Overview
We are a blank check company incorporated in Delaware
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. We are an early stage and emerging
growth company and, as such, we are subject to all of the risks associated with early stage and emerging growth companies.
On January 19, 2021, our sponsor paid $25,000 to
cover certain of our offering expenses in consideration for 5,750,000 shares of our Class B common stock, par value $0.0001 per share.
On February 7, 2021, our sponsor transferred 20,000 shares of Class B common stock to each of our independent directors and chief financial
officer.
On March 25, 2021, the Company consummated its
initial public offering of 20,000,000 Units at $10.00 per Unit, generating gross proceeds of $200.0 million, and incurring offering costs
of approximately $11.6 million, inclusive of $7.0 million in deferred underwriting commissions. On March 30, 2021, following our initial
public offering, the underwriter partially exercised its over-allotment option to purchase 2,047,293 Units, and our sponsor
forfeited 238,177 shares of Class B common stock. The Company incurred an additional $0.4 million in cash underwriting fees and $716,553
in additional deferred underwriting fees. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant.
Each whole public warrant entitles the holder to purchase one share of our Class A common stock at a price of $11.50 per share, subject
to adjustment.
Simultaneously with the closing of our initial
public offering, we consummated the private placement of 7,200,000 private placement warrants to our sponsor, at a price of $1.00 per
private placement warrant, generating gross proceeds of approximately $7.2 million. Simultaneously with the closing of the over-allotment
option, we sold an additional 409,459 private placement warrants to our sponsor at a price of $1.00 per private placement warrant, generating
additional gross proceeds of approximately $0.4 million. Each private placement warrant is exercisable to purchase one share of our Class
A common stock.
Market Opportunity
We believe the technological changes that will
drive the transformation of the 21st century industrial economy will generate increased demand for essential yet increasingly
scarce raw materials, including nickel, aluminum, phosphorus, copper, graphite, lithium, helium, hydrogen, cobalt and manganese, that
are critical for supporting the expected explosive growth from this technological transformation. The growing focus on environmental,
social and governance practices has led to a paradigm shift in the global economy towards energy transition, electrification and decarbonization,
resulting in public and private demand for commercial solutions to the lack of sufficient critical energy infrastructure, such as scalable
energy storage, battery technology, carbon capture and resource management. We believe continued technological innovation in end-markets such
as renewable energy, hardware for digital technologies, infrastructure, healthcare, specialized manufacturing, aerospace and defense,
and space exploration will provide additional growth drivers for demand in the underlying natural resources needed to support this transformation
as well as energy management services across the value chain.
McKinsey & Company projects that aggregate
global battery demand will grow by over fifteen times in the next decade, from an estimated 250 GWh in 2020 to an estimated 3,900 GWh in
2030, due to increased emphasis on electric mobility, utility-scale and home energy storage, and distributed energy technology and
infrastructure. This rapid growth in demand is expected to create significant shortages in the supply of key battery metals, such as nickel,
cobalt, graphite, lithium, phosphorus, and manganese. Automotive semiconductors may also drive supply/demand disruptions for helium, silicon,
and cobalt as the end-market is expected to represent 15% of semiconductor demand by 2030, due to the proliferation of electric vehicles. The International Energy Association predicts that the total mineral demand from clean energy technologies will more than double by 2040
and that the mineral demand from electronic vehicles and battery storage will grow more than tenfold during the same time. As a result, we believe that securing supply of these key resources has become an urgent strategic
imperative for companies looking to participate at scale in the 21st century industrial economy and represents a critical
element of a holistic energy transition investment thesis.
Most developed economies have put forward
targeted decarbonization plans in recent years, including prospective bans on sales of new gasoline and diesel vehicles by as early
as 2025. McKinsey & Company estimates that global electricity consumption will double by 2050, led by the electrification
of transport and buildings. Over this time period, electric vehicle sales are expected to reach 62 million units per year, and the
U.S. Energy Information Administration projects a nearly 50% increase in world energy use by 2050. To meet this growing demand of
energy, they also predict that renewable energy sources will grow by nearly the same level. Morgan Stanley estimates $50 trillion of
investment will be required over the next 30 years. In order to successfully compete at scale as this global
mega-trend accelerates, many businesses are already developing and implementing their energy transition strategies.
Business Strategy
Our focus is to identify and acquire a company
that generates long term shareholder value in the public markets. We intend to target a company that provides critical resources and/or
services to the technologies powering the 21st century industrial economy. Additionally, we intend to leverage our management’s
deep knowledge of natural resources, real assets and innovative technologies as well as our extensive network of relationships with management
of public and private companies, investment bankers, and attorneys to identify and evaluate a number of business combination opportunities.
We intend to deploy a pro-active, thematic sourcing strategy focused on companies where we believe the combination of our investment track
record, operating experience, and strong relationship networks can be catalysts to transform companies and can help accelerate the target
business’s growth and performance.
