of our initial public offering and the sale of the private placement warrants not being held in the trust account
are insufficient, it could limit the amount available to fund our search for a target business or businesses and complete our
initial business combination and we will depend on loans from our sponsor or management team to fund our search for a business
combination, to pay our franchise and income taxes and to complete our initial business combination. If we are unable to obtain
these loans, we may be unable to complete our initial business combination.
Of
the net proceeds of our initial public offering and the sale of the private placement warrants, only approximately $954,102 (as
of December 31, 2016) will be available to us outside the trust account to fund our working capital requirements. If we are required
to seek additional capital, we would need to borrow funds from our sponsor, management team or other third parties to operate
or may be forced to liquidate. Neither our sponsor, members of our management team nor any of their affiliates is under any obligation
to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the trust account
or from funds released to us upon completion of our initial business combination. We do not expect to seek loans from parties
other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and
provide a waiver against any and all rights to seek access to funds in our trust account. If we are unable to obtain these loans,
we may be unable to complete our initial business combination. If we 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 approximately $10.00 per share on our redemption of our public shares, and our warrants
will expire worthless. In certain circumstances, our public stockholders may receive less than $10.00 per share on the redemption
of their shares. See “— If third parties bring claims against us, the proceeds held in the trust account could be
reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share” and other risk factors
below.
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
our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Although 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 post-combination debt financing. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
such stockholders, or if they are able to successfully bring a private claim under securities laws that the tender offer materials
or proxy statement related to our initial business combination contained an actionable material misstatement or material omission.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements
with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not
be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if
management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
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 business combination within the prescribed
timeframe, or upon the exercise of a redemption right in connection with our 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 share initially
held in the trust account, due to claims of such creditors. Our sponsor has agreed that it will be liable to us if and to the
extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have
discussed entering into a transaction agreement, reduce the amount of funds in the trust account to 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 the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes. This
liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access
to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against
certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed
to be unenforceable against a third party, then our sponsor will not be responsible to the extent of any liability for such third
party claims. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations
and believe that our sponsor’s only assets are securities of our company. We have not asked our sponsor to reserve for such
indemnification obligations. Therefore, our sponsor may not 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
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 or (ii) such lesser
amount per share held in the trust account as of the date of the liquidation of the trust account due to reductions in the value
of the trust assets, in each case net of the interest which may be withdrawn to pay taxes, and our sponsor asserts that it is
unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations.
While
we currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so
if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable
or if the independent directors determine that a favorable outcome is not likely. 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 we and
our board may be exposed to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself
and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions
on the nature of our investments; and
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restrictions
on the issuance of securities, each of which may make it difficult for us to complete
our business combination.
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In
addition, we may have imposed upon us burdensome requirements, including:
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registration
as an investment company;
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adoption
of a specific form of corporate structure; and
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reporting,
record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In
order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our
activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting
more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business
is to identify and complete a business combination and thereafter to operate the post-transaction business or assets for the long
term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated
businesses or assets or to be a passive investor.
We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds
held in the trust account may only be invested in United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act having a maturity of 180 days or less or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment
of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long
term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid
being deemed an “investment company” within the meaning of the Investment Company Act. The trust account is intended
as a holding place for funds pending the earliest to occur of: (i) the completion of our primary business objective, which is
a business combination; (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 redeem 100% of our
public shares if we do not complete our initial business combination by July 20, 2018; or (iii) absent a business combination,
our return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If
we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed
to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses
for which we have not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete
our initial business combination, our public stockholders may receive only approximately $10.00 per share on the liquidation of
our trust account and our warrants will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments 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 and results of operations.
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 July 20, 2018 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 July 20, 2018
in the event we do not complete our 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 and investment bankers) 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 July 20, 2018 is not considered
a liquidating distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section
174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution,
instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual meeting of stockholders until after the consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect directors.
In
accordance with NASDAQ corporate governance requirements, we are not required to hold an annual meeting until one year after our
first fiscal year end following our listing on NASDAQ. Under Section 211(b) of the DGCL, we are, however, required to hold an
annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws unless such election is made
by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to
the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which
requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to 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.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any
state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus
precluding such investor from being able to exercise its warrants except on a cashless basis and potentially causing such warrants
to expire worthless.
