Introduction
We
are a blank check company incorporated in January 2017 as a Delaware corporation formed for the purpose of effecting a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses,
which we refer to throughout this report as our initial business combination. To date, our efforts have been limited to organizational
activities as well as activities related to our initial public offering and since our initial public offering, the search for
a target business. We have generated no operating revenues to date and we do not expect that we will generate operating revenues
until we consummate our initial business combination.
While
we may pursue an acquisition opportunity in any business, industry, sector or geographical location, we intend to focus on industries
that complement our management team’s background, and to capitalize on the ability of our management team to identify and
acquire a business, focusing on the industrial manufacturing, distribution or services sector in the United States (which may
include a business based in the United States which has operations or opportunities outside of the United States). We are seeking
to acquire one or more businesses with an aggregate enterprise value over $1 billion.
Business
Opportunity Overview
Our
strategy is to identify, acquire and, after our initial business combination, build, an industrial manufacturing, distribution
or services business. Industrial manufacturers, distributors and service providers are companies that manufacture and/or distribute
products or provide critical services to a broad range of customers and end use markets. We believe that an industrial “renaissance”
is now underway in the United States and that this resurgence is primarily the result of four critical factors: (i) aging infrastructure,
(ii) a stable and flexible labor market, (iii) cheap and abundant sources of energy and (iv) logistical factors such as shipping
costs and the various risks of operating extended global supply chains, each of which we believe is quite favorable to the United
States when compared with advanced manufacturing nations and increasingly competitive when compared with emerging manufacturing
nations.
Years
of under-investment in new capital projects (in favor of maintaining existing infrastructure) has resulted in a need for large-scale
investment across all key infrastructure verticals. The American Society of Civil Engineers, or ASCE, estimates that United States
infrastructure demand will require $4.6 trillion of investment through 2020 to achieve a national score of a “B-rating”,
or “in good to excellent condition; some elements show signs of general deterioration that require attention [with] few
elements exhibit significant deficiencies.” The United States infrastructure as a whole currently has a “D+-rating,”
defined as “poor to fair condition and mostly below standard, with many elements approaching the end of their service life.”
The ASCE scored categories of infrastructure investment individually in its “Report Card,” awarding the highest rating
(B-) to solid waste and the poorest scores to levees, inland waterways, transit, dams, schools, roads, wastewater, hazardous waste,
and energy infrastructure.
According
to BCG, the manufacturing-cost gap between the U.S. and other highly developed economies widened significantly over the last decade.
Stable and efficient labor is one key to growing the U.S. competitive advantage. The U.S. has one of the world’s most flexible
labor markets and has the highest worker productivity among the world’s largest exporters by far. Adjusted for productivity,
U.S. labor costs are 20% to 54% lower than those of Western Europe and Japan for many products.
In
addition to the benefits of its labor force, the U.S. also has an energy cost advantage. While industrial prices for natural gas
have risen around the world, they have decreased by approximately 50% in the U.S. since the recovery from underground shale deposits
began in earnest. Natural gas costs more than three times as much in China, France and Germany than in the U.S., and nearly four
times as much in Japan. Natural gas is used increasingly as a fuel in U.S. power plants, which is likely to ensure that the price
of industrial electricity will remain between one-quarter and two-thirds of the cost of electricity in major exporting nations
such as China, Japan, Germany, France and Italy. We believe cheap natural gas will give the U.S. a powerful and unique cost advantage
that will benefit a wide variety of industries across the full value chain, from feedstock to finished goods, and should be largely
exclusive to the U.S. for the foreseeable future.
When
taking all of this into account, the U.S. has emerged as the lowest-cost manufacturing location in the developed world, and at
the same time, has achieved approximate cost parity with low-cost countries in Eastern Europe. The cost gap with China has shrunk
dramatically, and, if the trend of the last ten years continues, will likely disappear before the end of the decade.
We
believe these factors are further compounded when adding logistical factors to the decision making process. Factors such as shipping
costs, the various risks of operating extended global supply chains, just-in-time inventory requirements and shorter product life
cycles necessitate that production and end-markets be co-located. According to BCG, the U.S. and Mexico are the “rising
stars” of the top 25 export economies because of low wage growth, sustained productivity gains, stable exchange rates and
significant energy and electricity cost advantages.
Competitive
Strengths
Daniel
J. Hennessy and our Executive Officers
. Hennessy Capital LLC is the managing member of our sponsor and was founded by
Daniel J. Hennessy, our Chairman and Chief Executive Officer in 2013. From September 2013 to February 2015, Mr. Hennessy served
as Chairman of the Board and Chief Executive Officer of Hennessy Capital Acquisition Corp., or Hennessy I, which merged with School
Bus Holdings Inc., or SBH, in February 2015 and is now known as Blue Bird Corporation (NASDAQ: BLBD), and since February 2015,
has served as its Vice Chairman. From April 2015 to February 2017, Mr. Hennessy served as Chairman of the Board and Chief Executive
Officer of Hennessy Capital Acquisition Corp. II, or Hennessy II, which merged with Daseke in February 2017 and is now known as
Daseke, Inc. (NASDAQ: DSKE), and since February 2017, has served as its Vice Chairman. From 1988 to 2016, Mr. Hennessy served
as a Partner at Code Hennessy & Simmons LLC (n/k/a CHS Capital or “CHS”), a middle-market private equity investment
firm he co-founded. Over a 30-year period, CHS invested $2.9 billion in nearly 400 operating companies. Mr. Hennessy has served
as Chairman of the Board of Directors of various CHS portfolio companies that manufacture and/or distribute a broad array of products
or provide services for the industrial, infrastructure, energy and packaging sectors.
Mr.
Hennessy has over 30 years of middle-market private equity investment experience, dedicated almost entirely to investments in
industrial manufacturing, distribution or services operating companies. He has initiated and overseen numerous add-on acquisitions,
divestitures, initial public offerings and debt capital markets issues for CHS-owned companies and is well known by the most active
middle-market private equity firms, investment banks and debt financing sources that will be called upon to assist us in executing
our strategy. Mr. Hennessy devotes a substantial portion of his professional time to our affairs.
Experienced
SPAC Management Team with Business Combination Success
. Each of our executive officers served as executive officers,
directors or advisors of Hennessy I, a former blank check company which raised $115.0 million in its initial public offering in
January 2014 and Hennessy II, a blank check company which raised approximately $200.0 million in its initial public offering in
July 2015.
In
February 2015, Hennessy I consummated its initial business combination by acquiring all of the outstanding shares of capital stock
of School Bus Holdings Inc., which, through its subsidiaries, conducts its business under the “Blue Bird” name, from
The Traxis Group B.V., an entity that is majority owned by funds affiliated with Cerberus Capital Management, L.P. In connection
with its initial business combination, Hennessy I changed its name to Blue Bird Corporation. Blue Bird is the leading independent
designer and manufacturer of school buses, with more than 550,000 buses sold since its formation in 1927 and approximately 180,000
buses in operation today. Hennessy I’s stockholders approved the business combination, with approximately 99% of the shares
voting, 98% of which were voted in favor of the transaction, allowing for the swift completion of the business combination only
13 months after Hennessy I’s initial public offering. Following Hennessy I’s IPO, its management identified Blue Bird
within four months, entered into an exclusive letter of intent within six months and executed a binding purchase agreement within
eight months. Prior to signing the purchase agreement with The Traxis Group B.V., Hennessy I’s management secured investments
of $40 million of convertible preferred stock (with a $10 million accordion option) and $10 million in a common equity backstop.
Management also initiated a warrant exchange which resulted in a reduction of Hennessy I’s warrants by over 50%.
In
February 2017, Hennessy II consummated its initial business combination by acquiring all of the outstanding capital stock of Daseke,
Inc., or Daseke. Daseke is a leading consolidator of the open deck freight market in North America and, of the 50 largest U.S.
trucking companies, was one of the fastest-growing companies in 2015. Daseke is one of the largest owners of open deck equipment
and one of the largest providers of open deck transportation and logistics solutions by revenue in North America. In connection
with the transaction, Hennessy II’s management secured investments of $65.0 million of convertible preferred stock and a
$35.0 million common equity backstop.
We
believe that potential sellers of target businesses view the fact that our management team has successfully closed two business
combinations with vehicles similar to our company as positive factors in considering whether or not to enter into a business combination
with us. However, past performance by our management team is not a guarantee of success with respect to any business combination
we may consummate.
We
believe our management team is well positioned to take advantage of the growing set of acquisition opportunities focused on industrial
manufacturing, distribution or service companies in the United States, to create value for our stockholders, and that our contacts
and relationships, ranging from owners of private and public companies, private equity funds, investment bankers, attorneys, accountants
and business brokers has allowed us to generate attractive acquisition opportunities. Our management team is led by Daniel J.
Hennessy, who has over 30 years of experience in the private equity investment business and served as Chief Executive Officer
of Hennessy I and Hennessy II. Members of our management team are not obligated to devote any specific number of hours to our
matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial
business combination. The amount of time that Mr. Hennessy or any other members of our management 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
Board of Directors.
We have assembled a group of independent directors who bring us public company governance, executive
leadership, operations oversight, private equity investment management and capital markets experience. Our Board members have
extensive experience, having served as directors, chief executive officers, chief financial officers or in other executive and
advisory capacities for numerous publicly-listed and privately-owned companies and private equity firms. Our directors have experience
with acquisitions, divestitures and corporate strategy and implementation, which we believe significantly benefits us as we evaluate
potential acquisition or merger candidates as well as following the completion of our initial business combination.
Our
Network of Third Party Advisors.
We have and will continue to utilize what our management believes is an accomplished
and proven network of third party advisors and relationships to assist with target company origination and evaluation, due diligence
and implementation of value creation programs and activities following our initial business combination. This network has assisted
Mr. Hennessy in executing on human capital, performance improvement, strategic growth and capital markets initiatives. We believe
this combination of resources is unique and provides us with a truly differentiated value proposition for investors, sellers,
target companies and their management teams.
Initial
Business Combination
The
NYSE American rules provide that our initial business combination must be with one or more target businesses that together have
a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and
taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination.
If our board is not able to independently determine the fair market value of the target business or businesses, we will obtain
an opinion from an independent investment banking firm that is a member of the Financial Industry Regulatory Authority, or FINRA,
or a qualified independent accounting firm with respect to the satisfaction of such criteria. If our securities are not listed
on NYSE American after our initial public offering, we would not be required to satisfy the 80% requirement. However, we intend
to satisfy the 80% requirement even if our securities are not listed on NYSE American at the time of our initial business combination.
We
anticipate structuring our initial business combination so that the post-transaction company in which our public stockholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses. We may, however, structure
our initial business combination such that the post-transaction company owns or acquires less than 100% of such interests or assets
of the target business in order to meet certain objectives of the target management team or stockholders or for other reasons,
but we will only complete such business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act. Even
if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior to
the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately
prior to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business
combination. If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the
post-transaction company, the portion of such business or businesses that is owned or acquired is what will be valued for purposes
of the 80% of net assets test. If the business combination involves more than one target business, the 80% of net assets test
will be based on the aggregate value of all of the target businesses. If our securities are not listed on NYSE American after
our initial public offering, we would not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement
even if our securities are not listed on NYSE American at the time of our initial business combination.
Consistent
with this strategy, we have identified the following general criteria and guidelines that we believe are important in evaluating
prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide
to enter into our initial business combination with a target business that does not meet these criteria and guidelines.
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Middle-Market Businesses.
We are seeking to acquire one or more businesses with an aggregate enterprise value over $1 billion, determined in the sole discretion of our officers and directors according to reasonably accepted valuation standards and methodologies. We believe that the middle market segment provides the greatest number of opportunities for investment and is the market consistent with our sponsor’s previous investment history. This segment is where we believe we have the strongest network to identify the greatest number of attractive opportunities and we believe the larger market capitalization and public float of the resulting company will be more attractive to our investors.
