Item 1 Business.
Overview
Over
the last 15 years, our founders, John Delaney and Steve Case, have worked together on several transactions and through multiple
disruptive trends that have helped shape today’s economic and business landscape. We believe we are on the cusp of another
transformation, one that is driven by accelerating technological advancements and, importantly, shaped by increasing regulatory
and public policy considerations.
We
are a blank check company incorporated on September 10, 2020, as a Delaware corporation, 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 as our initial business combination. While we may pursue an acquisition in any business industry or sector,
our company will be focused on target companies operating in the healthcare, financial services, clean energy, consumer products,
infrastructure, government to private sector transitions or media sectors that we believe are uniquely positioned to capitalize
on the opportunities that can be unlocked by the convergence of innovation, government policy and regulation. Our sponsor is RAAC
Management LLC, a Delaware limited liability company.
Our
registration statement for our initial public offering (the “Initial Public Offering”) was declared effective on December
7, 2020. On December 10, 2020, we consummated our Initial Public Offering of 28,750,000 units (the “Units” and, with
respect to the shares of Class A common stock, par value $0.0001 per share, included in the Units offered, the “public shares”),
including 3,750,000 additional Units to cover over-allotments, at $10.00 per Unit, generating gross proceeds of $287,500,000,
and incurring offering costs of $16,242,914, inclusive of $10,062,500 in deferred underwriting commissions.
Substantially
concurrently with the closing of the Initial Public Offering, we consummated the private placement (the “Private Placement”)
of 5,166,667 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”),
at a price of $1.50 per Private Placement Warrant to our sponsor, generating gross proceeds of $7,750,000.
Upon
the closing of the Initial Public Offering and the Private Placement, $287,500,000 ($10.00 per Unit) of the net proceeds of the
Initial Public Offering and certain of the proceeds of the Private Placement were placed in a trust account (“Trust Account”)
with Continental Stock Transfer & Trust Company acting as trustee and invested in United States government treasury bills
with a maturity of 185 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions
under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”), as determined
by the Company, until the earlier of: (i) the completion of an initial business combination and (ii) the distribution of the Trust
Account as described below.
Our
management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and
the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward
consummating our initial business combination. The Nasdaq Stock Market LLC (“Nasdaq”) rules require that our initial
business combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of
the net assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned
on the Trust Account) at the time we sign a definitive agreement in connection with the initial business combination. However,
we will only complete an initial business combination if the post-transaction company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act.
We
intend to effectuate an initial business combination using the proceeds from the Initial Public Offering and Private Placement,
and from additional issuances of, if any, our capital stock and our debt, or a combination of cash, stock and debt. We have not
engaged in, and we will not engage in, any operations until we complete an initial business combination. We will not generate
any operating revenues until after completion of our initial business combination, at the earliest. Our entire activity since
inception through December 31, 2020, related to our formation, the preparation for the Initial Public Offering, and following
the closing of the Initial Public Offering, the search for a prospective initial business combination. Based on our business activities,
we are a “shell company” as defined under the Exchange Act of 1934, as amended (the “Exchange Act”), because
we have no operations and nominal assets consisting almost entirely of cash.
We
will provide the holders of our public shares (the “public stockholders”) with the opportunity to redeem all or a
portion of their public shares upon the completion of our initial business combination either (i) in connection with a stockholder
meeting called to approve the initial business combination or (ii) by means of a tender offer. The decision as to whether we will
seek stockholder approval of our initial business combination or conduct a tender offer will be made by us, solely in our discretion.
The public stockholders will be entitled to redeem their public shares for a pro rata portion of the amount then in the Trust
Account. The per-share amount to be distributed to public stockholders who redeem their public shares will not be reduced by the
deferred underwriting commissions we pay to the underwriters of the Initial Public Offering. For additional information about
the redemption rights of public stockholders, see Note 1 to the Financial Statements included herewith.