Business Combination Criteria
Consistent with our business strategy, we have
identified the following general criteria and guidelines to evaluate targets for our initial business combination. We use these criteria
and guidelines in evaluating business combination opportunities, but we may decide to enter into our initial business combination with
a target business that does not meet any or all of these criteria and guidelines. We currently intend to focus on targets that we believe:
| ● | are well positioned to supply the critical resources required to support the technological transformation of the 21st century
industrial economy; |
| ● | have developed solutions to the energy management needs of developed economies driven by public and private focus on energy transition,
electrification and decarbonization; |
| ● | have a positive environmental and social impact, taking into account stakeholders, employees and the community, without sacrificing
a financial return for our stockholders; |
| ● | will benefit from our management team’s extensive network, operating expertise, technical expertise, and strong track record
of investing in real assets; |
| ● | have opportunities to grow the business organically and via third-party acquisitions; |
| ● | will be well received by public investors and are expected to have access to the public capital markets; |
| ● | are engaged in businesses that would benefit from macro trends that our management team believes will drive value over the subsequent
years; |
| ● | are expected to generate attractive risk-adjusted returns for our stockholders. |
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 team may deem relevant. In the event that we decide
to enter into our initial business combination with a target business that does not meet the above criteria and guidelines, we will disclose
that the target business does not meet the above criteria in our stockholder communications related to our initial business combination,
would be in the form of proxy solicitation materials or tender offer documents that we would file with the United States Securities and
Exchange Commission (“SEC”).
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 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. The requirement that the target business or businesses together have an aggregate fair
market value of at least 80% of the assets held in the trust account is set forth in our amended and restated certificate of incorporation,
and will continue to apply to us even if our securities are no longer listed on Nasdaq. 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 the Financial Industry Regulatory Authority Inc. (“FINRA”) or an independent accounting firm with respect to
the satisfaction of such criteria.
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. 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 (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. In addition, we have agreed not to enter
into a definitive agreement regarding an initial business combination without the prior consent of our sponsor.
Our Acquisition Process
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 from 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 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 currently 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. 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 and directors or affiliates of our
sponsor may sponsor, form or participate in other blank check companies similar to ours during the period in which we are seeking an initial
business combination. Any such companies may present additional conflicts of interest in pursuing an acquisition target, particularly
in the event there is overlap among investment mandates and the officer and director teams. However, we do not currently expect that any
such other blank check company would materially affect our ability to complete our initial business combination.
In addition, our officers and directors are not
required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts of interest in allocating management
time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
Moreover, our officers and directors have and will have in the future time and attention requirements for current and future investment
funds, accounts, co-investment vehicles and other entities managed by affiliates of our sponsor. To the extent any conflict of interest
arises between, on the one hand, us and, on the other hand, investments funds, accounts, co-investment vehicles and other entities
managed by affiliates of our sponsor (including, without limitation, arising as a result of certain of our officers and directors being
required to offer acquisition opportunities to such investment funds, accounts, co-investment vehicles and other entities), such
affiliates will resolve such conflicts of interest in their sole discretion in accordance with their then existing fiduciary, contractual
and other duties and there can be no assurance that such conflict of interest will be resolved in our favor.
We have filed a Registration Statement on Form
8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result, we are subject to the rules
and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15 to suspend our reporting or other
obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
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 network of relationships with investment banks, private equity firms, professional advisors and senior
industry executives provides us with a substantial number of potential business combination targets. Over the course of their careers,
the members of our management team have developed a broad network of contacts and corporate relationships around the world. This network
has grown through the activities of our management team sourcing, acquiring and financing businesses, our management team’s relationships
with sellers, financing sources and target management teams. Our management team is also highly experienced in executing transactions
under varying economic and financial market conditions. See the section of this Report entitled “Directors, Executive Officers and
Corporate Governance” for a more complete description of our management team’s experience.
Status as a Public Company
We believe our structure makes 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 certain 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 underwriter’s
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 $1.07 billion, or (c) in which we are deemed to be
a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates equaled or
exceeded $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Additionally, we are a “smaller reporting
company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced
disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a
smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares of common stock held
by non-affiliates equaled or exceeded $250 million as of the prior June 30th, and (2) our annual revenues
equaled or exceeded $100 million during such completed fiscal year or the market value of our shares of common stock held by non-affiliates equaled
or exceeded $700 million as of the prior June 30th.
Financial Position
With funds available for a business combination in the amount of $220,487,761 as of December 31, 2021, after payment of $7,716,553 of deferred underwriting fees, in each case 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 access to the expertise of our management team, 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 following our initial public offering. We intend to effectuate our initial
business combination using cash from the proceeds of our initial public offering and the private placement of the private placement warrants,
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, and we may effectuate
our initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject
to compliance with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our
business combination. In the case of an initial business combination funded with assets other than the trust account assets, our tender
offer documents or proxy materials disclosing the business combination would disclose the terms of the financing and, only if required
by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through
loans in connection with our initial business combination. At this time, 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 final prospectus
associated with 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 our sponsor a total of $25,000 per month
for office space, utilities and professional, 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 from 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.
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. The requirement that the target business or businesses together have an aggregate fair market value of at least 80% of the
assets held in the trust account is set forth in our amended and restated certificate of incorporation, and will continue to apply to
us even if our securities are no longer listed on Nasdaq. 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. There is no basis for investors to evaluate the possible merits or risks of any target business with which we may ultimately complete
our business combination.
To the extent we effect our 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.
In addition, we have agreed not to enter into a
definitive agreement regarding an initial business combination without the prior consent of our sponsor.
Redemption Rights for Public Stockholders upon Completion of our
Initial Business Combination
We will provide our public stockholders with the
opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business combination
at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days
prior to the consummation of the initial business combination including interest earned on the funds held in the trust account and not
previously released to us to pay our 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 underwriter. The redemption rights will include the requirement that a beneficial holder must identify
itself in order to validly redeem its shares. 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 intend to 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:
| ● | conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender
offers; and |
| ● | file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same
financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A
of the Exchange Act, which regulates the solicitation of proxies. |
Upon the public announcement of our business combination,
we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class A
common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under
the Exchange Act.