We
have not registered the shares of Class A common stock issuable upon exercise of the warrants issued in our initial public offering
under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have
agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination,
we will use our best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of
the shares of Class A common stock issuable upon exercise of the warrants and thereafter will use our 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 issuable upon exercise of the warrants issued in our initial public offering are not registered under the Securities
Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable
for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants,
unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the
exercising holder, or an exemption from registration is available. Notwithstanding the above, if our Class A common stock is at
the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a
“covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public
warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement, but we will
be required to use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption
is not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in
exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable
state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not
so registered or qualified or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise
such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part
of a purchase of units will have paid the full unit purchase price solely for the shares of Class A common stock included in the
units. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register
or qualify the underlying shares of Class A common stock for sale under all applicable state securities laws.
The
grant of registration rights to our initial stockholders may make it more difficult to complete our initial business combination,
and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant
to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial
stockholders and their permitted transferees can demand that we register the private placement warrants and the shares of Class
A common stock issuable upon exercise of the founder shares and the private placement warrants held by them and holders of warrants
that may be issued upon conversion of working capital loans may demand that we register such warrants or the Class A common stock
issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability
of such a significant number of securities for trading in the public market may have an adverse effect on the market price of
our Class A common stock. In addition, the existence of the registration rights may make our initial business combination more
costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek
in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A common
stock that is expected when the securities owned by our initial stockholders or holders of working capital loans or their respective
permitted transferees are registered.
Because
we are not limited to a particular industry, sector or 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’ operations.
Although
we expect to focus our search for a target business in the consumer sector, we may seek to complete a business combination with
an operating company in any industry or sector. However, we are not, under our amended and restated certificate of incorporation,
permitted to effectuate our business combination with another blank check company or similar company with nominal operations.
Because we have not yet entered into a definitive agreement with 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 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 revenues or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or an early 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 shares will ultimately prove to be more favorable to investors
than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders
who choose to remain stockholders following the 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.
Past
performance by Centerview Capital Consumer, including our management team, may not be indicative of future performance of an investment
in the Company.
Information
regarding performance by, or businesses associated with, Centerview Capital Consumer and its affiliates is presented for informational
purposes only. Past performance by Centerview Capital Consumer, including our management team, is not a guarantee either (i) of
success with respect to any business combination we may consummate or (ii) that we will be able to locate a suitable candidate
for our initial business combination. You should not rely on the historical record of Centerview Capital Consumer’s or our
management team’s performance as indicative of our future performance of an investment in the company or the returns the
company will, or is likely to, generate going forward. Most of our officers or directors have not had experience with blank check
companies or special purpose acquisition corporations in the past.
We
may seek acquisition opportunities in industries or sectors which may or may not be outside of our management’s area of
expertise.
We
will consider a business combination outside of our management’s area of expertise if a business combination candidate is
presented to us and we determine that such candidate offers an attractive acquisition 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 securities will not ultimately prove to be less favorable to investors in our initial public offering than a direct investment,
if an opportunity were available, in a business combination candidate. In the event we elect to pursue an acquisition 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 herein regarding the areas of our management’s expertise would not be relevant
to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain
or assess all of the significant risk factors. Accordingly, any stockholders who choose to remain stockholders following our business
combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction
in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we 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 legal reasons, it may be more difficult
for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria
and guidelines. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share on the liquidation of our trust account and our warrants will expire worthless.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of revenue
or earnings, which could subject us to volatile revenues or earnings or difficulty in retaining key personnel.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established
record of revenues or earnings, we may be affected by numerous risks inherent in the operations of the business with which we
combine. These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although
our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to
properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business.
We
are not required to obtain an opinion from an independent investment banking firm or from an independent accounting firm, and
consequently, you may have no assurance from an independent source that the price we are paying for the business is fair to our
company from a financial point of view.
