Item 1. Business
Overview and Corporate Information
PropTech Investment Corporation
II (“we,” “us, “our,” or the “Company”) is a newly organized blank check company, incorporated
as a Delaware corporation on August 6, 2020 and formed for the purpose of effecting an initial business combination.
Our executive offices are
located at 3415 N. Pines Way, Suite 204, Wilson, WY 83014 and our telephone number is (310) 954-9665.
On
December 8, 2020, we consummated our initial public offering of 23,000,000 units, including 3,000,000 units issued pursuant to
the full exercise of the underwriters’ over-allotment option. Each unit consists of one share of our Class A common stock
and one-third of one redeemable warrant, with each whole warrant entitling the holder thereof to purchase one share of Class A
common stock for $11.50 per share. The units were sold at a price of $10.00 per unit, generating gross proceeds to us of $230,000,000.
Simultaneously
with the closing of our initial public offering, we also consummated the sale of 4,833,333 private placement warrants at a price
of $1.50 per private placement warrant in a private placement to our sponsor, generating gross proceeds of $7,250,000. The private
placement warrants are identical to the warrants underlying the units sold in our initial public offering, except that the private
placement warrants are not transferable, assignable or salable until after the completion of an initial business combination, subject
to certain limited exceptions.
A
total of $230,000,000 of the proceeds from our initial public offering and the sale of the private placement warrants, was placed
in a U.S.-based trust account at J.P. Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company,
acting as trustee. The proceeds held in the trust account may be invested by the trustee only in U.S. government securities with
a maturity of 185 days or less or in money market funds investing solely in U.S. government treasury obligations and meeting certain
conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended.
Except with respect to
interest earned on the funds held in the trust account that may be released to us to pay its taxes (less up to $100,000 interest
to pay dissolution expenses), the funds held in the trust account will not be released from the trust account until the earliest
of (i) the completion of our initial business combination, (ii) the redemption of any of our public shares properly submitted in
connection with a stockholder vote to amend our amended and restated certificate of incorporation (a) to modify the substance or
timing of its obligation to redeem 100% of our public shares if we do not complete our initial business combination by December
8, 2022 or (b) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity
and (iii) the redemption of our public shares if we are unable to complete our initial business combination by December 8, 2022,
subject to applicable law.
Our units, public shares
and public warrants are each traded on Nasdaq under the symbols “PTICU”, “PTIC” and “PTICW,”
respectively. Our units commenced public trading on December 4, 2020, and our public shares and public warrants commenced separate
public trading on January 25, 2021.
We must complete our initial
business combination by December 8, 2022, 24 months from the closing of our initial public offering. If our initial business
combination is not consummated by December 8, 2022, then our existence will terminate, and we will distribute all amounts in the
trust account.
Description of Business
Overview
We are a newly organized
blank check company incorporated as a Delaware corporation and formed for the purpose of effecting our initial business combination.
Since our initial public
offering, we have concentrated our efforts in identifying high quality businesses that provide technological innovation to the
real estate industry, or PropTech. As the largest asset class in the United States, the real estate industry is vast and includes,
but is not limited to: (i) commercial real estate such as office buildings, multi-family buildings, retail centers, industrial
warehouses, hotels, self-storage facilities, medical office buildings, student housing, senior housing and data centers; and
(ii) residential real estate such as single family homes and condominiums. Within the real estate industry, we are focused
on businesses that provide technology solutions to make the real estate industry more accessible, affordable, autonomous, collaborative,
connected, data-driven, digital, dynamic, efficient, experiential, flexible, productive, profitable, smart, transparent, and virtual.
New demand drivers are emerging
across all sectors of the real estate industry — traditionally one of the most illiquid, opaque, fragmented and low-tech asset
classes in the U.S. economy. These trends are prompting entrepreneurs to create technologies and build companies that digitally
transform and disrupt the outdated technology and operating models of real estate. For example, cloud-based software solutions
are modernizing the way real estate is operated, particularly in light of increasing remote work due to COVID-19; modular technology,
pre-fabrication and internet of things, or IoT, are reshaping property design, development, construction, and operations;
marketplaces and crowdfunding platforms are expanding real estate ownership and services to a broader and distributed pool of participants;
and the proliferation of data is allowing for the application and more efficient pricing of financial technology, or FinTech, solutions
to real estate, such as data-driven property management, risk management, investment, and asset management tools.
We are seeking to invest
in businesses that offer innovative software, hardware, products, operations, or services that are technologically equipped to
improve property ownership; property financing; property valuation; property operations; property management; leasing; property
insurance; real estate asset management and investment management; design, construction, and development. These businesses, therefore,
have a large market audience and many different customers, including landlords, homeowners, tenants, developers, operators, managers,
brokers, investors, lenders, architects, engineers, and general contractors.
We are seeking to invest
in established businesses of scale that we believe are poised for continued growth with capable management teams and proven unit
economics, but potentially in need of financial, operational, strategic or managerial enhancement to maximize value. We do not
intend to invest in startup companies, companies with speculative business plans, or companies that are excessively leveraged.
Additionally, as a result of COVID-19, we believe there are attractive businesses that may have additional capital needs over the
next few years, which could further increase the pipeline of potential opportunities.