In the event we conduct redemptions pursuant to
the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a) under
the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer period.
In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public shares which
are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination (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:
| ● | conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies, and not pursuant to the tender offer rules; and |
| ● | file proxy materials with the SEC. |
In the event that we seek stockholder approval
of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders
with the redemption rights described above upon 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 8,267,736,
or 37.5% (assuming all outstanding shares are voted), or 1,377,957, or 6.25% (assuming only the minimum number of shares representing
a quorum are voted), of the 22,047,293 public shares sold in our initial public offering (including the partial exercise by the underwriter
of its over-allotment option) to be voted in favor of a transaction 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
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 15% 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 15% 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 15% 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 or proxy materials mailed to such holders,
or up to two business days prior to the initially scheduled 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 proxy solicitation or tender offer materials, as applicable, that we will furnish
to holders of our public shares in connection with our initial business combination will indicate the applicable delivery requirements,
which will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares. 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 stockholder meeting set forth in our
proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection with an election of
redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such holder may simply request
that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders
of our public shares electing to redeem their shares will be distributed promptly after the completion of our 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 24 months from the closing
of our initial public offering.
Redemption of Public Shares and Liquidation if no Initial Business
Combination
Our sponsor, officers and directors have agreed
that we will have only 24 months from the closing of our initial public offering to complete our initial business combination. If
we are unable to complete our business combination within such 24-month period, we will: (i) cease all operations except for
the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest
earned on the funds held in the trust account and not previously released to us to pay our franchise and income taxes (less up to $100,000
of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject
to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to our warrants, which will expire worthless if we fail to complete our business combination within the 24-month time
period.
Our sponsor, officers and directors have entered
into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the trust account with
respect to any founder shares held by them if we fail to complete our initial business combination within 24 months from the closing
of our initial public offering. However, if our initial stockholders acquire public shares in or 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 within the allotted 24-month time period.
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 within 24 months from the closing of our initial public offering or with respect to any other provisions relating to
the rights of holders of our Class A common stock, unless we provide our public stockholders with the opportunity to redeem their
shares of Class A common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released
to us to pay our franchise and income 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 proceeds
held outside of the trust account (which as of December 31, 2021, was $1,025,865), 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 our franchise and income taxes
on interest income earned on the trust account balance, we may request the trustee to release to us an additional amount of up to $100,000
of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of
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 (other than our independent registered public accounting firm), prospective target businesses or other entities with which we
do business execute agreements with us waiving any right, title, interest or claim of any kind in or to 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 interest that may be withdrawn to pay our tax obligations, 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 underwriter 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 our tax obligations, 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 (other
than our independent registered public accounting firm), prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will
also not be liable as to any claims under our indemnity of the underwriter of our initial public offering against certain liabilities,
including liabilities under the Securities Act. We will have access to up to approximately $1,500,000 from the proceeds of our initial
public offering 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). In the event that we liquidate and it is subsequently determined that
the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account could be liable for claims
made by creditors. In the event that our offering expenses exceed our estimate of $1,700,000, we may fund such excess with funds from
the funds not to be held in the trust account. In such case, the amount of funds we intend to be held outside the trust account would
decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,700,000, the
amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
Under the DGCL, stockholders may be held liable
for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion
of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our
business combination within 24 months from the closing of our initial public offering may be considered a liquidating distribution
under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that
it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust
account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete our business combination
within 24 months from the closing of our initial public offering, 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 within 24 months from the closing of our initial public offering,
we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more
than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us
to pay our 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 our 24th month and, therefore,
we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of
distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such
date.
Because we will not be complying with Section 280,
Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment
of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However,
because we are a blank check company, rather than an operating company, and our operations are limited to searching for prospective target
businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective
target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will seek to have all vendors,
service providers (other than our independent registered public accounting firm), prospective target businesses or other entities with
which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the
trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that
any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable only to the
extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such lesser
amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of
the trust assets, in each case net of the amount of interest withdrawn to pay our franchise and income taxes and will not be liable as
to any claims under our indemnity of the underwriter of 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 within
24 months from the closing of our initial public offering 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 encounter intense competition from other entities having a business objective similar to ours,
including other blank check companies, private equity groups and leveraged buyout funds, and operating businesses seeking strategic acquisitions.
Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or
through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our
ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others
an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders
who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding
warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these
factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Facilities
Our executive offices are located at 3811 Turtle
Creek Blvd., Suite, 1100, Dallas, TX 75219, and our telephone number is (972) 850-7474. Our executive offices are provided to us by our
sponsor. Commencing on March 22, 2021, we have agreed to pay our sponsor a total of $25,000 per month for office space, utilities and
professional, secretarial and administrative support. We consider our current office space adequate for our current operations.
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
We have registered our Units, Class A common
stock and warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and
current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports will contain financial statements
audited and reported on by our independent registered public accounting firm.
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 or IFRS, depending on the circumstances and the historical financial statements may be required to be audited in accordance
with the PCAOB. 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 such requirements or that the potential target business will be able to prepare its financial
statements in accordance with such requirements. 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.
A target company may not be in compliance with
the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls over financial reporting. 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.
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 $1.07 billion, or (c) in which we are deemed to be
a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates equaled or
exceeded $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt securities during the prior three-year period.