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Established Companies with Proven Track Records.
We are seeking to acquire one or more established companies with consistent historical financial performance. We are focused on companies with a history of strong operating and financial results and strong fundamentals. We do not intend to acquire start-up companies or companies with recurring negative free cash flow.
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Companies with Proven Revenue and Earnings Growth or Potential for Revenue and Earnings Growth.
We are seeking to acquire one or more businesses that have achieved or have the potential for significant revenue and earnings growth through a combination of organic growth, synergistic add-on acquisitions, new product markets and geographies, increased production capacity, expense reduction and increased operating leverage.
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Companies with, or with the Potential for, Strong Free Cash Flow Generation.
We are seeking to acquire one or more businesses that already have, or have the potential to generate, consistent, stable and increasing free cash flow. We are focusing on businesses that have predictable revenue streams.
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Strong Competitive Position.
We are focused on acquisition targets that have a leading, growing or niche market position in their respective industries. We will analyze the strengths and weaknesses of target businesses relative to their competitors. We are seeking to acquire one or more businesses that demonstrate advantages when compared to their competitors, which may help to protect their market position and profitability.
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Experienced Management Team.
We are seeking to acquire one or more businesses with a complete, experienced management team that provides a platform for us to further develop the acquired business’s management capabilities. We are seeking to partner with a potential target’s management team and expect that the operating and financial abilities of our executive team and board will complement their own capabilities.
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Sectors Exhibiting Secular Growth or with Potential for Cyclical Uptick.
We are focused on acquisition targets in sectors which exhibit positive secular growth or potential for near-term cyclical uptick. We are identifying sectors that have demonstrated strong positive growth in recent years, possess drivers for continued growth and are strategically positioned to benefit from upswings in their respective industry cycles.
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Benefit from Being a Public Company.
We are seeking to acquire one or more businesses that will benefit from being publicly traded and can effectively utilize the broader access to capital and the public profile that are associated with being a publicly traded company.
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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
addition, the members of our board of directors have significant executive management and public company experience with industrial
manufacturing, distribution or service companies. Over the course of their careers, the members of our management team and board
of directors have developed a broad network of contacts and corporate relationships that we believe will be useful for sourcing
acquisition opportunities. This network has been developed through our management team’s experience in:
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sourcing, acquiring, operating, developing, growing, financing
and selling businesses; and
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executing transactions under varying economic and financial
market conditions.
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This
network has provided our management team with a flow of referrals that have resulted in numerous transactions. We believe that
the network of contacts and relationships of our management team has and will continue to provide us with an important source
of acquisition opportunities. In addition, we anticipate that target business candidates will be brought to our attention from
various unaffiliated sources, including investment market participants, private equity groups, investment banks, consultants,
accounting firms and large business enterprises.
Certain
members of our management team have spent significant portions of their careers working with businesses in the industrial manufacturing,
distribution or services sector, and have developed a wide network of professional services contacts and business relationships
in that industry. The members of our board of directors also have significant executive management and public company experience
with industrial manufacturing, distribution or service companies.
In
evaluating a prospective target business, we will conduct a thorough due diligence review which will encompass, among other things,
meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial,
operational, legal and other information which will be made available to us.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor,
officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking
firm which is a member of FINRA or a qualified independent accounting firm that our initial business combination is fair to our
company from a financial point of view.
Members
of our management team may directly or indirectly own our common stock and warrants following our initial public offering, and,
accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with
which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest
with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors
was included by a target business as a condition to any agreement with respect to our initial business combination.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to another entity pursuant to which such officer or director is or will be required to present a business combination opportunity
to such entity. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is
suitable for an entity to which he or she has then-current fiduciary or contractual obligations, he or she will honor these obligations
to present such business combination opportunity to such entities, and may only decide to present it to us if such entities reject
the opportunity and consummating the same would not violate any restrictive covenants to which they are subject. Such officers
or directors shall also have the right in the absence of such fiduciary or contractual obligations to offer certain business opportunities
to such entities before presenting them to us and, in some instances, may be required to present such opportunities to such other
entities before having the ability to offer such opportunities to us. We do not believe, however, that the fiduciary duties or
contractual obligations or other rights of our officers or directors will materially affect our ability to complete our initial
business combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate
opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her
capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake
and would otherwise be reasonable for us to pursue.
Our
sponsor, executive officers, and directors have agreed, pursuant to a written letter agreement, not to participate in the formation
of, or become an officer or director of, any other special purpose acquisition companies with a class of securities registered
under the Securities Exchange Act of 1934, as amended, or the Exchange Act, until we have entered into a definitive agreement
regarding our initial business combination or we have failed to complete our initial business combination by December 28, 2018.
Our
executive offices are located at 3485 N. Pines Way, Suite 110, Wilson, Wyoming 83014 and our telephone number is (307) 734-7879.
Status
as a Public Company
We
believe our structure makes us an attractive business combination partner to target businesses. As an existing public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination.
In this situation, the owners of the target business would exchange their shares of stock in the target business for shares of
our stock or for a combination of shares of our stock and cash, allowing us to tailor the consideration to the specific needs
of the sellers. Although there are various costs and obligations associated with being a public company, we believe target businesses
will find this process a more certain method to becoming a public company than the typical initial public offering.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could prevent the offering from occurring. Once public, we believe the target business would then have greater access to
capital and an additional means of providing management incentives consistent with stockholders’ interests. It can offer
further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting talented
employees.
While
we believe that our structure and our management team’s backgrounds make us an attractive business partner, some potential
target businesses may have a negative view of us since we are a blank check company, without an operating history, and there is
uncertainty relating to our ability to obtain stockholder approval of our proposed initial business combination and retain sufficient
funds in our trust account in connection therewith.
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an emerging growth company until the
earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of 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 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 during the prior three-year period.
Financial
Position
With
funds available for a business combination initially in the amount of $260.6 million assuming no redemptions and after payment
of up to approximately $9.6 million of deferred underwriting fees, we offer a target business a variety of options such as creating
a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening
its balance sheet by reducing its debt ratio. Because we are able to complete our 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.
Significant
Activities Since Inception
On
June 28, 2017, we consummated our initial public offering of 22,500,000 units, each unit consisting of one share of common stock,
$0.0001 par value per share, and three-quarters of one warrant, pursuant to the registration statement on Form S-1 (File No. 333-218341).
Each whole warrant is exercisable to purchase one share of common stock at a price of $11.50 per full share. The units were sold
at an offering price of $10.00 per unit, generating gross proceeds of $225,000,000 (before underwriting discounts and commissions
and offering expenses). Simultaneously with the consummation of our initial public offering, we completed the private placement
of 9,600,000 warrants, issued to our sponsor, generating gross proceeds of $9,600,000.
On
July 14, 2017, the underwriters exercised their over-allotment option in part and on July 19, 2017, the underwriters purchased
an additional 3,165,000 units at an offering price of $10.00 per unit, generating additional gross proceeds of $31,650,000.
Approximately
$259.2 million of the net proceeds from our initial public offering (including the over-allotment) and the private placement with
our sponsor were deposited in a trust account established for the benefit of our public stockholders.
Our
units began trading on June 22, 2017 on the NYSE American under the symbol HCAC.U. Commencing on August 1, 2017, the securities
comprising the units began separate trading. The units, common stock and warrants are trading on the NYSE American under the symbols
“HCAC.U,” “HCAC” and “HCAC.WS,” respectively.
Effecting
our Initial Business Combination
General
We
are not presently engaged in, and we will not engage in, any operations until we consummate our initial business combination.
We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private
placement warrants, our capital stock, debt or a combination of these as the consideration to be paid in our initial business
combination. We may seek to complete our initial business combination with a company or business that may be financially unstable
or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
If
our initial business combination is paid for using equity or debt securities, or not all of the funds released from the trust
account are used for payment of the consideration in connection with our business combination or used for redemptions of purchases
of our common stock, we may apply the balance of the cash released to us from the trust account for general corporate purposes,
including for maintenance or expansion of operations of the post-transaction company, the payment of principal or interest due
on indebtedness incurred in completing our initial business combination, to fund the purchase of other companies or for working
capital.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of
our initial business combination, and we may effectuate our initial business combination using the proceeds of such offering rather
than using the amounts held in the trust account. Subject to compliance with applicable securities laws, we would complete such
financing only simultaneously with the completion of our business combination. In the case of an initial business combination
funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the business
combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such
financing. There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business
combination. At this time, we are not a party to any arrangement or understanding with any third party with respect to raising
any additional funds through the sale of securities or otherwise.
Origination
and Sourcing of Target Business Opportunities
We
believe our management team’s extensive private equity investment and transaction experience, along with relationships with
intermediaries and companies, will provide us with a substantial number of potential business combination targets. Over the course
of their careers, the members of our board and management team have developed a broad network of contacts and corporate relationships
around the world. In the case of our Chairman and Chief Executive Officer, this network has been developed over the course of
over 30 years.
Specifically,
our Chairman and Chief Executive Officer was a Partner at CHS Capital, a middle-market private equity investment firm he co-founded,
from 1988 to 2016. Over a 25-year period, CHS invested $2.9 billion in nearly 400 operating companies. Our Chairman and Chief
Executive Officer, as well as certain of our directors and officers served as directors of Hennessy I, formerly a blank check
company, which is now Blue Bird Corporation (NASDAQ: BLBD) from September 2013 to February 2015 and served as directors of Hennessy
II, formerly a blank check company, which is now known as Daseke, Inc. (NASDAQ: DSKE) from April 2015 to February 2017. We expect
that the management team’s network of existing contacts and relationships will be able to deliver a flow of potential platform
and add-on acquisition opportunities which are proprietary or where a limited group of established, credentialed buyers have been
invited to participate in the sale process. In addition, target business candidates continue to be brought to our attention from
various unaffiliated sources, including investment market participants, private equity funds and large business enterprises seeking
to divest non-core assets or divisions.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, executive
officers or directors, or making the acquisition through a joint venture or other form of shared ownership with our sponsor, executive
officers or directors. In the event we seek to complete an initial business combination with a target that is affiliated with
our sponsor, executive officers or directors, we, or a committee of independent directors, would obtain an opinion from an independent
investment banking which is a member of FINRA or a qualified independent accounting firm that such an initial business combination
is fair to our company from a financial point of view. We are not required to obtain such an opinion in any other context.
If
any of our executive officers becomes aware of a business combination opportunity that falls within the line of business of any
entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such business
combination opportunity to such entity prior to presenting such business combination opportunity to us. All of our executive officers
currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. Our
amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity offered
to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director
or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise
be reasonable for us to pursue.
We
anticipate that target business candidates will also be brought to our attention from various unaffiliated sources, including
investment bankers, private investment funds and other intermediaries. Target businesses may be brought to our attention by such
unaffiliated sources as a result of being solicited by us through calls or mailings. These sources may also introduce us to target
businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read this report
and know what types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to
our attention target business candidates that they become aware of through their business contacts as a result of formal or informal
inquiries or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number
of proprietary opportunities that would not otherwise necessarily be available to us as a result of the track record and business
relationships of our officers and directors, and the success of Hennessy I and Hennessy II, which are well-known to many market
participants.
Selection
of a target business and structuring of our initial business combination
The
NYSE American rules provide that our initial business combination must be with one or more target businesses that together have
a fair market value equal to at least 80% of the balance in the trust account (less any deferred underwriting commissions and
taxes payable on interest earned) at the time of our signing a definitive agreement in connection with our initial business combination.