Business Opportunity Overview
Real estate investment represents
a significant segment of the U.S. economy. In 2018, the National Association of Real Estate Trusts estimated the total value of
commercial real estate in the U.S. to be $16 trillion, and in 2019 Zillow estimated the total value of residential real estate
in the U.S. to be $34 trillion. According to the Bureau of Labor Statistics, real estate investment comprised the largest non-government share
of U.S. GDP, with $3.7 trillion of total spending in 2019, representing 17.5% of U.S. GDP. Despite the massive size of the commercial
and residential real estate industries, real estate is tremendously behind the innovation curve. Nearly every industry, other than
real estate, has been disrupted by new, innovative technologies, funded by a significant larger relative share of venture capital
investment. Real estate, however, has received a relatively small share of venture capital investment. This disparity is particularly
pronounced given the significant size of the real estate sector as a percentage of the U.S. economy. We believe this dynamic can
be characterized as the real estate “innovation funding gap.”
The way that buildings are
constructed, managed, leased, and traded has not changed materially for decades and information technology spending for commercial
real estate firms represents just 1.0% of revenues, as compared to 3.0% of revenues across all other industry sectors. We believe
traditional real estate owners and operators have not meaningfully invested in innovation, which has led to the innovation funding
gap. The next generation of PropTech companies have identified this lack of innovation as an immediate opportunity. This metamorphosis
is already underway. According to Unissu, over 8,000 PropTech companies have emerged, and according to CRETech, global investment
in PropTech has increased from $33 million in 2010 to $31.6 billion in 2019, which represented a record year for investment
into PropTech and a 229% increase from the $9.6 billion invested into the sector in 2018. We expect venture capital investment
into PropTech to accelerate.
Additionally, in recent
years the relative share of PropTech funding has increasingly shifted towards a higher percentage of late stage deals and a lower
percentage of early stage deals. We believe this trend mirrors the increasing maturation of the PropTech sector as a whole. We
have focused our efforts in identifying, evaluating, and investing in established and scalable PropTech companies, primarily at
the later stage of growth.
Despite the relative dearth
of venture capital funding in PropTech, private investors have recognized the opportunity, as evidenced by the accelerating pace
of PropTech funding relative to other sectors. The public markets have also supported PropTech companies including AppFolio (NASDAQ:APPF),
which has pioneered building automation through software-as-a-service platforms. Zillow (NASDAQ: ZG) has changed the way people
think about buying or renting their next home and CoStar (NASDAQ: CSGP) has changed the way that data is aggregated and analyzed
(e.g. LoopNet, Apartments.com, ForRent.com, Ten-X).
We believe that the combination
of these trends has created a compelling growth proposition for well-managed, scalable PropTech companies with a proven product/market
fit, for the following reasons: (i) the tremendous size (i.e. total addressable market) of the real estate economy; (ii) the
stark innovation funding gap (i.e. the opportunity) that presently exists in the PropTech space; and (iii) the current robust
private market appetite (i.e. investor recognition) for PropTech companies.
As PropTech businesses grow,
we believe that they will require access to the public markets to access capital for growth. Historically, companies have accessed
public markets through initial public offerings, or IPOs. However, the number of IPOs in recent years has diminished. An average
of 159 technology companies went public each year during the 1990s, according to the research firm Deal Logic. However, since 2010,
the average number of IPOs has plummeted to only 35 per year, a 78% decrease. Generally, IPO slots are relatively available to
companies that are larger and older and relatively unavailable to smaller companies. Further, the current IPO market has predominantly
backed much larger companies. For example, the median market capitalization of a venture-backed IPO soared from about $660 million
in 2012 to over $1.5 billion in 2018. Today, the few available IPO slots are limited to companies that are larger. Finally,
we believe there is general discontent among founders, management and shareholders of the traditional IPO process, due to the time
and resource commitment and uncertain IPO outcome.
Limited and uncertain IPO
windows create a dilemma for founders, management and shareholders of many high quality, established and scalable PropTech companies.
These companies require access to public markets and capital to grow, but can currently only access private capital, which is typically
expensive, complex and staged. The only viable exit route for these PropTech companies is a strategic sale, which can be an unattractive
option for founders and management who desire to maintain some level of control over their businesses. Ultimately, we believe this
disparity creates a long-term opportunity to unlock shareholder value through a business combination. We target high quality
established and growing PropTech businesses that have a valuation greater than $500 million but are below the size where the
traditional IPO could be an option. Additionally, it provides a persuasive argument for such companies to merge with us, as we
believe we offer an attractive alternative to the limited private growth options available to these companies. Our strategy is
to identify, evaluate, invest and, after our initial business combination, continue to grow, a compelling PropTech business.
Competitive Strengths
Experienced SPAC Management Team with Deal Sourcing Network
Our team is led by co-CEOs Thomas
D. Hennessy and M. Joseph Beck. With a combined 27 years of real estate experience, Messrs. Hennessy and Beck bring a unique
track record, proprietary relationships, and deep expertise that is suited to take advantage of the growing set of investment opportunities
in the U.S. PropTech space and to create shareholder value. Mr. Hennessy has served as the Managing Partner of Growth Strategies
of Hennessy Capital Group, LLC, an alternative investment firm founded in 2013 that focuses that focuses on investing in sustainable
and real estate technology, since July 2019. Mr. Hennessy served from 2014 to 2019 as a Portfolio Manager of Abu Dhabi
Investment Authority, or ADIA, the world’s largest institutional real estate investor. While at ADIA, Mr. Hennessy was
responsible for managing office, residential, and retail assets in the U.S. totaling over $2.1 billion of net asset value
or $5.0 billion of gross asset value. Additionally, Mr. Hennessy executed over $900.0 million of equity commitments
to U.S. real estate acquisitions, developments, and funds. Mr. Hennessy also conceived and led ADIA’s PropTech initiative
and investment mandate, which included extensive due diligence on every major U.S. PropTech venture capital fund as well as meetings
with numerous PropTech founders and companies. Mr. Hennessy’s PropTech efforts at ADIA resulted in assembling a global
team of investment professionals, creating a network and establishing relationships with the major global PropTech participants
and ultimately making a significant investment into PropTech.