Additionally, we are a “smaller reporting
company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure
obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting
company until the last day of the fiscal year in which (1) the market value of our shares of common stock held by non-affiliates equaled
or exceeded $250 million as of the prior June 30th, and (2) our annual revenues equaled or exceeded $100 million
during such completed fiscal year or the market value of our shares of common stock held by non-affiliates equaled or exceeded $700 million
as of the prior June 30th.
An investment in our securities involves a high
degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this
Report and the final prospectus associated with our initial public offering, before making a decision to invest in our securities. If
any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that
event, the trading price of our securities could decline, and you could lose all or part of your investment.
Risks Relating to our Search for, Consummation of, or Inability
to Consummate, a Business Combination and Post-Business Combination Risks
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.
Past performance by, or business associated with, our management
team, is not indicative of future performance of an investment in us.
Information regarding performance by, or businesses
associated with, our management team, is presented for informational purposes only. Any past experience and performance of our management
team is not a guarantee either: (1) that we will be able to successfully identify a suitable candidate for our initial business combination;
or (2) of any results with respect to any initial business combination we may consummate. You should not rely on the historical record
of the performance of, or businesses associated with, our management team as being indicative of the future performance of an investment
in us or the returns we will, or are likely to, generate going forward.
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 though a majority of our public
stockholders do not support such a combination.
We may choose not to hold a stockholder vote to
approve our initial business combination unless the business combination would require stockholder approval under applicable law or stock
exchange listing requirements or if we decide to hold a stockholder vote for business or other legal reasons. Except as required by law,
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,
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, 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 8,267,736, or 37.5% (assuming all outstanding shares are voted), or 1,377,957,
or 6.25% (assuming only the minimum number of shares representing a quorum are voted), of the 22,047,293 public shares sold in our initial
public offering (including the partial exercise by the underwriter of the over-allotment option) to be voted in favor of a transaction
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, 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 will
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 underwriter 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 not be consummated
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 not be consummated 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 within 24 months
from the closing of our initial public offering. 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.
Our search for a business combination, and any target business
with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (COVID-19) outbreak
and the status of debt and equity markets.
In December 2019, a novel strain of coronavirus
was reported to have surfaced, which has and is continuing to spread throughout parts of the world, including the United States. On January
30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency
of International Concern.” On January 31, 2020, former U.S. Health and Human Services Secretary Alex M. Azar II declared a
public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11,
2020, the World Health Organization characterized the outbreak as a “pandemic.” The COVID-19 outbreak has and a
significant outbreak of other infectious diseases could result in a widespread health crisis that could adversely affect the economies
and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could
be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating
to COVID-19 continues to restrict travel, limit the ability to have meetings with potential investors or the target company’s
personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to
which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot
be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat
its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of
time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business
combination, may be materially adversely affected.
In addition, our ability to consummate a transaction
may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other events, including
as a result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable
to us or at all.
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 within 24 months from the closing of our initial public offering. We may not be
able to find a suitable target business and complete our initial business combination within such time period. For example, the outbreak
of COVID-19 continues to grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend
on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market
volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally,
the outbreak of COVID-19 may negatively impact businesses we may seek to acquire. If we have not completed our initial
business combination within such time period, we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and
not previously released to us to pay our 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 are unable to complete an initial business
combination within the 24-month period, we may seek an amendment to our amended and restated certificate of incorporation to extend the
period of time we have to complete an initial business combination beyond 24 months. Our amended and restated certificate of incorporation
requires that such an amendment be approved by holders of 65% of our outstanding common stock.
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 obtain or maintain the quotation, listing or trading of our securities on a national securities exchange.
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 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 for at least the next 24
months, 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 for at least the next 24 months, assuming that our initial business combination is
not completed during that time. We believe that, upon the closing of our initial public offering, the funds available to us outside of
the trust account will be sufficient to allow us to operate for at least the next 24 months; 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, as of December 31, 2021 only $1,025,865 is 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. Even though these charges may be non-cash items and not have an immediate
impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our
securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result
of assuming pre-existing debt held by a target business or by virtue of our obtaining 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 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:
| ● | restrictions on the nature of our investments; and |
| ● | restrictions on the issuance of securities, each of which may make it difficult for us to complete our business combination. |
In addition, we may have imposed upon us burdensome
requirements, including:
| ● | registration as an investment company; |
| ● | adoption of a specific form of corporate structure; and |
| ● | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
In order not to be regulated as an investment company
under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other
than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or
trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and
cash items) on an unconsolidated basis. Our business is to identify and complete 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 subject us to the Investment Company Act. To this end, the proceeds held in the trust account may only be invested in United
States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act having a maturity of 185
days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest
only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other
securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring
and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity
fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. Our initial
public offering is not intended for persons who are seeking a return on investments in government securities or investment securities.
The trust account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our 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 (a) 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 within 24 months from the closing of our initial public
offering, or (b) with respect to any other provisions relating to the rights of holders of our Class A common stock; 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.
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.
Holders of Class A common stock will not be entitled to vote on
any election of directors we hold prior to our initial business combination.
Prior to our initial business combination, only
holders of our founder shares will have the right to vote on the election of directors. Holders of our public shares will not be entitled
to vote on the election of directors during such time. In addition, prior to the completion of an initial business combination, holders
of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, you may not have any say
in the management of our company prior to the consummation of an initial business combination.