The fair market value of the target or targets will be determined by our board of directors based upon one or more standards generally
accepted by the financial community, such as discounted cash flow valuation or value of comparable businesses. If our board is
not able to independently determine the fair market value of the target business or businesses, we will obtain an opinion from
independent investment banking firm that is a member of FINRA or a qualified independent accounting firm with respect to the satisfaction
of such criteria. If our securities are not listed on NYSE American at the time of our initial business combination, we would
not be required to satisfy the 80% requirement. However, we intend to satisfy the 80% requirement even if our securities are not
listed on NYSE American at the time of our initial business combination. Subject to this requirement, our management will have
virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not
be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal
operations.
In
any case, we will only complete an initial business combination in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire a controlling interest in the target sufficient for it not to be required to register
as an investment company under the Investment Company Act. If we own or acquire less than 100% of the equity interests or assets
of a target business or businesses, the portion of such business or businesses that are owned or acquired by the post-transaction
company is what will be valued for purposes of the 80% of net assets test. There is no basis for investors in our initial public
offering to evaluate the possible merits or risks of any target business with which we may ultimately complete our business combination.
To
the extent we effect our business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will
endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all significant risk factors.
In
evaluating a prospective target business, we expect to conduct a thorough due diligence review which will encompass, among other
things, meetings with incumbent management and employees, document reviews, inspection of facilities, as well as a review of financial
and other information which will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect
to the identification and evaluation of a prospective target business with which our business combination is not ultimately completed
will result in our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of business diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike other entities that have the resources to complete business combinations
with multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations
and mitigate the risks of being in a single line of business. By completing our business combination with only a single entity,
our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact
on the particular industry in which we operate after our initial business combination, and
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cause
us to depend on the marketing and sale of a single product or limited number of products or services.
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Limited
ability to evaluate the target’s management team
Although
we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting
our business combination with that business, our assessment of the target business’s management may not prove to be correct.
In addition, the future management may not have the necessary skills, qualifications or abilities to manage a public company.
Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with
any certainty. While it is possible that one or more of our directors will remain associated in some capacity with us following
our business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our business
combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company.
The determination as to whether any of our key personnel will remain with the combined company will be made at the time of our
initial business combination.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that the 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
NYSE American’s listing rules, stockholder approval would be required for our initial business combination if, for example:
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we
issue common stock that will be equal to or in excess of 20% of the number of shares of our common stock then outstanding;
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any
of our directors, officers or substantial stockholders (as defined by the NYSE American rules) has a 5% or greater interest
(or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to
be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding
shares of common stock or voting power of 5% or more; or
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the
issuance or potential issuance of common stock will result in our undergoing a change of control.
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Permitted
purchases of our securities
In
the event we seek stockholder approval of our business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or their affiliates may purchase shares
in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination. However, they have no current commitments, plans or intentions to engage in such transactions and have not formulated
any terms or conditions for any such transactions. None of the funds in the trust account will be used to purchase shares in such
transactions. They will not make any such purchases when they are in possession of any material non-public information not disclosed
to the sellers or if such purchases are prohibited by Regulation M under the Exchange Act. Such a purchase may include a contractual
acknowledgement that such stockholder, although still the record holder of our shares is no longer the beneficial owner thereof
and therefore agrees not to exercise its redemption rights. Subsequent to the consummation of our initial public offering, we
adopted an insider trading policy which requires insiders to: (i) refrain from purchasing shares during certain blackout periods
and when they are in possession of any material non-public information and (ii) to clear all trades with our legal counsel prior
to execution. We cannot currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it
will be dependent upon several factors, including but not limited to, the timing and size of such purchases. Depending on such
circumstances, our insiders may either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not
necessary.
In
the event that our sponsor, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required
to revoke their prior elections to redeem their shares. We do not currently anticipate that such purchases, if any, would constitute
a tender offer subject to the tender offer rules under the Exchange Act or a going-private transaction subject to the going-private
rules under the Exchange Act; however, if the purchasers determine at the time of any such purchases that the purchases are subject
to such rules, the purchasers will comply with such rules.
The
purpose of such purchases would be to (i) vote such shares in favor of the business combination and thereby increase the likelihood
of obtaining stockholder approval of the business combination or (ii) to satisfy a closing condition in an agreement with a target
that requires us to have a minimum net worth or a certain amount of cash at the closing of our business combination, where it
appears that such requirement would otherwise not be met. This may result in the completion of our business combination that may
not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our common stock may be reduced and the number of beneficial
holders of our securities may be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading
of our securities on a national securities exchange.
Our
sponsor, officers, directors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor,
officers, directors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us directly
or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into
a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem
their shares for a pro rata share of the trust account or vote against the business combination. Our sponsor, officers, directors,
advisors or their affiliates will only purchase shares if such purchases comply with Regulation M under the Exchange Act and the
other federal securities laws.
Any
purchases by our sponsor, officers, directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the
Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe
harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical
requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers,
directors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule
10b-5 of the Exchange Act.
Redemption
rights for public stockholders upon completion of our initial business combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of common stock upon the
completion of our initial business combination at a per-share price which is payable in cash and 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 (which interest shall be net of taxes payable by us) divided by the number of then outstanding public shares, subject
to the limitations described in this Report. The amount in the trust account as of December 31, 2017, net of taxes payable, was
approximately $10.15 per public share. The per-share amount we will distribute to investors who properly redeem their shares will
not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our initial stockholders have entered
into letter agreements with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder
shares and any public shares they may hold in connection with the completion of our business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of common stock upon the
completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the business
combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business
combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors
such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval under
the law or stock exchange listing requirement. Under NYSE American 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. We intend to conduct redemptions without a stockholder vote pursuant to the tender offer rules of the Securities
and Exchange Commission, or the SEC, unless stockholder approval is required by law or stock exchange listing requirement or we
choose to seek stockholder approval for business or other legal reasons. So long as we maintain a listing for our securities on
NYSE American, 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 business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our common stock in the open market if we elect to redeem our public shares through a tender
offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business
days, in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not
tendering more than a specified number of public shares which are not purchased by our sponsor, which number will be based on
the requirement that we may not redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001
upon consummation of our initial business combination (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw the tender offer and
not complete the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain
stockholder approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
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conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and
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file proxy materials with the SEC.
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In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business
combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of
common stock voted are voted in favor of the business combination. In such case, our initial stockholders have agreed to vote
their founder shares and any public shares purchased during or after our initial public offering in favor of our initial business
combination. As a result, assuming all stockholders are present at the stockholders’ meeting held to approve our initial
business combination, we would need only 9,624,375 of the 25,665,000 public shares, or 37.5%, sold in our initial public offering
to be voted in favor of our initial business combination in order to have such transaction approved. Each public stockholder may
elect to redeem their public shares irrespective of whether they vote for or against the proposed transaction. In addition, our
initial stockholders have entered into letter agreements with us, pursuant to which they have agreed to waive their redemption
rights with respect to their founder shares and public shares in connection with the completion of a business combination.
Our
amended and restated certificate of incorporation provides that in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination (so that
we are not subject to the SEC’s “penny stock” rules). Redemptions of our public shares may also be subject to
a higher net tangible asset test or cash requirement pursuant to an agreement relating to our initial business combination. For
example, the proposed business combination may require: (i) cash consideration to be paid to the target or its owners, (ii) cash
to be transferred to the target for working capital or other general corporate purposes or (iii) the retention of cash to satisfy
other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration
we would be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required
to satisfy cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available
to us, we will not complete the business combination or redeem any shares, and all shares of common stock submitted for redemption
will be returned to the holders thereof.
Limitation
on redemption upon completion of our initial business combination if we seek stockholder approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides
that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting
in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering (the “Excess Shares”).
We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by
such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force
us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable
terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our initial public
offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our management
at a premium to the then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem
no more than 15% of the shares sold in our initial public offering, we believe we will limit the ability of a small group of stockholders
to unreasonably attempt to block our ability to complete our business combination, particularly in connection with a business
combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However,
we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against
our business combination.
Tendering
stock certificates in connection with a tender offer or redemption rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our transfer agent prior to the date set forth in
the tender offer documents, or up to two business days prior to the vote on the proposal to approve the business combination in
the event we distribute proxy materials, or to deliver their shares to the transfer agent electronically using Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option. The tender offer or proxy materials,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will indicate
whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would have
from the time we send out our tender offer materials until the close of the tender offer period, or up to two days prior to the
vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to
exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic
delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering
them through the DWAC System. The transfer agent will typically charge the tendering broker $35.00 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 some other blank check companies. In order to perfect redemption rights in
connection with their business combinations, some other blank check companies would distribute proxy materials for the stockholders’
vote on an initial business combination, and a holder could simply vote against a proposed business combination and check a box
on the proxy card indicating such holder was seeking to exercise his or her redemption rights. After the business combination
was approved, the company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify
ownership. As a result, the stockholder then had an “option window” after the completion of the business combination
during which he or she could monitor the price of the company’s stock in the market. If the price rose above the redemption
price, the stockholder could sell its shares in the open market before actually delivering its 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, became
“option” rights surviving past the completion of the business combination until the redeeming holder delivered its
certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s
election to redeem is irrevocable once the business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials
or the commencement of the meeting of stockholders held to approve the initial business combination, as applicable. Furthermore,
if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides
prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return
the certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares
electing to redeem their shares will be distributed promptly after the completion of our business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise
their redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In
such case, we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed business combination is not completed, we may continue to try to complete a business combination with a different
target until December 28, 2018.
Redemption
of public shares and liquidation if no initial business combination
We
have only until December 28, 2018 to complete our initial business combination, after which 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 which is payable in cash and equal to the aggregate amount then on deposit in the
trust account, including interest (less up to $100,000 of interest to pay dissolution expenses (which interest shall be net of
taxes payable by us) 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 liquidation distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining
stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to
provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination by December
28, 2018.
Our
initial stockholders have entered into letter agreements with us, pursuant to which they have waived their rights to liquidating
distributions from the trust account with respect to their founder shares if we fail to complete our initial business combination
by December 28, 2018. However, if our initial stockholders acquired public shares in or after our initial public offering, they
will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete
our initial business combination by December 28, 2018.
Our
sponsor, executive officers, directors and director nominees have agreed, pursuant to a written letter agreement with us, that
they will not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or
timing of our obligation to redeem 100% of our public shares if we do not complete our initial business combination by December
28, 2018, unless we provide our public stockholders with the opportunity to redeem their shares of common stock upon approval
of any such amendment at a per-share price which is payable in cash and equal to the aggregate amount then on deposit in the trust
account, including interest (which interest shall be net of taxes payable by us) divided by the number of then outstanding public
shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001
upon consummation of our initial business combination (so that we are not subject to the SEC’s “penny stock”
rules). 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. Prior to acquiring any securities from our initial stockholders, permitted transferees must
enter into a written agreement with us agreeing to be bound by the same restriction.
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 $1,353,000 of proceeds held outside the trust account (as of December
31, 2017), although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds are not
sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any
interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional amount
of up to $100,000 of such accrued interest to pay those costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering, 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 $10.10. 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 $10.10. 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 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. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust
account, Daniel J. Hennessy, our Chairman and Chief Executive Officer, has agreed that he will be liable to us if and to the extent
any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed
entering into a definitive agreement for a business combination, reduce the amount of funds in the trust account to below (i)
$10.10 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 other than due to the failure to obtain such waiver, in each
case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed
a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that
an executed waiver is deemed to be unenforceable against a third party, then Mr. Hennessy will not be responsible to the extent
of any liability for such third-party claims. We cannot assure you, however, that Mr. Hennessy would be able to satisfy those
obligations. None of our other officers will indemnify us for claims by third parties including, without limitation, claims by
vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.10 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 other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn
to pay taxes, and Mr. Hennessy asserts that he is unable to satisfy his 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 Mr.