Mr. Beck has served as a
Managing Partner of Growth Strategies of Hennessy Capital Group, LLC, an alternative investment firm founded in 2013 that focuses
on investing in sustainable and real estate technology. Mr. Beck served from 2012 to 2019 as a Senior Investment Manager of
ADIA, working alongside Mr. Hennessy. While at ADIA, Mr. Beck was responsible for managing office, residential, industrial
and retail assets in the U.S. totaling over $2.7 billion of net asset value or $3.6 billion of gross asset value. Additionally,
Mr. Beck executed over $2.6 billion of equity commitments to U.S. real estate acquisitions, developments, and funds.
Mr. Beck’s primary focus at ADIA was acquiring, executing, and managing a 10-asset portfolio of assets in Silicon
Valley, where he established a superior network and access to major Silicon Valley real estate players, including technology tenants,
landlords, brokers and developers.
Each member of our management
team also previously served on the management team of PropTech Acquisition Corporation, or PTAC, a special purpose acquisition
company which in December 2020 closed an initial business combination with Porch.com, Inc. and is now known as Porch Group,
Inc. (NASDAQ: PRCH), or Porch, a leading software and services platform for the home inspection and home service industries that
provides ERP and CRM software to inspection, moving and adjacent home services companies, gaining access to a proprietary and reoccurring
sales funnel which includes a majority of homebuyers in the U.S. annually. The transaction included a $150,000,000 fully committed
common stock private investment at $10.00 per share led by Wellington Management Company, LLP. Mr. Hennessy currently serves as
a director of Porch. We believe our management team’s proven track record of providing access to growth capital via an accelerated
public listing supports our investment thesis and strategy, and that potential sellers of target businesses will view our execution
capabilities with a vehicle similar to our company as a positive factor in considering whether or not to enter into a business
combination with us.
Our management team’s
and advisors contacts and relationships are extensive across both the real estate and the property technology landscape, providing
superior access to PropTech. With regard to real estate, our network includes best-in-class owners, operators, developers,
tenants, lenders, brokers, service providers and advisors. With regard to PropTech, our network includes partners at U.S. venture
capital and private equity funds with investments in PropTech and founders of real estate technology companies. Since our initial
public offering, we have leveraged this network to gain exclusive access to and identify attractive target businesses in PropTech.
Target business candidates
are brought to our attention from various unaffiliated sources, including real estate market participants, real estate private
equity and generalist venture capital groups, investment banking firms, consultants, legal and accounting firms and large business
enterprises. Members of our management team communicate actively with our networks of relationships to articulate parameters for
a potential business combination target.
Board of Directors
We have a group of highly
accomplished and engaged independent directors who bring to us public company governance, executive leadership, operations oversight
and capital markets expertise. Our board members have served as directors, officers, partners and other executive and advisory
capacities for publicly-listed and privately-owned companies and private equity and venture capital firms. Our directors
have extensive experience with public equity investing, mergers and acquisitions, divestitures and corporate strategy and possess
relevant domain expertise in the sectors where we expect to source business combination targets. We believe their collective expertise,
contacts and relationships make us a highly desirable merger partner. Finally, all of our directors are individual investors in
our sponsor.
In addition to supporting
us in the areas of, assessment of key risks and opportunities and due diligence, members of our board of directors may also advise
us after the completion of our business combination in overseeing our strategy and value creation plan where relevant expertise
exists.
In addition to our independent
directors, we have two highly accomplished senior advisors who bring to us significant experience in special purpose acquisition
companies, global investment management, public and private equity and debt capital markets. Our senior advisors advise us on public
company governance, executive leadership, human capital management, corporate strategy and capital markets. Our senior advisors
have served as directors, officers, executives, and partners for publicly-listed and privately-owned companies, private
equity firms, and global investment managers. In addition to advising us in the areas of, assessment of key risks and opportunities
and due diligence, our senior advisors may also advise us after the completion of our business combination in overseeing our strategy
and value creation plan where relevant expertise exists.
Past performance of our
management team or advisors is not a guarantee either (i) that we will be able to identify a suitable candidate for our initial
business combination or (ii) of success with respect to any business combination we may consummate. You should not rely on
the historical performance record of our management team or advisors as indicative of our future performance. Additionally, in
the course of their respective careers, members of our management team have been involved in businesses and deals that were unsuccessful.
Our officers and directors may have conflicts of interest with other entities to which they owe fiduciary or contractual obligations
with respect to initial business combination opportunities.
We believe that we are unique
among listed SPAC vehicles due to our management’s extensive research, analysis, credentials, and relationships with respect
to U.S. PropTech. As PropTech is a relatively nascent technology sector, we believe that a key differentiator in the space will
be combining real estate, PropTech, venture capital, and public equity investment expertise with real-time, superior access to
the founders and entrepreneurs that are building PropTech companies and the venture capital investors that are funding the growth
of these PropTech companies.