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 have focused our search for a target
business that provides critical resources and/or services to the technologies powering the 21st century industrial economy, 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, be permitted to effectuate our business combination with another blank check company or similar company
with nominal operations. Because we have not yet selected or approached any specific target business with respect to a business combination,
there is no basis to evaluate the possible merits or risks of any particular target business’ 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 a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent
in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or
that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us
with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that
an investment in our Units, Class A common stock or warrants 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.
We may seek acquisition opportunities in industries or sectors which
may or may not be outside of our management’s area of expertise.
Although we intend to focus on identifying business
combination candidates that provide critical resources and/or services to the technologies powering the 21st century industrial economy,
we may 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 Units, Class A common stock
or warrants 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 in this Report regarding the areas of our management’s expertise would not be relevant to an understanding
of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain or assess all of the significant
risk factors. Accordingly, any stockholders who choose to remain stockholders following our 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.
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.
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’ 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.
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.
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:
| ● | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our
debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach
certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
| ● | our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding; |
| ● | our inability to pay dividends on our common stock; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general
corporate purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation; |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements,
and execution of our strategy; and |
| ● | other disadvantages compared to our competitors who have less debt. |
We may only be able to complete one business combination with the
proceeds of our 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 (including the partial exercise by the underwriter of its over-allotment option) and the sale of the private placement
warrants, as of December 31, 2021, $220,487,761 is available to complete our business combination and pay related fees and expenses
(which includes up to approximately $7,716,553 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 business, 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 are focusing our search for an initial business combination in a single industry. Accordingly, the prospects
for our success may be:
| ● | solely dependent upon the performance of a single business, property or asset; or |
| ● | dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification may subject us to
numerous economic, competitive and regulatory 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 though
a substantial majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder
approval of our initial business combination and do not conduct redemptions in connection with our 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.
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 changed industry focus.
We cannot assure you that we will not seek to amend our charter or governing instruments or change our industry focus 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 applicable stock exchange rules. Our initial stockholders, who
collectively beneficially own 20% of our common stock, will participate in any vote to amend our amended and restated certificate of
incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be able to amend
the provisions of our amended and restated certificate of incorporation which govern our pre-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 within 24 months from the closing of our initial public offering or with respect to any other provisions relating to the rights
of holders of our Class A common stock, 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 will be sufficient to allow us to complete our initial business
combination, 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 candidate.
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 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.
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 statement
requirements may limit the pool of potential target businesses we may acquire because some targets may be unable to provide such financial
statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination
within the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley Act may make it
more difficult for us to effectuate our initial business combination, require substantial financial and management resources, and increase
the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls over financial reporting beginning with our Annual Report on Form 10-K
for the year ending December 31, 2022. Only in the event we are deemed to be a large accelerated filer or an accelerated filer and no
longer qualify as an emerging growth company, will we be required to comply with the independent registered public accounting firm attestation
requirement on our internal control over financial reporting. 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 over financial reporting of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
A provision in our warrant agreement may make it more difficult
for us to consummate an initial business combination.
Unlike most blank check companies, if (i) we issue
additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our
initial business combination at a Newly Issued Price of less than $9.20 per share of Class A common stock, (ii) the aggregate gross proceeds
from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial
business combination on the date of the consummation of our initial business combination (net of redemptions), and (iii) the Market Value
is below $9.20 per share, then the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value
and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180%
of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the
nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price. This may make it more difficult for us to consummate
an initial business combination with a target business.
As the number of special purpose acquisition companies evaluating
targets increases, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase
the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business
combination.
In recent years, the number of special purpose
acquisition companies that have been formed has increased substantially. Many potential targets for special purpose acquisition companies
have already entered into an initial business combination, and there are still many special purpose acquisition companies seeking targets
for their initial business combination, as well as many such companies currently in registration. As a result, at times, fewer attractive
targets may be available to consummate an initial business combination.
In addition, because there are more special purpose
acquisition companies seeking to enter into an initial business combination with available targets, the competition for available targets
with attractive fundamentals or business models may increase, which could cause target companies to demand improved financial terms. Attractive
deals could also become scarcer for other reasons, such as economic or industry sector downturns, geopolitical tensions, or increases
in the cost of additional capital needed to close business combinations or operate targets post-business combination. This could increase
the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial business combination, and may result
in our inability to consummate an initial business combination on terms favorable to our investors altogether.
We may engage the underwriter from our initial public offering or
one of its affiliates to provide additional services to us after our initial public offering, which may include acting as financial advisor
in connection with an initial business combination or as placement agent in connection with a related financing transaction. The underwriter
is entitled to receive deferred commissions that will be released from the trust only on a completion of an initial business combination.
These financial incentives may cause the underwriter to have potential conflicts of interest in rendering any such additional services
to us after our initial public offering, including, for example, in connection with the sourcing and consummation of an initial business
combination.
We may engage the underwriter from our initial
public offering or one of its affiliates to provide additional services to us after our initial public offering, including, for example,
identifying potential targets, providing financial advisory services, acting as a placement agent in a private offering or arranging debt
financing. We may pay the underwriter from our initial public offering or its affiliates fair and reasonable fees or other compensation
that would be determined at that time in an arm’s length negotiation. The underwriter is also entitled to receive deferred commissions
that are conditioned on the completion of an initial business combination. The fact that the underwriter or its affiliates’ financial
interests are tied to the consummation of a business combination transaction may give rise to potential conflicts of interest in providing
any such additional services to us, including potential conflicts of interest in connection with the sourcing and consummation of an initial
business combination.