If
we are unable to complete an initial business combination within 24 months from the closing of the Initial Public Offering (the
“Combination Period”), we will (i) cease all operations except for the purpose of winding up; (ii) as promptly as
reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust
Account and not previously released to us to fund our working capital requirements (less up to $100,000 of interest to pay dissolution
expenses and which interest shall be net of taxes payable) divided by the number of the then outstanding public shares, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidation distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii),
to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Proposed
Berkshire Grey Business Combination
On
February 23, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among
the Company, Pickup Merger Corp, a Delaware corporation and a direct, wholly owned subsidiary of the Company (“Merger Sub”),
and Berkshire Grey, which provides for, among other things, the merger of Merger Sub with and into Berkshire Grey, with Berkshire
Grey being the surviving corporation of the merger and a direct, wholly owned subsidiary of the Company as a consequence of the
merger (the “Merger” and, together with the other transactions contemplated by the Merger Agreement, the “Berkshire
Grey Business Combination”). The Merger Agreement and the transactions contemplated thereby were unanimously approved by
the board of directors of the Company on February 23, 2021 and by the board of directors of Berkshire Grey.
Subject
to the terms and conditions of the Merger Agreement, the consideration to be paid in respect of each share of common stock, par
value $0.001 per share, of Berkshire Grey (“Berkshire Grey Common Stock”) issued and outstanding (other than (i) any
such shares held in the treasury of Berkshire Grey and (ii) any shares held by stockholders of Berkshire Grey who have perfected
and not withdrawn a demand for appraisal rights) immediately prior to the effective time of the Merger will be a number of shares
of newly issued Class A common stock of the Company (with each share valued at $10.00), par value $0.0001 per share (“Class A
Stock”), equal to (x) $2,250,000,000.00 divided by (y) the number of shares of Aggregate Fully Diluted Company
Stock (as defined in the Merger Agreement). Immediately prior to the closing of the Berkshire Grey Business Combination (the “Closing”),
all of the outstanding shares of each series of preferred stock, par value $0.001 per share, of Berkshire Grey (“Berkshire
Grey Preferred Stock”) will be converted into shares of Berkshire Grey Common Stock.
At
the Closing, each outstanding option to acquire Berkshire Grey Common Stock and each award of restricted Berkshire Grey Common
Stock will be converted into the right to receive an option relating to shares of Class A Stock and an award of restricted shares
of Class A Stock, as applicable, upon substantially the same terms and conditions, including with respect to vesting and termination-related
provisions, as existed prior to the Closing, except that the number of shares underlying such option and the exercise price and
the number of shares subject to restricted stock awards, in each case, shall be determined as set forth in the Merger Agreement.
Each
of the Company, Merger Sub and Berkshire Grey have made representations, warranties and covenants that are customary for a transaction
of this nature. The representations and warranties contained in the Merger Agreement terminate and are of no further force or
effect as of the Closing.
The
Merger Agreement contains additional covenants of the parties, including, among others, covenants providing for (a) the parties
to conduct their respective businesses in the ordinary course through the Closing, subject to certain exceptions, (b) the Company
and Berkshire Grey to cease discussions regarding alternative transactions, (c) the Company to prepare with Berkshire Grey’s
cooperation and to file with the SEC a registration statement on Form S-4 in connection with the registration under the Securities
Act of 1933, as amended (the “Securities Act”), of the shares of Class A Stock issued in the Merger (the “Registration
Statement”), (d) the Company to prepare with Berkshire Grey’s cooperation and to file with the SEC a proxy statement
as part of the Registration Statement soliciting proxies from the Company’s stockholders to vote in favor of approval of
the Merger Agreement, the transactions contemplated thereby and certain other matters in connection with the Berkshire Grey Business
Combination at a stockholders’ meeting called therefor and (e) the parties providing required notice under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the “HSR Act”).
In
connection with the Closing, the Company will amend and restate its second amended and restated certificate of incorporation and
its bylaws such that the Company will (i) change its name to “Berkshire Grey, Inc.” and (ii) have a board of directors
initially consisting of up to thirteen (13) directors, with one director nominee designated by the Company and up to twelve (12)
director nominees to be mutually agreed by the Company and Berkshire Grey.
The
consummation of the transactions contemplated by the Merger Agreement is subject to customary closing conditions for special purpose
acquisition companies, including, among others: (a) approval of the Berkshire Grey Business Combination by the Company’s
stockholders and Berkshire Grey’s stockholders, (b) the Registration Statement being deemed effective (c) the Company having
at least $5,000,001 of net tangible assets, (d) the expiration or termination of the waiting period under the HSR Act, (e) the
approval for listing on The Nasdaq Stock Market LLC of the shares of Class A Stock to be issued in connection with the Merger,
and (f) as a condition to Berkshire Grey’s obligations to consummate the Berkshire Grey Business Combination, the Company
having at least $200,000,000 in available cash, after taking into account payments required to satisfy the Company’s stockholder
redemptions and the net proceeds from the PIPE Investment (as defined below).