When taken together, we
believe that our management team’s successful special purpose acquisition company track record and proprietary PropTech network
and experience investing in both real estate and PropTech, our Board’s extensive management, private equity, public equity,
venture capital, and technology experience, as well as our advisors’ successful special purpose acquisition company track
record, position us to identify an attractive PropTech target company and close an initial business combination with such target.
Consistent with this strategy,
we have identified the following general criteria and guidelines that we believe are important in evaluating prospective targets.
Since our initial business combination, we have used the following criteria and guidelines in evaluating acquisition opportunities,
but we may decide to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
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Real Estate Technology. We are seeking to invest in one or more businesses with
a focus on PropTech, a domain in which we have a substantial track record, deep experience, and pattern recognition knowledge.
Our management team and advisors’ multifaceted expertise in assessing a target’s applicability to real estate are key
in evaluating investment candidates.
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Target Business Size. We are seeking to invest in one or more established businesses
with an aggregate enterprise value greater than $500 million, determined in the sole discretion of our officers and directors
according to reasonably accepted valuation standards and methodologies. This segment is where we believe we have a superior and
proprietary network to identify the greatest number of attractive opportunities.
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Compelling Growth. We are seeking to invest in one or more businesses with a
compelling growth story, that includes defensible organic growth drivers as well as strategic opportunities that require growth
capital, such as expansion into new business verticals and mergers and acquisitions. We are seeking to invest in one or more businesses
that have a demonstrated ability to successfully execute on mergers and acquisitions in the past.
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Proven Unit Economics and Established Companies. We are seeking to invest in
one or more businesses that have generated attractive unit economics at scale. We are focusing on one or more businesses that have
established and growing revenue streams. We do not intend to invest in startup companies, companies with speculative business plans,
or companies that are excessively leveraged.
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Competitive Position. We intend to invest in one or more businesses that have
a leading, growing or unique niche market position in their respective sectors. We analyze the strengths and weaknesses of target
businesses relative to their competitors. We are seeking to invest in one or more businesses that demonstrate advantages when compared
to their competitors, including capable management team, defensible proprietary technology, strong adoption rates, and relevant
domain expertise.
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Capable Management Team. We are seeking to invest in one or more businesses that
have experienced management teams or those that provide a platform for us to assemble an effective and capable management team.
We are focusing on management teams with a proven track record of driving revenue growth and creating value for their shareholders.
We are focusing on management teams which have implemented robust financial systems and controls.
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Benefit from Being a Public Company. We intend to invest in one or more businesses
that will benefit from being publicly listed and can effectively utilize the broader access to capital and the public profile to
grow and accelerate shareholder value creation.
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These criteria are not intended
to be exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent
relevant, on these general guidelines as well as other considerations, factors and criteria that our management may deem relevant.
In the event that we find an opportunity that has characteristics more compelling to us than the characteristics described above,
we would pursue such opportunity.
Our Business Combination Process
In evaluating prospective
business combinations, we have conducted and will continue to conduct a thorough due diligence review process that encompasses,
among other things, a review of historical and projected financial and operating data, meetings with management and their advisors
(if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and other
reviews as we deem appropriate. We also utilize our expertise analyzing target companies and evaluating operating projections,
financial projections and determining the appropriate return expectations given the risk profile of the target business.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor, officers, advisors or directors. In
the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers, advisors
or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or
another independent entity that commonly renders valuation opinions that our initial business combination is fair to our company
from a financial point of view.
Certain members of our management
team and our advisors directly or indirectly own our founders shares, common stock and/or private placement warrants, and, accordingly,
may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate
our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating
a particular business combination if the retention or resignation of any such officers and directors were to be included by a target
business as a condition to any agreement with respect to our initial business combination.
Each of our officers and
directors presently has, and many 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, including 7GC &
Co. Holdings Inc. (NASDAQ: VII), a special purpose acquisition company targeting the technology industry. 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 believe, however, that the fiduciary duties or contractual obligations of our officers
or directors will not materially affect our ability to complete our initial business combination, as we believe any such opportunities
presented would be smaller than what we are interested in, in different fields than what we would be interested in, or to entities
that are not themselves in the business of engaging in business combinations. Our amended and restated certificate of incorporation
provides that we will renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity
is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity
is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent
the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our officers and directors
may become an officer or director of another special purpose acquisition company with a class of securities intended to be registered
under the Securities Exchange Act of 1934, as amended, or the Exchange Act, even before we have entered into a definitive agreement
regarding 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 devote as much of their time as they deem
necessary to our affairs and intend to continue doing so until we have completed our initial business combination. The amount of
time that any member of our management team devotes in any time period varies based on whether a target business has been selected
for our initial business combination and the current stage of the business combination process. Our management team’s and
our advisors’ operating and transaction experience and relationships with companies provide us with a substantial number
of potential business combination targets. Over the course of their careers, the members of our management team have developed
a broad network of contacts and corporate relationships in many industries. This network has grown through the activities of our
management team sourcing, acquiring and financing businesses, our management team’s relationships with sellers, financing
sources and target management teams and the experience of our management team in executing transactions under varying economic
and financial market conditions.