Hennessy to enforce his indemnification obligations. While we currently expect that our independent directors would take legal
action on our behalf against Mr. Hennessy to enforce his indemnification obligations to us, it is possible that our independent
directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, we cannot assure
you that due to claims of creditors the actual value of the per-share redemption price will not be substantially less than $10.10
per share.
We
have and will continue to reduce the possibility that Mr. Hennessy will have to indemnify the trust account due to claims of creditors
by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account.
Mr. Hennessy 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 $260.6 million from
the proceeds of our initial public offering held in the trust account (as of December 31, 2017) 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 to be distributed to our public stockholders upon the redemption of our public shares
in the event we do not complete our business combination by December 28, 2018 may be considered a liquidation distribution under
Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that
it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our business combination by December 28, 2018, is not considered a liquidation 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 liquidation distribution. If we are unable to complete our business combination by December 28,
2018, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not
more than ten business days thereafter, redeem the public shares, at a per-share price which is payable in cash and equal to the
aggregate amount then on deposit in the trust account, including interest (net of the amount of interest which may be withdrawn
to pay taxes and 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 liquidation 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 28, 2018,
and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any
claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond
the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers and investment bankers) or prospective target businesses. As described above, pursuant to the obligation contained
in our underwriting agreement, we will seek to have all vendors, service providers, prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account.
As
a result of this obligation, the claims that could be made against us are significantly limited and the likelihood that any claim
that would result in any liability extending to the trust account is remote. Further, Mr. Hennessy may be liable only to the extent
necessary to ensure that the amounts in the trust account are not reduced below (i) $10.10 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 other than due to the failure to obtain such waiver, in each case net of the amount of interest withdrawn
to pay taxes or working capital expenses and less any per-share amounts distributed from our trust account to our public stockholders
in the event we are unable to complete our business combination by December 28, 2018 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, Mr. Hennessy 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 $10.10 per share to our public stockholders. Additionally, if we
file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, any distributions
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential
transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received
by our stockholders. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have
acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from
the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us
for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only 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 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 28, 2018, subject to applicable law. In no other circumstances will a stockholder have any right
or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business
combination, a stockholder’s voting in connection with the business combination alone will not result in a stockholder’s
redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its
redemption rights described above.
Amended
and Restated Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements and restrictions relating to our initial public
offering that apply to us until the consummation of our initial business combination. If we seek to amend any provisions of our
amended and restated certificate of incorporation relating to stockholders’ rights or pre-initial business combination activity,
we will provide dissenting public stockholders with the opportunity to redeem their public shares in connection with any such
vote. Our initial stockholders have agreed to waive any redemption rights with respect to their founder shares and public shares
in connection with the completion of our initial business combination. Specifically, our amended and restated certificate of incorporation
provides, among other things, that:
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prior to the consummation of our initial business combination, we shall either (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable by us) or (2) provide our stockholders with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable by us) in each case subject to the limitations described in this Report;
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we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon consummation of our initial business combination and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the business combination;
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if our initial business combination is not consummated by December 28, 2018, then our existence will terminate and we will distribute all amounts in the trust account; and
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prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination.
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These
provisions cannot be amended without the approval of holders of 65% of our common stock. In the event we seek stockholder approval
in connection with our initial business combination, our amended and restated certificate of incorporation provides that we may
consummate our initial business combination only if approved by a majority of the shares of common stock voted by our stockholders
at a duly held stockholders meeting.
Competition
In
identifying, evaluating and selecting a target business for our business combination, we may encounter intense competition from
other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged
buyout funds, and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive
experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors
possess greater financial, technical, human and other resources than us. Our ability to acquire larger target businesses will
be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the acquisition
of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise their redemption
rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future
dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place
us at a competitive disadvantage in successfully negotiating an initial business combination.
Employees
We
currently have three executive officers. Members of our management team are not obligated to devote any specific number of hours
to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our
initial business combination. The amount of time that Mr. Hennessy or any other members of our management 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, but we expect that Mr. Hennessy will devote a substantial portion of his professional time
to our affairs.
Periodic
Reporting and Financial Information
We
have registered our units, common stock and warrants under the Exchange Act and have reporting obligations, including the requirement
that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our
annual report contains financial statements audited and reported on by our independent registered public accounting firm.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these
financial statements will need to be prepared in accordance with GAAP. We cannot assure you that any particular target business
selected by us as a potential acquisition candidate will have financial statements prepared in accordance with GAAP or that the
potential target business will be able to prepare its financial statements in accordance with GAAP. To the extent that this requirement
cannot be met, we may not be able to acquire the proposed target business. While this may limit the pool of potential acquisition
candidates, we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2018 as required by the Sarbanes-Oxley
Act. As long as we maintain our status as an emerging growth company, we will not be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. A target company may not be in
compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of their internal controls. The development of the
internal controls of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
In
connection with our initial public offering, we 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 business combination.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other
public companies that are not “emerging growth companies” including, but not limited to, not being required to comply
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors
find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of
our securities may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period.
We
will remain an emerging growth company until the earlier of:
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the
last day of the fiscal year:
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following
the fifth anniversary of the completion of our initial public offering,
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in
which we have total annual gross revenue of at least $1.07 billion, or
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in
which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates
exceeds $700 million as of the prior June 30
th
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the
date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
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References
in this Report to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
RISK
FACTORS
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Report, before making a decision to invest in our securities. If any of the following
events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the
trading price of our securities could decline, and you could lose all or part of your investment.
We
are a recently formed company with no operating history and no revenues, and you have no basis on which to evaluate our ability
to achieve our business objective.
We
are a recently formed company with no operations to date. Because we lack an operating history, you have no basis upon which to
evaluate our ability to achieve our business objective of completing our initial business combination with one or more target
businesses. If we fail to complete our business combination, we will never generate any operating revenues.
Our
public stockholders may not be afforded an opportunity to vote on our proposed business combination, which means we may complete
our initial business combination even though a majority of our public stockholders do not support such a combination.
We
may not hold a stockholder vote to approve our initial business combination unless the business combination would require stockholder
approval under applicable state law or the NYSE American rules or if we decide to hold a stockholder vote for business or other
reasons. For instance, the NYSE American rules currently allow us to engage in a tender offer in lieu of a stockholder meeting
but would still require us to obtain stockholder approval if we were seeking to issue more than 20% of our outstanding shares
to a target business as consideration in any business combination. Therefore, if we were structuring a business combination that
required us to issue more than 20% of our outstanding shares, we would seek stockholder approval of such business combination.
However, except as required by law, the decision as to whether we will seek stockholder approval of a proposed business combination
or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will
be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise
require us to seek stockholder approval. Accordingly, we may consummate our initial business combination even if holders of a
majority of the outstanding shares of our common stock do not approve of the business combination we consummate.
If
we seek stockholder approval of our initial business combination, our initial stockholders have agreed to vote in favor of such
initial business combination, regardless of how our public stockholders vote.
Unlike
some other blank check companies in which the initial stockholders agree to vote their founder shares in accordance with the majority
of the votes cast by the public stockholders in connection with an initial business combination, our initial stockholders have
agreed to vote their founder shares, as well as any public shares purchased during or after our initial public offering, in favor
of our initial business combination. Our initial stockholders own 20.0% of our outstanding shares of common stock. As a result,
assuming all stockholders are present at the stockholders’ meeting held to approve our initial business combination, we
would need only 9,624,375 of the 25,665,000 public shares, or 37.5%, sold in our initial public offering to be voted in favor
of our initial business combination in order to have such transaction approved. Accordingly, if we seek stockholder approval of
our initial business combination, it is more likely that the necessary stockholder approval will be received than would be the
case if our initial stockholders agreed to vote their founder shares in accordance with the majority of the votes cast by our
public stockholders.
Your
only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise
of your right to redeem your shares from us for cash, unless we seek stockholder approval of the business combination.
At
the time of your investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of one
or more target businesses. Since our board of directors may complete a business combination without seeking stockholder approval
(unless stockholder approval is required by law or stock exchange listing requirement, or we decide to obtain stockholder approval
for business or other legal reasons), public stockholders may not have the right or opportunity to vote on the business combination,
unless we seek such stockholder vote. Accordingly, if we do not seek stockholder approval, your only opportunity to affect the
investment decision regarding a potential business combination may be limited to exercising your redemption rights within the
period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders
in which we describe our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a definitive agreement for a business combination with a prospective target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption
rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 upon consummation of our initial business combination (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business
combination. Consequently, if accepting all properly submitted redemption requests would cause our net tangible assets to be less
than $5,000,001 upon consummation of our initial business combination or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for
an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
a business combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into a definitive agreement for our initial business combination, we will not know how many stockholders may
exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number
of shares that will be submitted for redemption. If our definitive agreement for our initial business combination requires us
to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash at
closing, we will need to reserve a portion of the cash in the trust account to meet such requirements, or arrange for third party
financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure
the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing. Raising additional
third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels.
The above considerations may limit our ability to complete the most desirable business combination available to us or optimize
our capital structure.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the
probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order
to redeem your stock.
If
the definitive agreement for our initial business combination requires us to use a portion of the cash in the trust account to
pay the purchase price, or requires us to have a minimum amount of cash at closing, the probability that our initial business
combination would be unsuccessful is increased. If our initial business combination is unsuccessful, our public stockholders would
not receive their pro rata portion of the trust account until we liquidate the trust account. If our public stockholders are in
need of immediate liquidity, they could attempt to sell their stock in the open market; however, at such time our stock may trade
at a discount to the pro rata amount per share in the trust account. In either situation, our public stockholders may suffer a
material loss on their investment or lose the benefit of funds expected in connection with our redemption until we liquidate or
our public stockholders are able to sell their stock in the open market.
The
requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses
leverage over us in negotiating a business combination and may decrease our ability to conduct due diligence on potential business
combination targets as we approach our dissolution deadline, which could undermine our ability to complete our business combination
on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination by December 28, 2018, which is 18 months from the closing of our initial public offering. Consequently,
such target business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our
initial business combination with that particular target business, we may be unable to complete our initial business combination
with any target business. This risk will increase as we get closer to the deadline described above. In addition, we may have limited
time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a
more comprehensive investigation.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem our public shares and liquidate.
We
must complete our initial business combination by December 28, 2018. We may not be able to find a suitable target business and
complete our initial business combination within such time period. If we have not completed our initial business combination within
such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the public shares, at a per-share price which is payable in cash and equal
to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable
by us, and 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 liquidation 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.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, executive officers, advisors and their
affiliates may elect to purchase shares from public stockholders, which may influence a vote on a proposed business combination
and reduce the public “float” of our common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor, directors, executive officers, advisors or their affiliates may purchase
shares in privately negotiated transactions or in the open market either prior to or following the completion of our initial business
combination, although they are under no obligation to do so. Such a purchase may include a contractual acknowledgement that such
stockholder, although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not
to exercise its redemption rights. In the event that our sponsor, directors, executive officers, advisors or their affiliates
purchase shares in privately negotiated transactions from public stockholders who have already elected to exercise their redemption
rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. The purpose of such
purchases could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder
approval of the business combination or to satisfy a closing condition in an agreement with a target that requires us to have
a minimum net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement
would otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our common stock and the number of beneficial holders
of our securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our
securities on a national securities exchange.
If
a public stockholder fails to receive notice of our offer to redeem our public shares in connection with our business combination,
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our business
combination. Despite our compliance with these rules, if a public stockholder fails to receive our tender offer or proxy materials,
as applicable, such stockholder may not become aware of the opportunity to redeem its shares. In addition, the tender offer documents
or proxy materials, as applicable, that we will furnish to holders of our public shares in connection with our initial business
combination will describe the various procedures that must be complied with in order to validly tender or redeem public shares.
In the event that a public stockholder fails to comply with these procedures, its shares may not be redeemed.