Unless
we complete our business combination with an affiliated entity or our board cannot independently determine the fair market value
of the target business or businesses, we are not required to obtain an opinion from an independent investment banking firm that
is a member of FINRA or from an independent accounting firm that the price we are paying is fair to our company from a financial
point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will
determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our tender offer documents or proxy solicitation materials, as applicable, related to our initial business combination.
We
may issue additional common stock or preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion
of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of
the anti-dilution provisions contained in our amended and restated certificate of incorporation. Any such issuances would dilute
the interest of our stockholders and likely present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 200,000,000 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. There are currently 159,750,000 and 9,937,500 authorized but unissued shares of Class A common
stock and Class B common stock, respectively, available for issuance, which amount takes into account the shares of Class A common
stock reserved for issuance upon exercise of outstanding warrants but not the shares of Class A common stock issuable upon conversion
of Class B common stock, which amount is not currently determinable. There are no shares of preferred stock issued and outstanding.
Shares of Class B common stock are convertible into shares of our Class A common stock initially at a one-for-one ratio but subject
to adjustment as set forth herein, including in certain circumstances in which we issue Class A common stock or equity-linked
securities related to our initial business combination. Shares of Class B common stock are also convertible at the option of the
holder at any time.
We
may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination
(including pursuant to a specified future issuance) 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 contained in our amended
and restated certificate of incorporation. However, our amended and restated certificate of incorporation provides, among other
things, that prior to our initial business combination, we may not issue additional shares of capital stock that would entitle
the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination. The issuance
of additional shares of common or preferred stock:
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may
significantly dilute the equity interest of investors in our initial public offering;
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may
subordinate the rights of holders of common stock if preferred stock is issued with rights
senior to those afforded our common stock;
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could
cause a change of control if a substantial number of shares of our common stock are issued,
which may affect, among other things, our ability to use our net operating loss carry
forwards, if any, and could result in the resignation or removal of our present officers
and directors; and
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may
adversely affect prevailing market prices for our units, Class A common stock and/or
warrants.
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Resources
could be wasted in researching acquisitions 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 receive only approximately $10.00 per share, or less than such amount in certain circumstances, on the liquidation
of our trust account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys 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 receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire
worthless.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our 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 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.
In
addition, the officers and directors of an acquisition candidate may resign upon completion of our initial business combination.
The departure 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. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our business combination and as a result,
may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our 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.
The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target
business. However, we believe the ability of such individuals to remain with us after the completion of our business combination
will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our business combination.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination
as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may affect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company, which could, in turn, negatively impact the value of our stockholders’ investment in us.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value.
Our
officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict
of interest in allocating their time between our operations and our search for 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 officers
is engaged in several other business endeavors for which he may be entitled to substantial compensation and our officers are not
obligated to contribute any specific number of hours per week to our affairs. In particular, certain of our officers and directors
are employed by Centerview Capital Consumer, which is an investment manager to various private investment funds, which make investments
in securities or other interests of or relating to companies in industries we may target for our initial business combination.
Our independent directors also serve as officers or board members for other entities. If our officers’ and directors’
other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment
levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete
our initial business combination.
Certain
of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business
activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their
time and determining to which entity a particular business opportunity should be presented.
Until
we consummate our initial business combination, we will continue to engage in the business of identifying and combining with one
or more businesses. Our sponsor and officers and directors are, and may in the future become, affiliated with entities that are
engaged in a similar business.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the
other entities to which they owe certain fiduciary or contractual duties.
Accordingly,
they may have conflicts of interest in determining whether a particular business opportunity should be presented. These conflicts
may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as
a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
Our
officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that conflict with
our interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct
or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which
we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated
with our sponsor, our directors or officers, although we do not intend to do so, or we may acquire a target business through an
Affiliated Joint Acquisition with one or more affiliates of Centerview Capital and/or one or more investors in funds managed by
Centerview Capital. We do not have a policy that expressly prohibits any such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and
ours.
In
particular, Centerview Capital Consumer is focused on investments in the consumer sector. As a result, there may be substantial
overlap between companies that would be a suitable business combination for us and companies that would make an attractive target
for such other affiliates.