Status as a Public Company
We believe our structure
makes us an attractive business combination partner to target businesses. As a public company, we offer a target business an alternative
to the traditional initial public offering through a merger or other business combination with us. Following an initial business
combination, we believe the target business would have greater access to capital and additional means of creating management incentives
that are better aligned with stockholders’ interests than it would as a private company. A target business can further benefit
by augmenting its profile among potential new customers and vendors and aid in attracting talented employees. In a business combination
transaction with us, the owners of the target business may, for example, exchange their shares of stock in the target business
for our shares of Class A common stock (or shares of a new holding company) or for a combination of our shares of Class A
common stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although there are various
costs and obligations associated with being a public company, we believe target businesses will find this method a more expeditious
and cost effective method to becoming a public company than the typical initial public offering. The typical initial public offering
process takes a significantly longer period of time than the typical business combination transaction process, and there are significant
expenses in the initial public offering process, including underwriting discounts and commissions, marketing and road show efforts
that may not be present to the same extent in connection with an initial business combination with us.
Furthermore, once a proposed
initial business combination is completed, the target business will have effectively become public, whereas an initial public offering
is always subject to the underwriters’ ability to complete the offering, as well as general market conditions, which could
delay or prevent the offering from occurring or could have negative valuation consequences. Following an initial business combination,
we believe the target business would then have greater access to capital and an additional means of providing management incentives
consistent with stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public company
can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting
talented employees.
While we believe that our
structure and our management team’s backgrounds make us an attractive business partner, some potential target businesses
may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder approval
of any proposed initial business combination, negatively.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible
to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not “emerging growth companies” including, but not limited to, not being required to comply with the independent
registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading
market for our securities and the prices of our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the
extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting
standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until
those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition
period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following
the fifth anniversary of the 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 exceeds $700 million as of the prior June 30th,
and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior
three-year period.
Additionally, we are a “smaller
reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of
certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares
held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our shares held by non-affiliates exceeds $700 million as of
the prior June 30.
Financial Position
With funds available for
an initial business combination initially in the amount of $230,007,668.20, as of December 31, 2020, before fees and expenses associated
with our initial business combination, we offer a target business a variety of options such as creating a liquidity event for its
owners, providing capital for the potential growth and expansion of its operations or strengthening its balance sheet by reducing
its debt or leverage ratio. Because we are able to complete our initial business combination using our cash, debt or equity securities,
or a combination of the foregoing, we have the flexibility to use the most efficient combination that will allow us to tailor the
consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third
party financing and there can be no assurance it will be available to us.
Effecting Our Initial Business Combination
We are not presently engaged
in, and we will not engage in, any operations other than finding a business combination for an indefinite period of time. We intend
to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement
of the private placement warrants, the proceeds of the sale of our shares in connection with our initial business combination (pursuant
to forward purchase agreements or backstop agreements we may enter into), shares issued to the owners of the target, debt issued
to bank or other lenders or the owners of the target, or a combination of the foregoing. We may seek to complete our initial business
combination with a company or business that may be financially unstable or in its early stages of development or growth, which
would subject us to the numerous risks inherent in such companies and businesses.
If our initial business
combination is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment
of the consideration in connection with our initial business combination or used for redemptions 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. In addition, we are targeting businesses larger than we could acquire with the net proceeds of our initial public
offering and the sale of the private placement warrants, and may as a result be required to seek additional financing to complete
such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete
such financing only simultaneously with the completion of our initial business combination. In the case of an initial business
combination funded with assets other than the trust account assets, our proxy materials or tender offer documents disclosing the
initial business combination would disclose the terms of the financing and, only if required by 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.
Although our management
assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment
will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside
of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target
business.
Sources of Target Businesses
We anticipate target
business candidates will continue to be brought to our attention from various unaffiliated sources, including investment bankers
and investment professionals. Target businesses will continue to be brought to our attention by such unaffiliated sources as a
result of being solicited by us by calls or mailings. These sources will also continue to 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 our public filings and
know what types of businesses we are targeting. Our officers and directors, as well as our sponsor and 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 may 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 and our sponsor and their respective industry and business contacts as well as their
affiliates. While we do not presently engage the services of professional firms or other individuals that specialize in business
acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which event we may pay a finder’s
fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms
of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities
to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction
that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion
of a transaction, in which case any such fee will be paid out of the funds held in the trust account. In no event, however, will
our sponsor or any of our existing officers or directors, or any entity with which our sponsor or officers are affiliated, be paid
any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the
company prior to, or in connection with any services rendered for any services they render in order to effectuate, the completion
of our initial business combination (regardless of the type of transaction that it is). Although none of our sponsor, executive
officers or directors, or any of their respective affiliates, are allowed to receive any compensation, finder’s fees or consulting
fees from a prospective business combination target in connection with a contemplated initial business combination, we do not have
a policy that prohibits our sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for
the reimbursement of out-of-pocket expenses by a target business. We pay our sponsor a total of $15,000 per month for office
space, utilities and secretarial and administrative support and to reimburse our sponsor for any out-of-pocket expenses related
to identifying, investigating and completing an initial business combination. Some of our officers and directors and advisors 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 are not used as a criterion in our selection process of an initial business
combination candidate.
We are not prohibited from
pursuing an initial business combination with an initial business combination target that is affiliated with our sponsor, officers,
directors or advisors or making the initial business combination through a joint venture or other form of shared ownership with
our sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial business
combination target that is affiliated with our sponsor, officers, directors or advisors, we, or a committee of independent directors,
would obtain an opinion from an independent investment banking firm or from another independent entity that commonly renders valuation
opinions that such an initial business combination is fair to our company from a financial point of view. We are not required to
obtain such an opinion in any other context.