You
will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate
your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) our completion
of an initial business combination, and then only in connection with those shares of our common stock that such stockholder properly
elected to redeem, subject to the limitations described in this Report, (ii) the redemption of our public shares in connection
with a stockholder vote to amend any provisions of our amended and restated certificate of incorporation relating to stockholders’
rights or pre-initial business combination activity or (iii) the redemption of our public shares if we are unable to complete
an initial business combination by December 28, 2018, subject to applicable law and as further described in this Report. In addition,
if our plan to redeem our public shares if we are unable to complete an initial business combination by December 28, 2018 is not
completed for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing stockholders
for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced
to wait beyond December 28, 2018 before they receive funds from our trust account. In no other circumstances will a public stockholder
have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell
your public shares or warrants, potentially at a loss.
The
NYSE American may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions
in our securities and subject us to additional trading restrictions.
Our
securities are currently listed on NYSE American. However, we cannot assure you that our securities will continue to be listed
on NYSE American in the future or prior to our initial business combination. In order to continue listing our securities on NYSE
American prior to our initial business combination, we must maintain certain financial, distribution and stock price levels. Generally,
we must maintain a minimum amount in stockholders’ equity (generally $2,000,000) and a minimum number of holders of our
securities (generally 300 round-lot holders). Additionally, in connection with our initial business combination, we will be required
to demonstrate compliance with NYSE American’s initial listing requirements, which are more rigorous than NYSE American’s
continued listing requirements, in order to continue to maintain the listing of our securities on NYSE American. For instance,
our stock price would generally be required to be at least $3.00 per share and our stockholders’ equity would generally
be required to be at least $2.0 million. We cannot assure you that we will be able to meet those initial listing requirements
at that time.
If
NYSE American delists our securities from trading on its exchange and we are not able to list our securities on another national
securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, we could face
significant material adverse consequences, including:
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a limited availability of market quotations for our securities;
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reduced liquidity for our securities;
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a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
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a limited amount of news and analyst coverage; and
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a decreased ability to issue additional securities or obtain additional financing in the future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because our units, common stock and
warrants are listed on the NYSE American, our units, common stock and warrants are covered securities. Although the states are
preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there
is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of
securities issued by blank check companies, other than the state of Idaho, certain state securities regulators view blank check
companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check
companies in their states. Further, if we were no longer listed on NYSE American, our securities would not be covered securities
and we would be subject to regulation in each state in which we offer our securities.
You
will not be entitled to protections normally afforded to investors of many other blank check companies.
Since
the net proceeds of our initial public offering and the sale of the private placement warrants are intended to be used to complete
an initial business combination with a target business that has not been selected, we are deemed to be a “blank check”
company under the United States securities laws. However, because we had net tangible assets in excess of $5,000,000 upon the
successful completion of our initial public offering and the sale of the private placement warrants and filed a Current Report
on Form 8-K, including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect
investors in blank check companies, such as Rule 419. Accordingly, investors are not afforded the benefits or protections of those
rules which would, for example, completely restrict the transferability of our securities and restrict the use of interest earned
on the funds held in the trust account. Because we are not subject to Rule 419, we will be entitled to withdraw any amounts of
interest earned on funds held in the trust account prior to the completion of an initial business combination.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our common stock, you will lose
the ability to redeem all such shares in excess of 15% of our common stock.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in
concert or as a “group” (as defined under Section 13 of the Exchange Act), is restricted from seeking redemption rights
with respect to more than an aggregate of 15% of the shares sold in our initial offering, which we refer to as the “Excess
Shares.” However, we are not restricting our stockholders’ ability to vote all of their shares (including Excess Shares)
for or against our business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability
to complete our business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in
open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we
complete our business combination. And as a result, you will continue to hold that number of shares exceeding 15% and, in order
to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
Because
of our limited resources and the significant competition for business combination opportunities, it may be more difficult for
us to complete our initial business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.10 per share, on our redemption, and our warrants will expire worthless.
We
have encountered and expect to continue to encounter intense competition from other entities having a business objective similar
to ours, including private investors (which may be individuals or investment partnerships), other blank check companies and other
entities, domestic and international, competing for the types of businesses we intend to acquire. Many of these individuals and
entities are well-established and have extensive experience in identifying and effecting, directly or indirectly, acquisitions
of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human
and other resources or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted
with those of many of these competitors. While we believe there are numerous target businesses we could potentially acquire with
the net proceeds of our initial public offering and the sale of the private placement warrants, our ability to compete with respect
to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, if we
are obligated to pay cash for the shares of common stock redeemed and, in the event we seek stockholder approval of our business
combination, we may make purchases of our common stock, potentially reducing the resources available to us for our initial business
combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 per
share upon the liquidation of our trust account and our warrants will expire worthless. Furthermore, as described in the risk
factor entitled “
If third parties bring claims against us, the proceeds held in the trust account could be reduced and
the per-share redemption amount received by stockholders may be less than $10.10 per share
,” under certain circumstances
our public stockholders may receive less than $10.10 per share upon the liquidation of the trust account.
If
the net proceeds of our initial public offering not being held in the trust account are insufficient to allow us to operate until
December 28, 2018, we may be unable to complete our initial business combination.
The
funds available to us outside of the trust account may not be sufficient to allow us to operate until December 28, 2018, assuming
that our initial business combination is not completed during that time. We believe that the funds available to us outside of
the trust account, will be sufficient to allow us to operate until December 28, 2018; however, we cannot assure you that our estimate
is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist
us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop”
provision (a provision in letters of intent designed to keep target businesses from “shopping” around for transactions
with other companies on terms more favorable to such target businesses) with respect to a particular proposed business combination,
although we do not have any current intention to do so. If we entered into a letter of intent where we paid for the right to receive
exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or
otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 per
share upon the liquidation of our trust account and our warrants will expire worthless. Furthermore, as described in the risk
factor entitled “
If third parties bring claims against us, the proceeds held in the trust account could be reduced and
the per-share redemption amount received by stockholders may be less than $10.10 per share
,” under certain circumstances
our public stockholders may receive less than $10.10 per share upon the liquidation of the trust account.
If
the net proceeds of our initial public offering not being held in the trust account are insufficient, it could limit the amount
available to fund our search for a target business or businesses and complete our initial business combination and we will depend
on loans from our sponsor or management team to fund our search, to pay our taxes and to complete our business combination.
Of
the net proceeds of our initial public offering, only approximately $1,353,000 (as of December 31, 2017) are available to us outside
the trust account to fund our working capital requirements. If we are required to seek additional capital, we would need to borrow
funds from our sponsor, management team or other third parties to operate or may be forced to liquidate. Neither our sponsor,
members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances.
Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion
of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient
funds available to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders
may only receive approximately $10.10 per share on our redemption of our public shares, and our warrants will expire worthless.
Furthermore, as described in the risk factor entitled “
If third parties bring claims against us, the proceeds held in
the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.10 per share
,”
under certain circumstances our public stockholders may receive less than $10.10 per share upon the liquidation of the trust account.
Subsequent
to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and
impairment or other charges that could have a significant negative effect on our financial condition, results of operations and
our stock price, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will
surface all material issues that may be present inside a particular target business, that it would be possible to uncover all
material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure
our operations, or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully
identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with
our preliminary risk analysis. Even though these charges may be non-cash items and would not have an immediate impact on our liquidity,
the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In
addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of
assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy
statement relating to the business combination contained an actionable material misstatement or material omission.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.10 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we have 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, such parties may not execute such agreements, or even if they execute such agreements
they may not be prevented from bringing claims against the trust account, including, but not limited to, fraudulent inducement,
breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in
each case in order to gain advantage with respect to a claim against our assets, including the funds held in the trust account.
If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has
not executed a waiver if management believes that such third party’s engagement would be significantly more beneficial to
us than any alternative. We are not aware of any product or service providers who have not or will not provide such waiver other
than the underwriters of our initial public offering. While our independent registered public accounting firm has waived any right,
title, interest or claim of any kind in or to any monies held in the trust account for the benefit of the public stockholders,
our independent registered public accounting firm has not waived any rights to fees for which they would become entitled for services
rendered.
Examples
of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver.
In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for
any reason. Upon redemption of our public shares, if we are unable to complete our business combination within the prescribed
time frame, or upon the exercise of a redemption right in connection with our business combination, we will be required to provide
for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption.
Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.10 per share initially
held in the trust account, due to claims of such creditors. Daniel J. Hennessy, our Chairman and Chief Executive Officer, has
agreed that he will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us,
or a prospective target business with which we have discussed entering into a definitive agreement for a business combination,
reduce the amount of funds in the trust account to below (i) $10.10 per public share or (ii) such lesser amount per public share
held in the trust account as of the date of the liquidation of the trust account due to reductions in the value of the trust assets,
in each case net of the interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a
waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event
that an executed waiver is deemed to be unenforceable against a third party, Mr. Hennessy will not be responsible to the extent
of any liability for such third party claims. We have not independently verified whether Mr. Hennessy has sufficient funds to
satisfy his indemnity obligations. We have not asked Mr. Hennessy to reserve for such eventuality. We believe the likelihood of
Mr. Hennessy having to indemnify the trust account is limited because we will endeavor to have all vendors and prospective target
businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or
to monies held in the trust account.
Our
directors may decide not to enforce the indemnification obligations of Mr. Hennessy, resulting in a reduction in the amount of
funds in the trust account available for distribution to our public stockholders.
In
the event that the proceeds in the trust account are reduced below the lesser of (i) $10.10 per share or (ii) other than due to
the failure to obtain such waiver such lesser amount per share held in the trust account as of the date of the liquidation of
the trust account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn
to pay taxes, and Mr. Hennessy asserts that he is unable to satisfy his obligations or that he has no indemnification obligations
related to a particular claim, our independent directors would determine whether to take legal action against Mr. Hennessy to
enforce his indemnification obligations. While we currently expect that our independent directors would take legal action on our
behalf against Mr. Hennessy to enforce his indemnification obligations to us, it is possible that our independent directors in
exercising their business judgment may choose not to do so in any particular instance. If our independent directors choose not
to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public
stockholders may be reduced below $10.10 per share.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members
of our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members
of our board of directors and us to claims of punitive damages.
If,
after we distribute the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under
applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself
and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over
the claims of our stockholders and the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise
be received by our stockholders in connection with our liquidation may be reduced.
If
we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance
requirements and our activities may be restricted, which may make it difficult for us to complete our business combination.
If
we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
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restrictions on the nature of our investments, and
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restrictions on the issuance of securities, each of which may make it difficult for us to complete our business combination.
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addition, we may have imposed upon us burdensome requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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We
do not believe that our anticipated principal activities will subject us to the Investment Company Act. The proceeds held in the
trust account may be invested by the trustee only in United States government treasury bills with a maturity of 180 days or less
or in money market funds investing solely in United States government treasury obligations and meeting certain conditions under
Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be restricted to these instruments, we
believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If
we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require
additional expenses for which we have not allotted funds and may hinder our ability to complete a business combination. If we
are unable to complete our initial business combination, our public stockholders may receive only approximately $10.10 per share
upon the liquidation of our trust account and our warrants will expire worthless. Furthermore, as described in the risk factor
entitled “
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share
redemption amount received by stockholders may be less than $10.10 per share
,” under certain circumstances our public
stockholders may receive less than $10.10 per share upon the liquidation of the trust account.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and
results of operations.
We
are subject to laws and regulations enacted by national, regional and local governments. In particular, we are required to comply
with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations can be difficult,
time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time
and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a
failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our
business, investments and results of operations.
Our
stockholders may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption
of their shares.