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, officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, officers and directors with other entities, we may decide to acquire one or more businesses
affiliated with our sponsor, officers or directors. Our directors also serve as officers and board members for other entities.
Such entities may compete with us for business combination opportunities. Although we are not 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 disinterested directors. Despite
our agreement to obtain an opinion from an independent investment banking firm that is a member of FINRA, or from an independent
accounting 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 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.
We
may acquire a target business through an Affiliated Joint Acquisition with one or more affiliates of Centerview Capital and/or
one or more investors in funds managed by Centerview Capital. This may result in conflicts of interest as well as dilutive issuances
of our securities.
We
may, at our option, pursue an Affiliated Joint Acquisition opportunity with an entity affiliated with Centerview Capital and/or
one or more investors in funds managed by Centerview Capital. Any such parties may co-invest with us in the target business at
the time of our initial business combination, or we could raise additional proceeds to complete the acquisition by making a specified
future issuance to any such parties. Accordingly, such persons or entities may have a conflict between their interests and ours.
In
addition, any specified future issuance in connection with an Affiliated Joint Acquisition would trigger the anti-dilution provisions
of our Class B common stock, which, unless waived, would result in an adjustment to the conversion ratio of our Class B common
stock such that our initial stockholders and their permitted transferees, if any, would retain their aggregate percentage ownership
at 20% of the sum of the total number of all shares of common stock currently outstanding plus all shares issued in the specified
future issuances. If such adjustment is not waived, the specified future issuance would not reduce the percentage ownership of
holders of our Class B common stock, but would reduce the percentage ownership of holders of our Class A common stock.
Since
our sponsor, officers and directors will lose their entire investment in us if our business combination is not completed, a conflict
of interest may arise in determining whether a particular business combination target is appropriate for our initial business
combination.
In
April 2016, our sponsor purchased an aggregate of 10,062,500 founder shares for an aggregate purchase price of $25,000, or approximately
$0.002 per share. In June 2016, our sponsor transferred 25,000 founder shares to each of Ms. Ghez and Messrs. Daley, Healey and
Montgomery, our independent directors. The founder shares will be worthless if we do not complete an initial business combination.
In addition, our sponsor purchased an aggregate of 6,700,000 private placement warrants, each exercisable for one share of our
Class A common stock at $11.50 per share, for a purchase price of $10,050,000, or $1.50 per whole warrant, that will also be worthless
if we do not complete a business combination. Holders of founder shares have agreed (A) to vote any shares owned by them in favor
of any proposed business combination and (B) not to redeem any founder shares in connection with a stockholder vote to approve
a proposed initial business combination. In addition, we may obtain loans from our sponsor, affiliates of our sponsor or an officer
or director. The personal and financial interests of our officers and directors may influence their motivation in identifying
and selecting a target business combination, completing an initial business combination and influencing the operation of the business
following the initial business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete 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 Report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our business combination. We have agreed that we will not incur any
indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the
monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from
the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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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 security
is payable on demand;
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our
inability to obtain necessary additional financing if the debt security contains covenants
restricting our ability to obtain such financing while the debt security is outstanding;
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our
inability to pay dividends on our 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 common stock if declared, our ability
to pay expenses, make capital expenditures and acquisitions, and fund 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;
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limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, and execution of our strategy; and
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other
disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of the initial public offering and the sale of the private
placement warrants, which will cause us to be solely dependent on a single business which may have a limited number of products
or services. This lack of diversification may negatively impact our operations and profitability.
Of
the net proceeds from our initial public offering and the sale of the private placement warrants, $402,500,000 is available
to complete our initial business combination and pay related fees and expenses (which includes up to approximately $14,087,500,
for the payment of deferred underwriting commissions).
We
may effectuate our 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 business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. By completing our initial business combination with only a single entity, our lack
of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which
may have the resources to complete several business combinations in different industries or different areas of a single industry.
In addition, we intend to focus our search for an initial business combination in a single industry. Accordingly, the prospects
for our success may be:
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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.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our 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 acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By
definition, very little public information 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.
Our
management may not be able to maintain control of a target business after our initial business combination.