Potential target companies
with whom we may engage in discussions may have had prior discussions with other special purpose acquisition companies, bankers
in the industry and/or other professional advisors including special purpose acquisition companies with whom our officers, directors
or advisors were affiliated. We may pursue transactions with such potential targets if: (i) such other special purpose acquisition
companies are no longer pursuing transactions with such potential targets, (ii) we become aware that such potential targets
are interested in a potential initial business combination with us and (iii) we believe such transactions would be attractive
to our stockholders. However, we may contact such targets if we become aware that such targets are interested in a potential initial
business combination with us and we believe such transaction would be attractive to our stockholders.
If any of our officers or
directors becomes aware of an initial business combination opportunity that falls within the line of business of any entity to
which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business
combination opportunity to such entity prior to presenting such business combination opportunity to us, including 7GC &
Co. Holdings Inc., if its initial business combination is not consummated. Our officers and directors currently have certain relevant
fiduciary duties or contractual obligations that may take priority over their duties to us.
Selection of a Target Business and Structuring of our Initial
Business Combination
Nasdaq rules require that
we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets
held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust
account) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market
value of our initial business combination 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, a valuation based on trading multiples of comparable
public businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board
of directors is not able to independently determine the fair market value of our initial business combination, we will obtain an
opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with
respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make
an independent determination of the fair market value of our initial business combination, it may be unable to do so if it is less
familiar or experienced with the business of a particular target or if there is a significant amount of uncertainty as to the value
of a target’s assets or prospects. We do not intend to purchase multiple businesses in unrelated industries in conjunction
with our initial business combination. Subject to this requirement, our management has virtually unrestricted flexibility in identifying
and selecting one or more prospective target businesses, although we will not be permitted to effectuate our initial business combination
with another blank check company or a similar company with nominal operations. Additionally, pursuant to Nasdaq rules, any initial
business combination must be approved by a majority of our independent directors.
We anticipate structuring
our initial business combination either (i) in such a way 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, or (ii) in such
a way so 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. However, we will only complete an initial business
combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target
or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company
under the Investment Company Act of 1940, as amended, or the “Investment Company Act”. Even if the post-transaction company
owns or acquires 50% or more of the voting securities of the target, our stockholders prior to the initial business combination
may collectively own a minority interest in the post-transaction company, depending on valuations ascribed to the target and
us in the initial business combination. For example, we could pursue a transaction in which we issue a substantial number of new
shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest
in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior to
our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction company,
the portion of such business or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s
80% fair market value test. If the initial business combination involves more than one target business, the 80% fair market value
test will be based on the aggregate value of all of the transactions 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.
To the extent we effect
our initial business combination with a company or business that may be financially unstable or in its early stages of development
or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In evaluating a prospective
business target, we conduct a thorough due diligence review, which encompasses, 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 initial business combination is not ultimately completed will result
in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack of Business Diversification
For an indefinite period
of time after the completion of our initial business combination, the prospects for our success may depend entirely on the future
performance of a single business. Unlike other entities that have the resources to complete business combinations with multiple
entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. In addition, we intend to focus our search for an initial business combination
in a single industry. By completing our initial business combination with only a single entity, our lack of diversification may:
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subject us to negative economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact on the particular industry in which we operate after our initial business combination, and
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cause us to depend on the marketing and sale of a single product or limited number of products
or services.
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Limited Ability to Evaluate the Target’s
Management Team
Although we intend to closely
scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination
with that business, our assessment of the target business’ management may not prove to be correct. In addition, the future
management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role
of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination
as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our
initial business combination. Moreover, we cannot assure you that members of our management team will have significant experience
or knowledge relating to the operations of the particular target business.
We cannot assure you that
any of our key personnel will remain in senior management or advisory positions with the combined company. The determination as
to whether any of our key personnel will remain with the combined company will be made at the time of our initial business combination.
Following an initial business
combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot
assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills,
knowledge or experience necessary to enhance the incumbent management.
Stockholders May Not Have the Ability to
Approve Our Initial Business Combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required
by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal reasons. Presented
in the table below is a graphic explanation of the types of initial business combinations we may consider and whether stockholder
approval is currently required under Delaware law for each such transaction.
Type
of Transaction
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Whether
Stockholder Approval is Required
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Purchase of assets
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No
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Purchase of stock of target
not involving a merger with the company
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No
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Merger of target into a subsidiary
of the company
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No
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Merger of the company with
a target
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Yes
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Under Nasdaq’s listing
rules, stockholder approval would be required for our initial business combination if, for example:
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we issue shares of Class A common stock that will be equal to or in excess of 20% of the number
of shares of our Class A common stock then outstanding;
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any of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5%
or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business
or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding
common shares or voting power of 5% or more; or
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the issuance or potential issuance of common stock will result in our undergoing a change of control.
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Permitted Purchases of our Securities
If we seek stockholder approval
of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase shares
or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our
initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors
or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they
have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions
for any such transactions. If they engage in such transactions, they will not make any such purchases when they are in possession
of any material nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the
Exchange Act. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange
Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers
will comply with such rules. Any such purchases will be reported pursuant to Section 13 and Section 16 of the Exchange
Act to the extent such purchasers are subject to such reporting requirements. None of the funds held in the trust account will
be used to purchase shares or public warrants in such transactions prior to completion of our initial business combination.