The
Merger Agreement may be terminated under certain customary and limited circumstances prior to the Closing, including (a) by mutual
written consent of the parties, (b) by either the Company or Berkshire Grey if a final and nonappealable order has been issued
or governmental action that permanently makes consummation of the transactions illegal or otherwise prevents or prohibits the
Berkshire Grey Business Combination, (c) by Berkshire Grey (i) if the Company’s stockholders do not vote to approve the
Berkshire Grey Business Combination at the Company’s stockholders’ meeting convened for such purpose, (ii) upon
a breach by the Company or Merger Sub that gives rise to a failure of a closing condition that cannot be cured or has not been
cured within 30 days’ notice and the Company continues to use its reasonable best efforts to cure, or (iii) if the Berkshire
Grey Business Combination is not consummated by August 23, 2021 (the “Outside Date”), unless Berkshire Grey is in
material breach of the Merger Agreement, and (d) by the Company (i) if approval by Berkshire Grey’s stockholders is not
obtained within two business days of the Registration Statement being declared effective by the SEC and delivered or otherwise
made available to stockholders, (ii) upon a breach by Berkshire Grey that gives rise to a failure of a closing condition that
cannot be cured or has not been cured within 30 days’ notice and Berkshire Grey continues its reasonable best efforts to
cure, or (iii) if the Berkshire Grey Business Combination is not consummated by the Outside Date, unless the Company is in material
breach of the Merger Agreement.
The
Merger Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date
of the Merger Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were
made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed
to by the parties in connection with negotiating such agreement. Investors and security holders are not third-party beneficiaries
under the Merger Agreement and should not rely on the representations, warranties or covenants, or any descriptions thereof, as
characterizations of the actual state of facts or condition of any party to the Merger Agreement or any of their respective subsidiaries
or affiliates. The representations, warranties and covenants in the Merger Agreement were made only as of the date of the Merger
Agreement or, with respect to certain representations, in the event the Closing, as of the date of such closing, or such other
date as is specified in the Merger Agreement and are also modified in important part by the underlying disclosure schedules which
are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable
to stockholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts.
The Company does not believe that these schedules contain information that is material to an investment decision.
Subscription
Agreements
Concurrently
with the execution of the Merger Agreement, the Company entered into subscription agreements (the “Subscription Agreements”)
with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors have committed to purchase an
aggregate amount of $165,000,000 in shares of Class A Stock at a purchase price of $10.00 per share, substantially concurrent
with, and contingent upon, the Closing (the “PIPE Investment”).
The
Subscription Agreements for the PIPE Investors provide for certain registration rights. In particular, the Company is required
to, within 30 calendar days following the Closing, file with the SEC a registration statement registering the resale of the securities
issued pursuant to the Subscription Agreements. Additionally, the Company is required to use its commercially reasonable efforts
to have such registration statement declared effective as soon as practicable after the filing thereof, but no later than the
earlier of (i) the 90th calendar day following the filing date thereof and (ii) the 10th business day after the date the Company
is notified (orally or in writing, whichever is earlier) by the SEC that the registration statement will not be “reviewed”
or will not be subject to further review.
Each
Subscription Agreement will terminate with no further force and effect upon the earliest to occur of: (a) such date and time as
the Merger Agreement is terminated in accordance with its terms; (b) the mutual written agreement of the parties to such Subscription
Agreement; (c) if any of the conditions to closing set forth in the Subscription Agreements are not satisfied on or prior to the
closing of the PIPE Investment and, as a result thereof, the transactions contemplated by such Subscription Agreement fail to
occur; and (d) if the consummation of the Berkshire Grey Business Combination has not occurred by the Outside Date.