We
may structure a business combination so that the post-transaction company in which our public stockholders own shares will own
less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if
the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment
Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns
50% or more of the voting securities of the target, our stockholders prior to the 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 transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of Class
A common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest
in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately
prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction.
In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining
a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management
will not be able to maintain our control of the target business. We cannot provide assurance that, upon loss of control of a target
business, new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete a business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no
event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation
of our initial business combination (such that we are not subject to the SEC’s “penny stock” rules) or any greater
net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. As
a result, we may be able to complete our business combination even if 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 business combination pursuant to the tender offer rules, have entered into
privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the
event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination
exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all shares
of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate
business combination.
The
exercise price for the public warrants is higher than in many similar blank check company offerings in the past, and, accordingly,
the warrants are more likely to expire worthless.
The
exercise price of the public warrants is higher than many similar blank check companies in the past. Historically, the exercise
price of a warrant was generally a fraction of the purchase price of the units in the initial public offering. The exercise price
for our public warrants is $11.50 per share. As a result, the warrants are less likely to ever be in the money and more likely
to expire worthless.
In
order to effectuate our initial business combination, we may seek to 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 but that our
stockholders may not support.
In
order to effectuate a business combination, blank check companies have, in the recent past, amended various provisions of their
charters and modified governing instruments. For example, blank check companies have amended the definition of business combination,
increased redemption thresholds and extended the period of time required to complete an initial business combination. We cannot
assure you that we will not seek to amend our charter or governing instruments or extend the period of time required to complete
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 blank check companies. It
may be easier for us, therefore, to amend our amended and restated certificate of incorporation and the trust agreement to facilitate
the completion of an initial business combination that some of our stockholders may not support.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination activity, without approval by a certain percentage of the company’s
stockholders. In those companies, amendment of these provisions sometimes requires approval by between 90% and 100% of the company’s
public stockholders. 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 our initial public offering and the private placement of
warrants into the trust account and not release such amounts except in specified circumstances, and to provide redemption rights
to public stockholders as described herein) 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 NASDAQ rules. Our initial stockholders, who collectively beneficially own up to 20% of our
common stock, will participate in any vote to amend our amended and restated certificate of incorporation and/or trust agreement
and will have the discretion to vote in any manner they choose. As a result, we may be able to amend the provisions of our amended
and restated certificate of incorporation which govern our pre-business combination behavior more easily than some other blank
check 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, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation that would affect the substance or timing of our obligation to redeem
100% of our public shares if we do not complete our initial business combination by July 20, 2018, unless we provide our public
stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding
public shares. These agreements are contained in a letter agreement that we have entered into with our sponsor, officers and directors.
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, 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.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement warrants are sufficient
to allow us to complete our initial business combination, because we have not yet identified any prospective target business we
cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our initial public offering and
the sale of the private placement warrants prove to be insufficient, either because of the size of our initial business combination,
the depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant
number of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated
transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing
or to abandon the proposed 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. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.00 per share plus any pro rata interest earned on the funds held in the trust account and not previously released to us to
pay our working capital requirements (up to $1,000,000 in the aggregate) as well as franchise and income taxes on the liquidation
of our trust account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete
our business combination, we may require such financing to fund the operations or growth of the target business. The failure to
secure additional financing could have a material adverse effect on the continued development or growth of the target business.
None of our officers, directors or stockholders is required to provide any financing to us in connection with or after our initial
business combination. If we are unable to complete our initial business combination, our public stockholders may only receive
approximately $10.00 per share on the liquidation of our trust account, and our warrants will expire worthless.
Our
initial stockholders may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you
do not support.
Our
initial stockholders own shares representing 20% of our issued and outstanding shares of common stock. Accordingly, they may exert
a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments
to our amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders
purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would increase
their control. Factors that would be considered in making such additional purchases would include consideration of the current
trading price of our Class A common stock. In addition, our board of directors, whose members were elected by our initial stockholders,
is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of
directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors prior to the completion
of our 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 business combination.