Risks Relating to our Securities
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 proxy solicitation or tender offer materials, as applicable, that we will furnish to holders of
our public shares in connection with our initial business combination will indicate the applicable delivery requirements, which will include
the requirement that a beneficial holder must identify itself in order to validly redeem its 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 initially scheduled 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. Therefore, to liquidate your investment, you may be forced to sell your public shares
or warrants, potentially at a loss.
Our public stockholders will be entitled to receive
funds from the trust account only upon the 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
(a) 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 within 24 months from the closing of our initial public offering, or (b) with respect to any other provisions relating to
rights of holders of our Class A common stock; and (iii) the redemption of our public shares if we are unable to complete an initial business
combination within 24 months from the closing of our initial public offering, subject to applicable law and as further described herein.
In addition, if we are unable to complete an initial business combination within 24 months from the closing of our initial public offering
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 24
months from the closing of our initial public offering 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.
The securities in which we invest the funds held in the trust account
could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount
received by public stockholders may be less than $10.00 per share.
The proceeds held in the trust account are invested
only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions
under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term
U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in
recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee
of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the
event that we are unable to complete our initial business combination or make certain amendments to our amended and restated certificate
of incorporation, our public stockholders are entitled to receive their pro-rata share of the proceeds held in the trust account, plus
any interest income, net of taxes paid or payable (less, in the case we are unable to complete our initial business combination, $100,000
of interest). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption amount received
by public stockholders may be less than $10.00 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.
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, our securities may not 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. 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
a minimum of 300 round lot holders of our securities. 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:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common
stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for
our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets Improvement Act
of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred
to as “covered securities.” Because our Units, Class A common Stock and warrants are listed on Nasdaq, our Units, Class A
common stock and warrants are covered securities. Although the states are preempted from regulating the sale of covered 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.
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to
hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A
common stock.
If we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender offer
rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange
Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares sold in 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
15% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
If third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per share.
Our placing of funds in the trust account may not
protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers (other than our independent
registered public accounting firm), prospective target businesses 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 that may be withdrawn to pay our franchise and income
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 underwriter 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 our franchise and income 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.
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 within 24 months from the closing of our initial public offering may be considered a liquidating distribution
under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it
makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought
against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our
public shares as soon as reasonably possible following the 24th month from the closing of our initial public offering 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, investment bankers, etc.) or
prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with
respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot
assure you that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend
beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders
upon the redemption of our public shares in the event we do not complete our initial business combination within 24 months from the closing
of our initial public offering 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.
Registration of the shares of Class A common stock issuable upon
exercise of the warrants under the Securities Act may not be in place when an investor desires to exercise warrants, thus precluding such
investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants
is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise
such warrant and such warrant may have no value and expire worthless.
We have agreed that as soon as practicable, but
in no event later than 20 business days after the closing of our initial business combination, we will use our commercially reasonable
efforts to file with the SEC a post-effective amendment to the registration statement on Form S-1 that was filed in connection with our
initial public offering or file a new registration statement for the registration under the Securities Act of the shares of Class A common
stock issuable upon exercise of the warrants and thereafter will use our commercially reasonable efforts to cause the same to become effective
within 60 business days following our initial business combination and to maintain the effectiveness of such registration statement and
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 are not registered under the Securities Act, we will be required to permit holders to exercise their warrants
on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any
shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the foregoing,
if a registration statement covering the Class A common stock issuable upon exercise of the warrants is not effective by the 60th business
day following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration
statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless
basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided that such exemption is available. If that
exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. We will use
our commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not
available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the
warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws
and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or
exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may
have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of Units will have paid the
full Unit purchase price solely for the shares of Class A common stock included in the Units. If and when the warrants become redeemable
by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all
applicable state securities laws. There may be a circumstance where an exemption from registration exists for holders of our private placement
warrants to exercise their warrants while a corresponding exemption does not exist for holders of the warrants included as part of Units
sold in our initial public offering. In such an instance, our sponsor and its transferees (which includes our independent directors and
chief financial officer) would be able to sell the Class A common stock underlying their warrants while holders of our public warrants
would not be able to exercise their warrants and sell the underlying shares of Class A common stock. We will use our commercially reasonable
efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which
the warrants were offered by us in our initial public offering. However, there may be instances in which holders of our public warrants
may be unable to exercise such public warrants but holders of our private warrants may be able to exercise such private warrants.
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.
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 400,000,000 shares of Class A common stock, par value $0.0001 per share, 40,000,000 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 377,952,707
and 34,488,177 authorized but unissued shares of Class A common stock and Class B common stock, respectively, available for issuance,
excluding shares of Class A common stock reserved for issuance upon exercise of outstanding warrants and currently issuable upon conversion
of Class B common stock. 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 at a one-for-one ratio but subject to adjustment as set forth herein, including in certain circumstances
in which we issue Class A common stock or equity-linked securities related to our initial business combination. Shares of Class B common
stock are also convertible at the option of the holder at any time.