Under
the Delaware General Corporation Law, or 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 to be 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 28, 2018 may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures
set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including
a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which
the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon
as reasonably possible following December 28, 2018 in the event we do not complete our business combination and, therefore, we
do not intend to comply with those procedures.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the 10 years following our dissolution. However, because we are a blank check company, rather than an operating company,
and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise
would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of distribution
complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited
to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability
of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly
assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third
anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon
the redemption of our public shares in the event we do not complete our initial business combination by December 28, 2018 is not
considered a liquidation 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 liquidation distribution.
We
may not hold an annual meeting of stockholders until after our consummation of a business combination and you will not be entitled
to any of the corporate protections provided by such a meeting.
We
may not hold an annual meeting of stockholders until after we consummate a business combination (unless required by NYSE American),
and thus may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting of stockholders be held for
the purposes of electing directors in accordance with a company’s bylaws unless such election is made by written consent
in lieu of such a meeting. Therefore, if our stockholders want us to hold an annual meeting prior to our consummation of a business
combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance
with Section 211(c) of the DGCL.
We
have not registered the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from
being able to exercise its warrants and causing such warrants to expire worthless.
We
have not registered the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities
laws. However, under the terms of the warrant agreement, we have agreed, as soon as practicable, but in no event later than 30
days after the closing of our initial business combination, to use our best efforts to file a registration statement under the
Securities Act covering such shares, and within 60 business days following our initial business combination to have the registration
statement declared effective, and to maintain a current prospectus relating to the common stock issuable upon exercise of the
warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you
that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information
set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein
are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered
under the Securities Act within 60 business days following our initial business combination, we will be required to permit holders
to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we
will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon
such exercise is registered or qualified under the securities laws of the state of the exercising holder, unless an exemption
is available. Notwithstanding the above, if our common stock is at the time of any exercise of a warrant not listed on a national
securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities
Act, we may, at our option, require holders of public warrants who exercise their warrants to do so a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event we so elect, we will not be required to file or maintain
in effect a registration statement or register or qualify the shares under blue sky laws. In no event will we be required to net
cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable
to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws. If the
issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification,
the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
In such event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price
solely for the shares of common stock included in the units. If and when the warrants become redeemable by us, we may not exercise
our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or
qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use
our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those
states in which the warrants were offered by us in our initial public offering. However, there may be instances in which holders
of our public warrants may be unable to exercise such public warrants but holders of our private warrants may be able to exercise
such private warrants.
The
grant of registration rights to our initial stockholders and holders of our private placement warrants may make it more difficult
to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of
our common stock.
Pursuant
to an agreement entered into concurrently with the issuance and sale of the securities in our initial public offering, our initial
stockholders and their permitted transferees can demand that we register the founder shares, holders of our private placement
warrants and their permitted transferees can demand that we register the private placement warrants and the shares of common stock
issuable upon exercise of the private placement warrants. We will bear the cost of registering these securities. The registration
and availability of such a significant number of securities for trading in the public market may have an adverse effect on the
market price of our common stock. In addition, the existence of the registration rights may make our initial business combination
more costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they
seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our common
stock that is expected when the securities owned by our initial stockholders, holders of our private placement warrants or their
respective permitted transferees are registered.
Because
we are not limited to a particular industry or any specific target businesses with which to pursue our initial business combination,
you will be unable to ascertain the merits or risks of any particular target business’s operations.
We
will seek to complete a business combination with an operating company in the industrial manufacturing, distribution or services
sector in the United States (which may include a company based in the United States which has operations or opportunities outside
the United States), but may also pursue acquisition opportunities in other industries, except that we are not, under our amended
and restated certificate of incorporation, permitted to effectuate our business combination with another blank check company or
similar company with nominal operations. Because we have not yet selected any specific target business with respect to a business
combination, there is no basis to evaluate the possible merits or risks of any particular target business’s operations,
results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete our business combination,
we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with
a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks
inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors
will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain
or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some
of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will
adversely impact a target business. We also cannot assure you that an investment in our securities will ultimately prove to be
more favorable to investors than a direct investment, if such opportunity were available, in a potential business combination
target. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction
in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able
to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary
duty owed to them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials
or proxy statement relating to the business combination contained an actionable material misstatement or material omission.
We
may seek acquisition opportunities in industries outside of the industrial manufacturing, distribution or services sector, which
industries may or may not be outside of our management’s area of expertise.
Although
we are focusing on identifying business combination candidates in the industrial manufacturing, distribution or services sector
in the United States (including candidates based in the United States which may have operations or opportunities outside the United
States), we will consider a business combination outside of the industrial manufacturing, distribution or services sector if a
business combination candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity
for our company or we are unable to identify a suitable candidate in the industrial manufacturing, distribution or services sector
after having expended a reasonable amount of time and effort in an attempt to do so. Although our management will endeavor to
evaluate the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain
or assess all of the significant risk factors. We also cannot assure you that an investment in our securities will not ultimately
prove to be less favorable to investors than a direct investment, if an opportunity were available, in a business combination
candidate.
In
the event we elect to pursue an investment outside of the industrial manufacturing, distribution or services sector, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Report regarding
the industrial manufacturing, distribution or services sector would not be relevant to an understanding of the business that we
elect to acquire.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, it is possible that a target
business with which we enter into our initial business combination will not have all of these positive attributes. If we complete
our initial business combination with a target that does not meet some or all of these guidelines, such combination may not be
as successful as a combination with a business that does meet all of our general criteria and guidelines. In addition, if we announce
a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number of stockholders
may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business
that requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction
is required by law, or we decide to obtain stockholder approval for business or other legal reasons, it may be more difficult
for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria
and guidelines. If we are unable to complete our initial business combination, our public stockholders may receive only approximately
$10.10 per share upon the liquidation of our trust account and our warrants will expire worthless. Furthermore, as described in
the risk factor entitled “
If third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per-share redemption amount received by stockholders may be less than $10.10 per share
,” under certain circumstances
our public stockholders may receive less than $10.10 per share upon the liquidation of the trust account.
We
may seek acquisition opportunities with a financially unstable business or an entity lacking an established record of revenue
or earnings.
To
the extent we complete our initial business combination with a financially unstable business or an entity lacking an established
record of sales or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine.
These risks include volatile revenues or earnings and difficulties in obtaining and retaining key personnel. Although our officers
and directors will endeavor to evaluate the risks inherent in a particular target business, we may not be able to properly ascertain
or assess all of the significant risk factors and we may not have adequate time to complete due diligence. Furthermore, some of
these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will
adversely impact a target business.
The
report of our independent registered public accounting firm expresses substantial doubt about our ability to continue as a going
concern.
Our
auditors have indicated in their report on our financial statements for the year ended December 31, 2017 that conditions exist
that raise substantial doubt about our ability to continue as a going concern because if we do not complete a business combination
by December 28, 2018, we will cease all operations except for the purpose of winding down and liquidating. A “going concern”
opinion could impair our ability to finance our initial business combination through the sale of equity, incurring debt, or other
financing alternatives. There can be no assurance that we will be able to consummate an initial business combination by December
28, 2018.
We
are not required to obtain an opinion from an independent investment banking or accounting firm, and consequently, you may have
no assurance from an independent source that the price we are paying for the business is fair to our company from a financial
point of view.
Unless
we complete our business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment
banking or accounting firm that the price we are paying is fair to our company from a financial point of view. If no opinion is
obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair market value based
on standards generally accepted by the financial community. Such standards used will be disclosed in our tender offer documents
or proxy solicitation materials, as applicable, related to our initial business combination.
We
may issue additional common or preferred shares to complete our initial business combination or under an employee incentive plan
after completion of our initial business combination, any one of which would dilute the interest of our stockholders and likely
present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up to 200,000,000 shares of common stock, par value
$0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. There are currently 139,070,000 authorized
but unissued shares of common stock available for issuance, which amount takes into account shares reserved for issuance upon
exercise of outstanding warrants. There are currently no shares of preferred stock issued and outstanding.
We
may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination
or under an employee incentive plan after completion of our initial business combination (although our amended and restated certificate
of incorporation provides that we may not issue securities that can vote with common stockholders on matters related to our pre-initial
business combination activity). However, our amended and restated certificate of incorporation provides, among other things, that
prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders
thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination. These provisions of our
amended and restated certificate of incorporation, like all provisions of our amended and restated certificate of incorporation,
may be amended with the approval of our stockholders. However, our executive officers, directors and director nominees have agreed,
pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate of incorporation
(A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete our initial
business combination by December 28, 2018 or (B) with respect to any other provision relating to stockholders’ rights or
pre-initial business combination activity, unless we provide our public stockholders with the opportunity to redeem their shares
of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account, including interest (which interest shall be net of taxes payable), divided by the number of then
outstanding public shares.
The
issuance of additional shares of common or preferred stock:
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may significantly dilute the equity interest of investors in our initial public offering;
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may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
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could cause a change in control if a substantial number of common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
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may adversely affect prevailing market prices for our units, common stock and/or warrants.
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Resources
could be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.10 per share upon the liquidation of our trust account and our warrants will expire
worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.10 per share upon the liquidation of our trust account and our warrants will expire
worthless. Furthermore, as described in the risk factor entitled “
If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.10
per share
,” under certain circumstances our public stockholders may receive less than $10.10 per share upon the liquidation
of the trust account.
We
are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors.
We believe that our success depends on the continued service of our executive officers and directors, at least until we have completed
our business combination. In addition, our executive officers and directors are not required to commit any specified amount of
time to our affairs and, accordingly, will have conflicts of interest in allocating management time among various business activities,
including identifying potential business combinations and monitoring the related due diligence. We do not have an employment agreement
with, or key-man insurance on the life of, any of our directors or executive officers. The unexpected loss of the services of
one or more of our directors or executive officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon
the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel
could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our business combination is dependent upon the efforts of our key personnel. The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with
the target business in senior management or advisory positions following our business combination, it is likely that some or all
of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage
after our business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These
individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have
to expend time and resources helping them become familiar with such requirements and take time away from oversight of our operations.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our business combination and as a result,
may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our business combination only if they are able to
negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take place
simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of the business combination.
The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target
business. However, we believe the ability of such individuals to remain with us after the completion of our business combination
will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.
There is no certainty, however, that any of our key personnel will remain with us after the completion of our business combination.
We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination
as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
We
may have a limited ability to assess the management of a prospective target business and, as a result, may effect our initial
business combination with a target business whose management may not have the skills, qualifications or abilities to manage a
public company.
When
evaluating the desirability of effecting our initial business combination with a prospective target business, our ability to assess
the target business’s management may be limited due to a lack of time, resources or information. Our assessment of the capabilities
of the target’s management, therefore, may prove to be incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not possess the skills, qualifications or abilities necessary
to manage a public company, the operations and profitability of the post-combination business may be negatively impacted. Accordingly,
any stockholders who choose to remain stockholders following the business combination could suffer a reduction in the value of
their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully
claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to
them, or if they are able to successfully bring a private claim under securities laws that the tender offer materials or proxy
statement relating to the business combination contained an actionable material misstatement or material omission.
The
officers and directors of an acquisition candidate may resign upon completion of our initial business combination. The departure
of a potential business combination target’s key personnel could negatively impact the operations and profitability of our
post-combination business. The role of an acquisition candidates’ key personnel upon the completion of our initial business
combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition candidate following our initial business combination, it is possible
that members of the management of an acquisition candidate will not wish to remain in place.
Our
executive officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination
as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete
our initial business combination.
Our
executive officers and directors are not required to, and will not, commit their full time to our affairs, which may result in
a conflict of interest in allocating their time between our operations and our search for a business combination and their other
businesses. We do not intend to have any full-time employees prior to the completion of our business combination. Each of our
executive officers is engaged in several other business endeavors for which he may be entitled to substantial compensation and
our executive officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors
also serve as officers and board members for other entities. If our executive officers’ and directors’ other business
affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could
limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business
combination.