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 50%
of the then outstanding public warrants. As a result, the exercise price of the warrants could be increased, the exercise period
could be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased,
all without warrant holders’ 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
to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 50% of the then
outstanding public warrants to make any change that adversely affects the interests of the registered holders. 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, shorten the exercise period or decrease the number of shares of our Class
A common stock purchasable upon exercise of a warrant.
We
may redeem unexpired warrants prior to their exercise at a time that is disadvantageous to a warrant holder, thereby making such
warrants worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a
price of $0.01 per warrant, provided that the last reported sales price of our Class A common stock equals or exceeds $18.00 per
share for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give
proper notice of such redemption and provided certain other conditions are met. If and when the warrants become redeemable by
us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under
all applicable state securities laws. Redemption of the outstanding warrants could force a holder (i) to exercise such warrants
and pay the exercise price therefor at a time when it may be disadvantageous for the holder to do so, (ii) to sell such warrants
at the then-current market price when the holder might otherwise wish to hold such warrants or (iii) to accept the nominal redemption
price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market
value of the warrants. None of the private placement warrants will be redeemable by us so long as they are held by the sponsor
or its permitted transferees.
Our
warrants and founder shares may have an adverse effect on the market price of our Class A common stock and make it more difficult
to effectuate our business combination.
We
issued warrants to purchase 13,416,667 shares of Class A common stock as part of the units sold in our initial public offering
and, simultaneously with the closing of our initial public offering, we issued in a private placement warrants to purchase an
aggregate of 6,700,000 shares of Class A common stock at $11.50 per share. Prior to our initial public offering, our sponsor purchased
an aggregate of 10,062,500 founder shares in a private placement. The founder shares are convertible into shares of Class A common
stock on a one-for-one basis, subject to adjustment as set forth herein. In addition, if our sponsor makes any working capital
loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.50 per warrant at the option of the lender.
Such warrants would be identical to the private placement warrants, including as to exercise price, exercisability and exercise
period.
To
the extent we issue shares of Class A common stock to effectuate a business combination, the potential for the issuance of a substantial
number of additional shares of Class A common stock upon exercise of these warrants and conversion rights could make us a less
attractive acquisition vehicle to a target business. Any such issuance will increase the number of issued and outstanding shares
of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete the business combination.
Therefore, our warrants and founder shares may make it more difficult to effectuate a business combination or increase the cost
of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that,
so long as they are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including
the Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred,
assigned or sold by our sponsor until 30 days after the completion of our initial business combination and (iii) they may be exercised
by the holders on a cashless basis.
Because
each unit contains one-third of one warrant and only a whole warrant may be exercised, the units may be worth less than units
of other blank check companies.
Each
unit contains one-third of one warrant. Because, pursuant to the warrant agreement, the warrants may only be exercised for a whole
number of shares, only a whole warrant may be exercised at any given time. 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-third of the number of shares compared to units that each contain a
warrant to purchase one whole share, thus making us, we believe, a more attractive merger partner for target businesses. Nevertheless,
this unit structure may cause our units to be worth less than if they included a warrant to purchase one whole share.
The
requirements of being a public company may strain our resources and divert management’s attention.
As
a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes
Oxley Act”), the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of NASDAQ and other
applicable securities rules and regulations. Compliance with these rules and regulations increase our legal and financial compliance
costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly
after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act requires, among other things, that we
maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and,
if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard,
significant resources and management oversight may be required. As a result, management’s attention may be diverted from
other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in
the future or engage outside consultants to comply with these requirements, which will increase our costs and expenses.
A
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained.
You may be unable to sell your securities unless a market can be established and sustained.
NASDAQ
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
securities are currently listed on NASDAQ. However, we cannot assure you that our securities will continue to be listed on NASDAQ
in the future or prior to our initial business combination. In order to continue listing our securities on NASDAQ prior to our
initial business combination, we must maintain certain financial, distribution and stock price levels. Generally, we must maintain
a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally
300 public holders). Additionally, in connection with our initial business combination, we will be required to demonstrate compliance
with NASDAQ’s initial listing requirements, which are more rigorous than NASDAQ’s continued listing requirements,
in order to continue to maintain the listing of our securities on NASDAQ. For instance, our stock price would generally be required
to be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5.0 million and we
would be required to have 300 round lot holders. We may not be able to meet those initial listing requirements at that time.