The purpose of any such
purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase the likelihood
of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement with a
target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be
to reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for
approval in connection with our initial business combination. Any such purchases of our securities may result in the completion
of our initial business combination that may not otherwise have been possible. In addition, if such purchases are made, the public
“float” of our shares of Class A common stock or warrants may be reduced and the number of beneficial holders
of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities
on a national securities exchange.
Our sponsor, officers, directors,
advisors and/or their affiliates may identify the stockholders with whom our sponsor, officers, directors, advisors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and
contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the
trust account or vote against our initial business combination, whether or not such stockholder has already submitted a proxy with
respect to our initial business combination. Our sponsor, officers, directors, advisors or their affiliates will only purchase
shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor,
officers, directors, advisors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange
Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor
from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has
certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor,
officers, directors, advisors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16
of the Exchange Act to the extent such purchases are subject to such reporting requirements.
Redemption Rights for Public Stockholders
upon Completion of our Initial Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of
our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account as of two business days prior to the consummation of the initial business combination including interest earned on
the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding
public shares, subject to the limitations described herein. The amount in the trust account 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 Cantor. Our sponsor, officers and directors have entered into a
letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares
and any public shares held by them in connection with the completion of our initial business combination.
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 initial business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed
initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety
of factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder
approval under the law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would
not typically require stockholder approval while direct mergers with our company where we do not survive and any transactions where
we issue more than 20% of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would
require stockholder approval. If we structure an initial business combination with a target company in a manner that requires stockholder
approval, we will not have discretion as to whether to seek a stockholder vote to approve the proposed initial business combination.
We may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval
is required by law or stock exchange listing requirements or we choose to seek stockholder approval for business or other legal
reasons. So long as we obtain and maintain a listing for our securities on Nasdaq, we will be required to comply with such rules.
If a stockholder vote is
not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant to our amended
and restated certificate of incorporation:
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conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act,
which regulate issuer tender offers, and
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file tender offer documents with the SEC prior to completing our initial business combination which
contain substantially the same financial and other information about the initial business combination and the redemption rights
as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.
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Upon the public announcement
of our initial 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 will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001
either immediately prior to or upon consummation of our initial business combination and after payment of underwriters’ fees
and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset
or cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders
tender more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
If, however, stockholder
approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval
for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of
the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide
our public stockholders with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval,
we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted
in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy
of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of
capital stock of the company entitled to vote at such meeting. Our initial stockholders will count toward this quorum and pursuant
to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares and any public shares purchased
(including in open market and privately negotiated transactions) in favor of our initial business combination. For purposes of
seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval
of our initial business combination once a quorum is obtained. As a result, in addition to our initial stockholders’ founder
shares, we would need only 8,625,001, or 37.5%, of the 23,000,000 public shares sold in our initial public offering to be voted
in favor of an initial business combination (assuming all outstanding shares are voted; or 1,437,501, or 6.25%, assuming only the
minimum number of shares representing a quorum are voted and assuming our sponsor, officers and directors do not purchase any public
shares) 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 we will only redeem our public shares so long as (after such redemption) our net tangible assets will
be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of
underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules) or any
greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination.
For example, the proposed initial business combination may require: (i) cash consideration to be paid to the target or its
owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination. In the
event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly
submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business
combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem
any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption upon Completion
of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding the foregoing,
if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the
“Excess Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage
stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise
their redemption rights against a proposed initial business combination as a means to force us or our management to purchase their
shares at a significant premium to the then-current market price or on other undesirable terms. 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 without our prior consent, we believe we will limit the ability of a small group of stockholders
to unreasonably attempt to block our ability to complete our initial business combination, particularly in connection with an initial
business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of
cash. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our initial business combination.
Tendering Stock Certificates in Connection
with 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 meeting held to approve a proposed initial
business combination by a date set forth in the proxy materials mailed to such holders or to deliver their shares to the transfer
agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s
option. The proxy materials that we will furnish to holders of our public shares in connection with our initial business combination
will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder
would have from the time we send out our proxy materials until the date set forth in such proxy materials 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 initial business combination and check a box on the proxy card indicating
such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved, the company
would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the
stockholder then had an “option window” after the completion of the initial business combination during which he or
she could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he or she
could sell his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As
a result, the redemption rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become
“option” rights surviving past the completion of the initial business combination until the redeeming holder delivered
its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the initial business combination is approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials. Furthermore, if a holder of a
public share delivered its certificate in connection with an election of redemption rights and subsequently decides prior to the
applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the certificate
(physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing to
redeem their shares will be distributed promptly after the completion of our initial business combination.
If our initial business
combination is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption
rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will
promptly return any certificates delivered by public holders who elected to redeem their shares.
If our initial proposed
initial business combination is not completed, we may continue to try to complete an initial business combination with a different
target until December 8, 2022.
Redemption of Public Shares and Liquidation
if no Initial Business Combination
Our amended and restated
certificate of incorporation provides that we will have until December 8, 2022 to complete our initial business combination. If
we are unable to complete our initial business combination by December 8, 2022, we will: (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less up to
$100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), 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 initial
business combination by December 8, 2022.
Our sponsor, officers and
directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions
from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination
by December 8, 2022. However, if our sponsor, officers or directors acquire public shares, they will be entitled to liquidating
distributions from the trust account with respect to such public shares if we fail to complete our initial business combination
by December 8, 2022.