Certain
of our executive officers and directors are now, and all of them may in the future become, affiliated with entities engaged in
business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining
to which entity a particular business opportunity should be presented.
Until
we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more
businesses. Our executive officers and directors are, or may in the future become, affiliated with entities (such as operating
companies or investment vehicles) that are engaged in a similar business, although they may not participate in the formation of,
or become an officer or director of, any other special purpose acquisition companies with a class of securities registered under
the Exchange Act until we have entered into a definitive agreement regarding our initial business combination or we have failed
to complete our initial business combination by December 28, 2018.
Our
officers and directors also may become aware of business opportunities which may be appropriate for presentation to us and the
other entities to which they owe certain fiduciary or contractual duties. Accordingly, they may have conflicts of interest in
determining to which entity a particular business opportunity should be presented to our company or to another entity. These conflicts
may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation
to us. Our amended and restated certificate of incorporation provides that we renounce our interest in any corporate opportunity
offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as
a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue.
Members
of our management team may directly or indirectly own our common stock and warrants following our initial public offering, and,
accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate business with
which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest
with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors
was included by a target business as a condition to any agreement with respect to our initial business combination.
Our
executive officers, directors, security holders and their respective affiliates may have competitive pecuniary interests that
conflict with our interests.
We
have not adopted a policy that expressly prohibits our directors, executive officers, security holders or affiliates from having
a direct or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction
to which we are a party or have an interest. In fact, we may enter into a business combination with a target business that is
affiliated with our sponsor, our directors or executive officers, although we do not intend to do so. Nor do we have a policy
that expressly prohibits any such persons from engaging for their own account in business activities of the types conducted by
us. Accordingly, such persons or entities may have a conflict between their interests and ours.
We
may engage in a business combination with one or more target businesses that have relationships with entities that may be affiliated
with our executive officers, directors or existing holders which may raise potential conflicts of interest.
In
light of the involvement of our sponsor, executive officers and directors with other entities, we may decide to acquire one or
more businesses affiliated with our sponsor, executive officers and directors. Our directors also serve as officers and board
members for other entities. Such entities may compete with us for business combination opportunities. Our sponsor, officers and
directors are not currently aware of any specific opportunities for us to complete our business combination with any entities
with which they are affiliated, and there have been no preliminary discussions concerning a business combination with any such
entity or entities. Although we are not specifically focusing on, or targeting, any transaction with any affiliated entities,
we would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination and
such transaction was approved by a majority of our disinterested directors. Despite our agreement to obtain an opinion from an
independent investment banking firm regarding the fairness to our company from a financial point of view of a business combination
with one or more domestic or international businesses affiliated with our executive officers, directors or existing holders, potential
conflicts of interest still may exist and, as a result, the terms of the business combination may not be as advantageous to our
public stockholders as they would be absent any conflicts of interest.
Since
our sponsor, executive officers and directors will lose their entire investment in us if our business combination is not completed,
a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial
business combination.
In
March 2017, our sponsor purchased an aggregate of 7,906,250 founder shares for an aggregate purchase price of $25,000. Thereafter,
we cancelled a portion of the founder shares, resulting in an aggregate of 6,468,750 founder shares outstanding (52,500 of which
were forfeited by our sponsor as a result of the partial exercise of the underwriters’ over-allotment option). The number
of founder shares issued was determined based on the expectation that such founder shares would represent 20.0% of the outstanding
shares upon completion of our initial public offering. In May 2017, our sponsor transferred 75,000 founder shares to each of Messrs.
Bell, Burns, Shea, O’Neil and DiMicco, our independent director nominees, 250,000 to Mr. Petruska, our Executive Vice President,
Chief Financial Officer and Secretary, and 500,000 to Mr. Charlton, our President and Chief Operating Officer. In addition, our
sponsor has purchased an aggregate of 9,600,000 private placement warrants, each exercisable for one share of our common stock
at $11.50 per share, for a purchase price of $9,600,000, or $1.00 per warrant, that will also be worthless if we do not complete
a business combination.
The
founder shares are identical to the shares of common stock included in the units sold in our initial public offering. However,
the holders have agreed (A) to vote any shares owned by them in favor of any proposed business combination and (B) not to redeem
any shares in connection with a stockholder vote to approve a proposed initial business combination.
The
personal and financial interests of our executive officers and directors may influence their motivation in identifying and selecting
a target business combination, completing an initial business combination and influencing the operation of the business following
the initial business combination.
Since
our sponsor, executive officers and directors will not be eligible to be reimbursed for their out-of-pocket expenses or collect
any deferred amounts owed to them if our business combination is not completed, a conflict of interest may arise in determining
whether a particular business combination target is appropriate for our initial business combination.
At
the closing of our initial business combination, our sponsor, executive officers and directors, or any of their respective affiliates,
will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential
target businesses and performing due diligence on suitable business combinations. There is no cap or ceiling on the reimbursement
of out-of-pocket expenses incurred in connection with activities on our behalf. Furthermore, certain of our executive officers
will be owed deferred amounts that are payable only if we consummate our initial business combination. These financial interests
of our sponsor, executive officers and directors may influence their motivation in identifying and selecting a target business
combination and completing an initial business combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although
we have no commitments as of the date of this report to issue any notes or other debt securities, or to otherwise incur outstanding
debt, we may choose to incur substantial debt to complete our business combination. We have agreed that we will not incur any
indebtedness unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the
monies held in the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from
the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
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default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
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our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
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our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;
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our inability to pay dividends on our common stock;
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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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We
may only be able to complete one business combination with the proceeds of our initial public offering and the sale of the private
placement warrants, which will cause us to be solely dependent on a single business which may have a limited number of products
or services. This lack of diversification may negatively impact our operations and profitability.
The
net proceeds from our initial public offering and the private placement of warrants provided us with approximately $260.6 million
that we may use to complete our business combination (excluding up to approximately $9.6 million of deferred underwriting commissions
being held in the trust account).
We
may effectuate our business combination with a single target business or multiple target businesses simultaneously or within a
short period of time. However, we may not be able to effectuate our business combination with more than one target business because
of various factors, including the existence of complex accounting issues and the requirement that we prepare and file pro forma
financial statements with the SEC that present operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. By completing our initial business combination with only a single entity our lack
of diversification may subject us to numerous economic, competitive and regulatory risks. Further, we would not be able to diversify
our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the
resources to complete several business combinations in different industries or different areas of a single industry. Accordingly,
the prospects for our success may be:
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solely dependent upon the performance of a single business, property or asset, or
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dependent upon the development or market acceptance of a single or limited number of products, processes or services.
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This
lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a
substantial adverse impact upon the particular industry in which we may operate subsequent to our business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If
we determine to simultaneously acquire several businesses that are owned by different sellers, we will need for each of such sellers
to agree that our purchase of its business is contingent on the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to complete our initial business combination. With multiple business
combinations, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations
and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation
of the operations and services or products of the acquired companies in a single operating business. If we are unable to adequately
address these risks, it could negatively impact our profitability and results of operations.
We
may attempt to complete our initial business combination with a private company about which little information is available, which
may result in a business combination with a company that is not as profitable as we suspected, if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial business combination with a privately held company. By
definition, very little public information exists about private companies, and we could be required to make our decision on whether
to pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
Our
management may not be able to maintain control of a target business after our initial business combination. We cannot provide
assurance that, upon loss of control of a target business, new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We
may structure a business combination so that the post-transaction company in which our public stockholders own shares will own
less than 100% of the equity interests or assets of a target business, but we will only complete such business combination if
the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for us not to be required to register as an investment company under the Investment
Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction company owns
50% or more of the voting securities of the target, our stockholders prior to the business combination may collectively own a
minority interest in the post business combination company, depending on valuations ascribed to the target and us in the business
combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common
stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the
target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately
prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such transaction.
In addition, other minority stockholders may subsequently combine their holdings resulting in a single person or group obtaining
a larger share of the company’s stock than we initially acquired. Accordingly, this may make it more likely that our management
will not be able to maintain our control of the target business.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete a business combination with which a substantial majority of our stockholders do not agree.
Our
amended and restated certificate of incorporation does not provide a specified maximum redemption threshold, except that in no
event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation
of our initial business combination (such that we are not subject to the SEC’s “penny stock” rules) or any greater
net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. As
a result, we may be able to complete our business combination even though a substantial majority of our public stockholders do
not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination
and do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, have entered into
privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or their affiliates. In the
event the aggregate cash consideration we would be required to pay for all shares of common stock that are validly submitted for
redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business combination exceed
the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, all shares of
common stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business
combination.
The
exercise price for the public warrants is higher than in some similar blank check company offerings in the past, and, accordingly,
the warrants are more likely to expire worthless.
The
exercise price of the public warrants is higher than is typical in some similar blank check companies in the past. Historically,
the exercise price of a warrant was generally a fraction of the purchase price of the units in the initial public offering. The
exercise price for our public warrants is $11.50 per whole share. As a result, the warrants are less likely to ever be in the
money and more likely to expire worthless.
In
order to effectuate an initial business combination, blank check companies have amended various provisions of their charters and
governing instruments. We cannot assure you that we will not seek to amend our amended and restated certificate of incorporation
or governing instruments in a manner that will make it easier for us to complete our initial business combination that our stockholders
may not support.
In
order to effectuate a business combination, blank check companies have amended various provisions of their charters and governing
instruments. For example, blank check companies have amended the definition of business combination, increased redemption thresholds
and extended the period of time during which they could consummate an initial business combination. We cannot assure you that
we will not seek to amend our charter or governing instruments in order to effectuate our initial business combination.
The
provisions of our amended and restated certificate of incorporation that relate to our pre-initial business combination activity
(and corresponding provisions of the agreement governing the release of funds from our trust account) may be amended with the
approval of holders of 65% of our common stock, which is a lower threshold than that of some other blank check companies. It may
be easier for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an
initial business combination that some of our stockholders may not support.
Some
other blank check companies have provisions in their charters which prohibit the amendment of certain of its provisions, including
those which relate to a company’s pre-initial business combination activity, without approval by a certain percentage of
the company’s stockholders. In those companies, amendment of these provisions requires approval by holders of between 90%
and 100% of the company’s public stockholders. Our amended and restated certificate of incorporation provides that any of
its provisions (other than amendments relating to the redemption rights of our public stockholders, which require the approval
of the holders of all (100%) of our common stock), including those related to pre-initial business combination activity, such
as an amendment to permit us to withdraw funds from the trust account such that the per share amount investors will receive upon
any redemption or liquidation is substantially reduced or eliminated, may be amended if approved by holders of 65% of our common
stock, and corresponding provisions of the trust agreement governing the release of funds from our trust account may be amended
if approved by holders of 65% of our common stock. In all other instances, our amended and restated certificate of incorporation
may be amended by holders of a majority of our common stock, subject to applicable provisions of the DGCL or applicable stock
exchange rules. We may not issue additional securities that can vote on amendments to our amended and restated certificate of
incorporation. Our initial stockholders, who collectively beneficially own 20.0% of our common stock, will participate in any
vote to amend our amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote
in any manner they choose. As a result, we may be able to amend the provisions of our amended and restated certificate of incorporation
which govern our pre-initial business combination behavior more easily than some other blank check companies, and this may increase
our ability to complete a business combination with which you do not agree. Our stockholders may pursue remedies against us for
any breach of our amended and restated certificate of incorporation.