If
NASDAQ delists our securities from trading on its exchange and we are not able to list our securities on another national securities
exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
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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.
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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 currently listed on NASDAQ, our units, Class A common stock and warrants are covered securities. Although the
states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies
if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale
of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict
the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view
blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities
of blank check companies in their states. Further, if we were no longer listed on NASDAQ, our securities would not be covered
securities and we would be subject to regulation in each state in which we offer our securities.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the
tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America, or GAAP, or international financial reporting standards, or IFRS,
depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards
of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statements may also be required to
be prepared in accordance with GAAP in connection with our current report on Form 8-K announcing the closing our initial business
combination within four business days following such closing. 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.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make
it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access
to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our Class A common stock held by non-affiliates exceeds
$700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following
December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our
securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading
prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accountant standards used.
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 acquisition.
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, 2017. As long as we remain an emerging growth company, we will not be required
to comply with the independent registered public accounting firm attestation requirement on our internal control over financial
reporting. The fact that we are
a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target company with which we seek to complete our 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 acquisition.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our Class A common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of and issue new series of preferred shares, which may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices
for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these
provisions may make the removal of management more difficult and may discourage transactions that otherwise could involve payment
of a premium over prevailing market prices for our securities.
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, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought
only in the Court of Chancery in the State of Delaware and, if brought outside of Delaware, the stockholder bringing such suit
will be deemed to have consented to service of process on such stockholder’s counsel. This provision may have the effect
of discouraging lawsuits against our directors and officers.
If
we effect our initial business combination with a company with operations or opportunities outside of the United States, we would
be subject to a variety of additional risks that may negatively impact our operations.
If
we effect our initial business combination with a company with operations or opportunities outside of the United States, we would
be subject to any special considerations or risks associated with companies operating in an international setting, including any
of the following:
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higher
costs and difficulties inherent in managing cross-border business operations and complying
with different commercial and legal requirements of overseas markets;
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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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tariffs
and trade barriers;
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regulations
related to customs and import/export matters;
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longer
payment cycles and challenges in collecting accounts receivable;
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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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cultural
and language differences;
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employment
regulations;
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crime,
strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
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deterioration
of political relations with the United States; and
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government
appropriations of assets.
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We
may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may
adversely impact our results of operations and financial condition.
We
may face risks related to consumer sector companies.
Business
combinations with companies in the consumer sector entail special considerations and risks. If we are successful in completing
a business combination with such a target business, we may be subject to, and possibly adversely affected by, the following risks:
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An
inability to compete effectively in a highly competitive environment with many incumbents
having substantially greater resources;
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An
inability to manage rapid change, increasing consumer expectations and growth;
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An
inability to build strong brand identity and improve customer satisfaction and loyalty;
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Limitations
on a target business’ ability to protect its intellectual property rights, including
its trade secrets, that could cause a loss in revenue and any competitive advantage;
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The
high cost or unavailability of materials, equipment, supplies and personnel that could
adversely affect our ability to execute our operations on a timely basis;
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An
inability to attract and retain customers;
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An
inability to license or enforce intellectual property rights on which our business may
depend;
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Seasonality
and weather conditions that may cause our operating results to vary from quarter to quarter;
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An
inability by us to successfully anticipate changing consumer preferences and buying trends
and manage our product line and inventory commensurate with customer demand;
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Potential
liability for negligence, copyright, or trademark infringement or other claims based
on the nature and content of materials that we may distribute;
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Dependence
of our operations upon third-party suppliers whose failure to perform adequately could
disrupt our business;
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Our
operating results may be adversely affected by changes in the cost or availability of
raw materials and energy;
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We
may be subject to production-related risks which could jeopardize our ability to realize
anticipated sales and profits;
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Changes
in the retail industry and markets for consumer products affecting our customers or retailing
practices could negatively impact customer relationships and our results of operations;
and
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Our
business could involve the potential for product recalls, product liability and other
claims against us, which could affect our earnings and financial condition.
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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 the consumer sector. 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.