Our sponsor, officers and
directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated
certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our public shares if
we do not complete our initial business by December 8, 2022 or certain amendments to our charter prior thereto or (ii) with
respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless
we provide our public stockholders with the opportunity to redeem their shares of Class A common stock upon approval of any
such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including
interest earned on the funds held in the trust account and not previously released to us to pay our taxes divided by the number
of then outstanding public shares. However, we will only redeem our public shares so long as (after such redemption) our net tangible
assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after
payment of underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules).
If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy
the net tangible asset requirement (described above), we would not proceed with the amendment or the related redemption of our
public shares at such time.
We expect that all costs
and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts
remaining out of the approximately $1,834,812 of proceeds held outside the trust account (as of December 31, 2020), although we
cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the
proceeds held in the trust account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the
costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the
trust account not required to pay taxes 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 have sought
and will continue to seek to have all vendors, service providers, prospective target businesses or other entities with which we
do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even
if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited
to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability
of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held
in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account,
our management will perform an analysis of the alternatives available to it and will only enter into an agreement with a third
party that has not executed a waiver if management believes that such third party’s engagement would be significantly more
beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management
to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is
unable to find a service provider willing to execute a waiver. WithumSmith+Brown, PC, our independent registered public accounting
firm, and the underwriters of our initial public offering will not execute agreements with us waiving such claims to the monies
held in the trust account.
In addition, there is no
guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor
has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold
to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar
agreement or business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00
per public share and (ii) the actual amount per public share held in the trust account as of the date of the liquidation of
the trust account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided
that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and
all rights to the monies held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims
under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under
the Securities Act. However, we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently
verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only
assets are securities of our company. Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations.
None of our officers or directors will indemnify us for claims by third parties including, without limitation, claims by vendors
and prospective target businesses.
In the event that the proceeds
in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the
trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case
net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy its indemnification
obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine
whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to us,
it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the
cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent
directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations
and we cannot assure you that our sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due
to claims of creditors the actual value of the per-share redemption price will not be less than $10.00 per public share.
We will seek to reduce the
possibility that our sponsor has to indemnify the trust account due to claims of creditors by endeavoring to have all vendors,
service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving
any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable
as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. We have access to up to approximately $1,834,811 held outside of the trust account
(as of December 31, 2020) 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.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the
event we do not complete our initial business combination by December 8, 2022 may be considered a liquidating distribution under
Delaware law. Delaware law provides if the corporation complies with certain procedures set forth in Section 280 of the DGCL
intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which
any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject
any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders,
any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after
the third anniversary of the dissolution.
Furthermore, if the pro
rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination by December 8, 2022, is not considered a liquidating distribution under Delaware
law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party
may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute
of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years,
as in the case of a liquidating distribution. If we are unable to complete our initial business combination December 8, 2022, we
will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously
released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right
to receive further liquidating distributions, if any), 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 December 8, 2022 and,
therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the
third anniversary of such date.
Because we will not be complying
with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that
will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the
subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations are
limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such
as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained
in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and
the likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor
may be liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per
public share or (ii) such lesser amount per public share held in the trust account as of the date of the liquidation of the
trust account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes
and will not be liable as to any claims under our indemnity of the underwriters of 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 some or all amounts received by our stockholders. Furthermore,
our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith,
thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior
to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders
will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion of our initial
business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder vote to
amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing of our
obligation to offer redemption rights in connection with any proposed initial business combination or to redeem 100% of our public
shares if we do not complete our initial business combination by December 8, 2022or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of all
of our public shares if we are unable to complete our business combination by December 8, 2022, subject to applicable law. Stockholders
who do not exercise their redemption rights in connection with an amendment to our certificate of incorporation would still be
able to exercise their redemption rights in connection with a subsequent 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 initial business combination alone will
not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder
must have also exercised its redemption rights as described above. These provisions of our amended and restated certificate of
incorporation, like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder
vote.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we have encountered and may continue to encounter competition
from other entities having a business objective similar to ours, including other blank check companies, private equity groups and
leveraged buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are well established
and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of
these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target
businesses is limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the
initial business combination of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders
who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding
warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either
of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We currently have two officers
and one employee. These individuals are not obligated to devote any specific number of hours to our matters but they devote as
much of their time as they deem necessary to our affairs and intend to continue doing so until we have completed our initial business
combination. The amount of time they devote in any time period will vary based on whether a target business has been selected for
our initial business combination and the stage of the initial business combination process we are in.
Periodic Reporting and Financial Information
Our units, Class A
common stock and warrants are registered 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, this Report
will contains financial statements audited and reported on by our independent registered public accountants.
We will provide stockholders
with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation
materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will
need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical financial
statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements
may limit the pool of potential targets we may conduct an initial business combination with because some targets may be unable
to provide such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial
business combination within the prescribed time frame. We cannot assure you that any particular target business identified by us
as a potential business combination candidate will have financial statements prepared in accordance with GAAP or that the potential
target business will be able to prepare its financial statements in accordance with the requirements outlined above. To the extent
that these requirements cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool
of potential business combination candidates, we do not believe that this limitation will be material.
We are required to evaluate
our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act. Only
in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the
provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the internal controls
of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete
any such business combination.
We have filed a Registration
Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act.
As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing
a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of
our initial business combination.
We
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 shares
of Class A common stock that are held by non-affiliates exceeds $700 million as of the prior June 30th,
and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Additionally, we are a “smaller
reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of
certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our shares
held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our shares held by non-affiliates exceeds $700 million as of
the prior June 30.