Our
sponsor, executive officers, directors and director nominees have agreed, pursuant to a written agreement with us, that they will
not propose any amendment to our amended and restated certificate of incorporation that would affect the substance or timing of
our obligation to redeem 100% of our public shares if we do not complete our initial business combination within 18 months from
the closing of our initial public offering, unless we provide our public stockholders with the opportunity to redeem their shares
of common stock upon approval of any such amendment at a per-share price which is payable in cash and equal to the aggregate amount
then on deposit in the trust account, including interest (net of the interest which may be withdrawn to pay taxes) divided by
the number of then outstanding public shares. These agreements are contained in letter agreements that we have entered into with
our sponsor, executive officers, directors and director nominees. Prior to acquiring any securities from our initial stockholders,
permitted transferees must enter into a written agreement with us agreeing to be bound by the same restriction. Our stockholders
are not parties to, or third-party beneficiaries of, these agreements and, as a result, will not have the ability to pursue remedies
against our sponsor, executive officers, directors or director nominees for any breach of these agreements. As a result, in the
event our sponsor, executive officers, directors or director nominees breach these agreements, our stockholders would need to
pursue a stockholder derivative action, subject to applicable law.
Certain
agreements related to our initial public offering may be amended without stockholder approval.
Certain
agreements, including the underwriting agreement relating to our initial public offering, the investment management trust agreement
between us and Continental Stock Transfer & Trust Company, the letter agreement among us and our sponsor, officers, directors
and director nominees, the registration rights agreement among us and our initial stockholders and the administrative services
agreement between us and an affiliate of our sponsor, may be amended without stockholder approval. These agreements contain various
provisions that our public stockholders might deem to be material. For example, the underwriting agreement related to our initial
public offering contains (i) a representation that we will not consummate any public or private equity or debt financing prior
to the consummation of a business combination, unless all investors in such financing expressly waive, in writing, any rights
in or claims against the trust account and (ii) a covenant that the target company that we acquire must have a fair market value
equal to at least 80% of the balance in the trust account at the time of signing the definitive agreement for the transaction
with such target business (excluding the deferred underwriting commissions and taxes payable on the income earned on the trust
account) so long as we obtain and maintain a listing for our securities on NYSE American. While we do not expect our board to
approve any amendment to any of these agreements prior to our initial business combination, it may be possible that our board,
in exercising its business judgment and subject to its fiduciary duties, chooses to approve one or more amendments to any such
agreement in connection with the consummation of our initial business combination. Any such amendment may have an adverse effect
on the value of an investment in our securities.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
Although
we believe that the net proceeds of our initial public offering and the sale of the private placement warrants will be sufficient
to allow us to complete our initial business combination, because we have not yet selected any prospective target business we
cannot ascertain the capital requirements for any particular transaction. If the net proceeds of our initial public offering and
the sale of the private placement warrants prove to be insufficient, either because of the size of our initial business combination,
the depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant
number of shares from stockholders who elect redemption in connection with our initial business combination or the terms of negotiated
transactions to purchase shares in connection with our initial business combination, we may be required to seek additional financing
or to abandon the proposed business combination. We cannot assure you that such financing will be available on acceptable terms,
if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination,
we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative
target business candidate. In addition, even if we do not need additional financing to complete our business combination, we may
require such financing to fund the operations or growth of the target business. The failure to secure additional financing could
have a material adverse effect on the continued development or growth of the target business. None of our officers, directors
or stockholders is required to provide any financing to us in connection with or after our business combination. If we are unable
to complete our initial business combination, our public stockholders may only receive approximately $10.10 per share upon the
liquidation of our trust account, and our warrants will expire worthless. Furthermore, as described in the risk factor entitled
“
If third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share
redemption amount received by stockholders may be less than $10.10 per share
,” under certain circumstances our public
stockholders may receive less than $10.10 per share upon the liquidation of the trust account.
Our
initial stockholders control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder
vote, potentially in a manner that you do not support.
Our
initial stockholders own 20.0% of our issued and outstanding shares of common stock. Accordingly, they may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our
amended and restated certificate of incorporation. If our initial stockholders purchase any additional shares of common stock
in the aftermarket or in privately negotiated transactions, their influence would increase. Neither our initial stockholders nor,
to our knowledge, any of our officers or directors, have any current intention to purchase additional securities. Factors that
would be considered in making such additional purchases would include consideration of the current trading price of our common
stock. In addition, our board of directors, whose members were elected by our sponsor, is and will be divided into two classes,
each of which will generally serve for a term of two years with only one class of directors being elected in each year. We may
not hold an annual meeting of stockholders to elect new directors prior to the completion of our business combination, in which
case all of the current directors will continue in office until at least the completion of the business combination. If there
is an annual meeting, as a consequence of our “staggered” board of directors, only a portion of the board of directors
will be considered for election and our initial stockholders, because of their ownership position, will have considerable influence
regarding the outcome. Accordingly, our initial stockholders will continue to exert control at least until the completion of our
business combination.
We
may amend the terms of the warrants in a manner that may be adverse to holders with the approval by the holders of at least 65%
of the then outstanding public warrants.
Our
warrants have been issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company,
as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of
any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least 65%
of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders. Accordingly,
we may amend the terms of the warrants in a manner adverse to a holder if holders of at least 65% of the then outstanding public
warrants approve of such amendment. Although our ability to amend the terms of the warrants with the consent of at least 65% of
the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase
the exercise price of the warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable
upon exercise of a warrant.
We
may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants
worthless.
We
have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration, at a
price of $0.01 per warrant, provided that the last reported sales price of our common stock equals or exceeds $18.00 per share
for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date we send the notice of
redemption to the warrant holders. If and when the warrants become redeemable by us, we may not exercise our redemption right
if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under
applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to
register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the
warrants were offered by us in our initial public offering. Redemption of the outstanding warrants could force you (i) to exercise
your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your
warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption
price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market
value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by their initial
purchasers or their permitted transferees.
Our
warrants may have an adverse effect on the market price of our common stock and make it more difficult to effectuate our business
combination.
We
have issued warrants to purchase 28,848,750 shares of our common stock as part of the units offered in our initial public offering
and, simultaneously with the closing of our initial public offering, we issued in a private placement an aggregate of 9,600,000
private placement warrants, each exercisable to purchase one share of common stock at $11.50 per share. Only whole warrants may
be exercised. To the extent we issue shares of common stock to effectuate a business transaction, the potential for the issuance
of a substantial number of additional shares of common stock upon exercise of these warrants could make us a less attractive acquisition
vehicle to a target business. Such warrants, when exercised, will increase the number of issued and outstanding shares of our
common stock and reduce the value of the shares of common stock issued to complete the business transaction. Therefore, our warrants
may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
The
private placement warrants are identical to the warrants sold as part of the units in our initial public offering except that,
so long as they are held by our sponsor or its permitted transferees, (i) they will not be redeemable by us, (ii) they (including
the common stock issuable upon exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned
or sold by the sponsor until 30 days after the completion of our initial business combination and (iii) they may be exercised
by the holders on a cashless basis.
A
market for our securities may not develop, which would adversely affect the liquidity and price of our securities.
The
price of our securities may vary significantly due to one or more potential business combinations and general market or economic
conditions. Furthermore, an active trading market for our securities may never develop or, if developed, it may not be sustained.
You may be unable to sell your securities unless a market can be established and sustained.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure. We will include the same financial statement
disclosure in connection with our tender offer documents, whether or not they are required under the tender offer rules. These
financial statements may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted
in the United States of America, or GAAP, or international financing reporting standards, or IFRS, depending on the circumstances,
and the historical financial statements will likely be required to be audited in accordance with the standards of the Public Company
Accounting Oversight Board (United States), or the PCAOB. These financial statement requirements may limit the pool of potential
target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose such
statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
We
are an emerging growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure
requirements available to emerging growth companies, this could make our securities less attractive to investors and may make
it more difficult to compare our performance with other public companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and
stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access
to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700
million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following
December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our
securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading
prices of our securities may be more volatile.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We
have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our business combination, require substantial
financial and management resources, and increase the time and costs of completing an acquisition.
Section
404 of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual
Report on Form 10-K no earlier than the year ending December 31, 2018. As long as we maintain our status as an emerging growth
company, we will not be required to comply with the independent registered public accounting firm attestation requirement on our
internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target company with which
we seek to complete our business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such acquisition.
Provisions
in our amended and restated certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the
price investors might be willing to pay in the future for our common stock and could entrench management.
Our
amended and restated certificate of incorporation contains provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of, and issue new series of, preferred stock, which may make more difficult the
removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market
prices for our securities.
We
are also subject to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these
provisions may make it more difficult to remove management and may discourage transactions that otherwise could involve payment
of a premium over prevailing market prices for our securities.
Provisions
in our amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against
our directors and officers.
Our
amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought
in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought
only in the Court of Chancery in the State of Delaware and, if brought outside of the State of Delaware, the stockholder bringing
such suit will be deemed to have consented to service of process on such stockholder’s counsel. These provisions may have
the effect of discouraging lawsuits against our directors and officers.
If
we effect our initial business combination with a company located in the United States but with operations or opportunities outside
of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.
If
we effect our initial business combination with a company located in the United States but with operations or opportunities outside
of the United States, we would be subject to any special considerations or risks associated with companies operating in an international
setting, including any of the following:
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costs and difficulties inherent in managing cross-border business operations
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rules and regulations regarding currency redemption;
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complex corporate withholding taxes on individuals;
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laws governing the manner in which future business combinations may be effected;
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tariffs and trade barriers;
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regulations related to customs and import/export matters;
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longer payment cycles;
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tax issues, such as tax law changes and variations in tax laws as compared to the United States;
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currency fluctuations and exchange controls;
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rates of inflation;
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challenges in collecting accounts receivable;
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cultural and language differences;
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employment regulations;
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crime, strikes, riots, civil disturbances, terrorist attacks and wars; and
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deterioration of political relations with the United States.
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We
may not be able to adequately address these additional risks. If we were unable to do so, our operations might suffer, which may
adversely impact our results of operations and financial condition.
We
face risks related to industrial manufacturing, distribution or service companies.
Business
combinations with industrial manufacturing, distribution or service companies entail special considerations and risks. If we are
successful in completing a business combination with such a target business, we will be subject to, and possibly adversely affected
by, the following risks:
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the markets we may serve may be subject to general economic conditions and cyclical demand, which could lead to significant shifts in our results of operations from quarter to quarter that make it difficult to project long-term performance;
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we may be unable to attract or retain customers;
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we may be subject to the negative impacts of catastrophic events;
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we may face competition and consolidation of the specific sector of the industry within which the target business operates;
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we may be subject to volatility in costs for strategic raw material and energy commodities (such as natural gas, including exports of material quantities of natural gas from the United States) or disruption in the supply of these commodities could adversely affect our financial results;
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we may be unable to obtain necessary insurance coverage for the target business’ operations;
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we may incur additional expenses and delays due to technical problems, labor problems (including union disruptions) or other interruptions at our manufacturing facilities after our initial business combination;
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we may experience work-related accidents that may expose us to liability claims;
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our manufacturing processes and products may not comply with applicable statutory and regulatory requirements, or if we manufacture products containing design or manufacturing defects, demand for our products may decline and we may be subject to liability claims;
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we may be liable for damages based on product liability claims, and we may also be exposed to potential indemnity claims from customers for losses due to our work or if our employees are injured performing services;
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our products may be are subject to warranty claims, and our business reputation may be damaged and we may incur significant costs as a result;
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we may be unable to protect our intellectual property rights;
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our products and manufacturing processes will be subject to technological change;
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we may be subject to increased government regulations, including with respect to, among other matters, increased environmental regulation and worker safety regulation, and the costs of compliance with such regulations; and
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the failure of our customers to pay the amounts owed to us in a timely manner.
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Any
of the foregoing could have a negative adverse impact on our operations following a business combination. However, our efforts
in identifying prospective target businesses will not be limited to the industrial manufacturing, distribution or services industry.
Accordingly, if we acquire a target business in another industry, these risks will likely not affect us and we will be subject
to other risks attendant with the specific industry in which we operate or target business which we acquire, none of which can
be presently ascertained.