We may issue a substantial number of additional
shares of common or preferred stock to complete our initial business combination or under an employee incentive plan after completion
of our initial business combination. We may also issue shares of Class A common stock to redeem the warrants or upon conversion of the
Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution
provisions contained in our amended and restated certificate of incorporation. However, our amended and restated certificate of incorporation
provides, among other things, that prior to 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:
| ● | may significantly dilute the equity interest of investors in our initial public offering; |
| ● | may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common
stock; |
| ● | could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things,
our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers
and directors; and |
| ● | may adversely affect prevailing market prices for our Units, Class A common stock and/or warrants. |
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 divided into three classes, each of which generally serves 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. In addition, prior to the completion of an initial business combination, holders
of a majority of our founder shares may remove a member of the board of directors for any reason. In addition, we have agreed not to enter
into a definitive agreement regarding an initial business combination without the prior consent of our sponsor.
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 65% of the then outstanding public warrants. As a result, the exercise price of
your warrants could be increased, the exercise period could be shortened and the number of shares of our Class A common stock purchasable
upon exercise of a warrant could be decreased, all without your approval.
Our warrants were issued in registered form under
a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that
the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but
requires the approval by the holders of at least 65% 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 65% of the then outstanding public warrants approve of such amendment and, solely with respect to any amendment to
the terms of the private placement warrants or any provision of the warrant agreement with respect to the private placement warrants,
65% of the number of the then outstanding private placement warrants. Although our ability to amend the terms of the public warrants with
the consent of at least 65% 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 your unexpired warrants prior to their exercise at
a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants
at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the last reported
sales price of our Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending
on the third trading day prior to the date on which we give proper notice of such redemption and provided certain other conditions are
met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify
the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you
(i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell
your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption
price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value
of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by our sponsor or its permitted
transferees.
In addition, we may redeem your warrants after
they become exercisable for $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders
will be able to exercise their warrants prior to redemption for a number of Class A common stock determined based on the redemption date
and the fair market value of our Class A common stock. Any such redemption may have similar consequences to a cash redemption described
above. In addition, such redemption may occur at a time when the warrants are “out-of-the-money,” in which case you would
lose any potential embedded value from a subsequent increase in the value of the Class A common stock had your warrants remained outstanding.
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 11,023,646 shares
of our Class A common stock as part of the Units offered by our initial public offering (including the partial exercise by the underwriter
of its over-allotment option) and, simultaneously with the closing of our initial public offering and the partial exercise by the underwriter
of its over-allotment option, we issued in a private placement an aggregate of 7,609,459 private placement warrants, each exercisable
to purchase one share of Class A common stock at $11.50 per share, subject to adjustment. Prior to our initial public offering, our
sponsor purchased an aggregate of 5,750,000 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 $1.00 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. Our
public warrants are also redeemable by us for Class A common stock.
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.
Our warrant agreement designates the courts of the State of New
York or the United States District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions
and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant holders to obtain a favorable
judicial forum for disputes with our company.
Our warrant agreement provides that, subject to
applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement, including
under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District Court for
the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive
forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum.
Notwithstanding the foregoing, these provisions
of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim
for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity purchasing
or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions
in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant agreement,
is filed in a court other than a court of the State of New York or the United States District Court for the Southern District of New York
(a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the
personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such
court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such warrant
holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant
holder.
This choice-of-forum provision may limit a warrant
holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may discourage
such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable with respect
to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters
in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result
in a diversion of the time and resources of our management and board of directors.
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.
Our amended and restated certificate of incorporation designates
the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be
initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with
our company or our company’s directors, officers or other employees.
Our amended and restated certificate of incorporation
provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall,
to the fullest extent permitted by law, be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf
of our company, (2) action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of our company
to our company or our stockholders, or any claim for aiding and abetting any such alleged breach, (3) action asserting a claim against
our company or any director, or officer or employee of our company arising pursuant to any provision of the DGCL or our amended and restated
certificate of incorporation or our bylaws, or (4) action asserting a claim against us or any director, or officer or employee of our
company governed by the internal affairs doctrine except for, as to each of (1) through (4) above, any claim (a) as to which the Court
of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable
party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (b) which
is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or (c) arising under the federal securities
laws, including the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall
concurrently be the sole and exclusive forums. Notwithstanding the foregoing, the provisions of this paragraph will not apply to suits
brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United
States of America shall be the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any shares
of our capital stock shall be deemed to have notice of and to have consented to the forum provisions in our amended and restated certificate
of incorporation. If any action the subject matter of which is within the scope the forum provisions is filed in a court other than a
court located within the State of Delaware (a “foreign action”) in the name of any stockholder, such stockholder shall be
deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection
with any action brought in any such court to enforce the forum provisions (an “enforcement action”); and (y) having service
of process made upon such stockholder in any such enforcement action by service upon such stockholder’s counsel in the foreign action
as agent for such stockholder.
This choice-of-forum provision may limit a stockholder’s
ability to bring a claim in a judicial forum that it finds favorable for disputes with our company or its directors, officers or other
employees, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our amended and restated certificate
of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur
additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business,
financial condition and results of operations and result in a diversion of the time and resources of our management and board of directors.
Risks Relating to our Sponsor and Management Team
Our ability to successfully effect our initial business combination
and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our
initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination
business.
Our ability to successfully effect our 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. In addition, pursuant to an agreement entered into concurrently with the issuance and sale of the securities in our initial
public offering, our sponsor, upon consummation of an initial business combination, will be entitled to nominate three individuals for
election to our board of directors.
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 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. 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 intend 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 to which entity a particular business opportunity
should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity
prior to its presentation to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity
as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
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.
We do not have a policy that expressly prohibits any such persons from engaging for their own account in business activities of the types
conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
We may engage in a business combination with one or more target
businesses that 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. They may also have investments in target businesses. 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.
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.
On January 19, 2021, our sponsor purchased 5,750,000
founder shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. On February 7, 2021, our sponsor transferred
20,000 founder shares to each of our independent directors and chief financial officer. On March 30, 2021, the underwriter partially exercised
its over-allotment option to purchase 2,047,293 Units. As a result, 238,177 founder shares were forfeited on April
1, 2021. The number of founder shares issued was determined based on the expectation that such founder shares would represent 20% of the
outstanding shares after our initial public offering. The founder shares will be worthless if we do not complete an initial business combination.
In addition, our sponsor purchased 7,609,459 private placement warrants, each exercisable for one share of our Class A common stock at
$11.50 per share, for an aggregate purchase price of $7,609,459, or $1.00 per 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.
Changes in the market for directors and officers liability insurance
could make it more difficult and more expensive for us to negotiate and complete an initial business combination.
In recent months, the market for directors and
officers liability insurance for special purpose acquisition companies has changed. Fewer insurance companies are offering quotes for
directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of such policies
have generally become less favorable. There can be no assurance that these trends will not continue.
The increased cost and decreased availability of
directors and officers liability insurance could make it more difficult and more expensive for us to negotiate an initial business combination.
In order to obtain directors and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business
combination entity might need to incur greater expense, accept less favorable terms or both. However, any failure to obtain adequate directors
and officers liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified
officers and directors.
In addition, even after we were to complete an
initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct
alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post-business
combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need
for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate our ability
to consummate an initial business combination on terms favorable to our investors.
Risks Associated with Acquiring and Operating a Business in Foreign
Countries
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:
| ● | higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal
requirements of overseas markets; |
| ● | rules and regulations regarding currency redemption; |
| ● | complex corporate withholding taxes on individuals; |
| ● | laws governing the manner in which future business combinations may be effected; |
| ● | tariffs and trade barriers; |
| ● | regulations related to customs and import/export matters; |
| ● | longer payment cycles and challenges in collecting accounts receivable; |
| ● | tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
| ● | currency fluctuations and exchange controls; |
| ● | cultural and language differences; |
| ● | crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; |
| ● | deterioration of political relations with the United States; and |
| ● | government appropriations of assets. |
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.
General Risk Factors
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.
We are an emerging growth company and a smaller reporting company
within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging
growth companies or smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult
to compare our performance with other public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being
required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding
advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result,
our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to
five years, although circumstances could cause us to lose that status earlier, including if the market value of our Class A common stock
held by non-affiliates equals or exceeds $700 million as of the end of a prior fiscal year’s second fiscal quarter 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.
Additionally, we are a “smaller reporting
company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure
obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting
company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equaled or exceeded
$250 million as of the end of the prior fiscal year’s second fiscal quarter, and (2) our annual revenues equaled or exceeded $100
million during such completed fiscal year or the market value of our common stock held by non-affiliates equaled or exceeded $700 million
as of the end of the prior fiscal year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations,
it may also make comparison of our financial statements with other public companies difficult or impossible.
Cyber incidents or attacks directed at us could result in information
theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including information
systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the
cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As an early
stage company without significant investments in data security protection, we may not be sufficiently protected against such occurrences.
We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents.
It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial
loss.
Our warrants are accounted for and are recorded at fair value upon issuance with changes in fair value each period to be reported in earnings, which may have an adverse
effect on the market price of our ordinary shares.
We account for our warrants as a warrant liability
and recorded at fair value upon issuance any changes in fair value each period reported in earnings as determined by the Company based
upon a valuation report obtained from its independent third party valuation firm. The impact of changes in fair value on earnings may
have an adverse effect on the market price of our ordinary shares.
We have identified material weaknesses in our internal control
over financial reporting as of December 31, 2021. If we are unable to develop and maintain an effective system of internal control over
financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor
confidence in us and materially and adversely affect our business and operating results.
On April 12, 2021, the Acting Director of the Division
of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations
for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations
for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). In the SEC
Statement, the SEC staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified
as liabilities on the SPAC’s financial statements as opposed to equity. Following the issuance of the SEC Statement, after consultation
with our independent registered public accounting firm, our management and our audit committee concluded that, in light of the SEC Statement,
it was appropriate to restate our previously audited balance sheet as of March 25, 2021 in the Form 8-K filed with the SEC on April 1,
2021. Additionally, in light of recent comment letters issued by the SEC to several SPACs, our management re-evaluated our application
of ASC 480-10-S99-3A to our accounting classification of Public Shares. After consultation with our independent registered public accounting
firm, our management and our audit committee concluded that it was appropriate to restate our previously reported financial statements
-- the Current Report on Form 8-K filed on April 1, 2021 with audited balance sheet as of March 25, 2021 (as restated in the Quarterly
Report on Form 10-Q filed on June 11, 2021), the Quarterly Report on Form 10-Q filed on June 11, 2021 with unaudited condensed financial
statements as of March 31, 2021, and the Quarterly Report on Form 10-Q filed on August 16, 2021 with unaudited condensed financial statements
as of June 30, 2021. As a result of these matters, we have identified a material weakness in our internal control over financial reporting
of complex financial instruments.
A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective internal controls are necessary for us
to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the identified material weaknesses.
These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the
intended effects.
If we identify any new material weaknesses in the
future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures
that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain
compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing
requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you
that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material
weaknesses.