Parent
Sponsor Letter Agreement
Concurrently
with the execution of the Merger Agreement, the Company and Berkshire Grey entered into an amended and restated letter agreement
(the “Parent Sponsor Letter Agreement”) with each of our sponsor, the Company’s officers and directors and holders
of founder shares and alignment shares, which amends and restates the prior letter agreement between the parties, dated December
7, 2020. Pursuant to the Parent Sponsor Letter Agreement, the parties thereto have agreed to modify the lock-up on any founder
shares held by such parties so that such shares may not be transferred, except to certain permitted transferees, until the earlier
of 180 days after the Closing and subsequent to the Closing, the date on which the Company completes a liquidation, merger, stock
exchange, reorganization or other similar transaction that results in all of its public stockholders having the right to exchange
their shares of the Company’s common stock for cash, securities or other property and the lock-up on any other shares of
the Company’s common stock held by such parties until the six months after the Closing. In addition, the Parent Sponsor
Letter Agreement provides that, among other things, the parties thereto shall vote all of their Common Stock in favor of the Berkshire
Grey Business Combination and certain other matters and, upon the terms and subject to the conditions set forth in the Parent
Sponsor Letter Agreement, not redeem or tender any of their Common Stock in connection with any such vote or in connection with
any vote to amend the second amended and restated certificate of incorporation.
Stockholder
Support Agreement
Concurrently
with the execution of the Merger Agreement, the Company entered into a stockholder support agreement (the “Stockholder Support
Agreement”), with Berkshire Grey and certain holders of Berkshire Grey securities. Under the Stockholder Support Agreement,
the holders of Berkshire Grey securities party thereto agreed to (i) vote all shares of outstanding capital stock with voting
rights of Berkshire Grey held by such parties in favor of the Berkshire Grey Business Combination and (ii) approve the conversion
of all shares of Berkshire Grey Preferred Stock into shares of Berkshire Grey Common Stock immediately prior to Closing.
Amended
and Restated Registration Rights Agreement
The
Merger Agreement contemplates that, at the Closing, the Company will enter into an Amended and Restated Registration Rights Agreement
(the “A&R Registration Rights Agreement”), with our sponsor and certain other investors party thereto (collectively,
with each other person who has executed and delivered a joinder thereto, the “RRA Parties”), including certain current
holders of Berkshire Grey securities (the “BG RRA Parties”), pursuant to which the RRA Parties will be entitled to
registration rights in respect of certain shares of Class A Stock and certain other equity securities of the Company that are
held by the RRA Parties from time to time.
The
A&R Registration Rights Agreement provides that the Company will, within 30 calendar days following the Closing, file with
the SEC a registration statement registering the resale of certain shares of Class A Stock and certain other equity securities
of the Company held by the RRA Parties. Additionally, the Company is required to use its reasonable best efforts to have such
registration statement declared effective as soon as practicable after the filing thereof, but no later than the earlier of (i)
the 90th calendar day following the filing date thereof and (ii) the 10th business day after the date the Company is notified
(orally or in writing, whichever is earlier) by the SEC that the registration statement will not be “reviewed” or
will not be subject to further review.
Each
of the RRA Parties and their respective permitted transferees will be entitled to certain demand registration rights in connection
with an underwritten shelf takedown offering, in each case subject to certain offering thresholds, issuer suspension periods and
certain other conditions. In addition, the RRA Parties have certain “piggy-back” registration rights, subject to customary
underwriter cutbacks, issuer suspension periods and certain other conditions. The A&R Registration Rights Agreement includes
customary indemnification provisions. The Company will bear the expenses incurred in connection with the filing of any registration
statements filed pursuant to the terms of the A&R Registration Rights Agreement, including the fees of legal counsel selected
by the majority-in-interest of RRA Parties initiating a demand registration right. The A&R Registration Rights Agreement also
provides for a lock-up on registrable securities held by the BG RRA Parties so that such BG RRA Parties may not transfer such
shares, except to certain permitted transferees, for 180 days following the Closing.
Important
Information Regarding the Berkshire Grey Business Combination
THE
MERGER AGREEMENT AND RELATED AGREEMENTS ARE FURTHER DESCRIBED IN THE FORM 8-K FILED BY THE COMPANY ON FEBRUARY 24, 2020. FOR MORE
INFORMATION ABOUT THE BERKSHIRE GREY BUSINESS COMBINATION AND THE TRANSACTIONS CONTEMPLATED THEREBY, SEE THE COMPANY’S REGISTRATION
STATEMENT AND PROXY STATEMENT / PROSPECTUS, WHEN THEY BECOME AVAILABLE, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AND
THE DEFINITIVE VERSIONS THEREOF (WHEN THEY BECOME AVAILABLE), AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY
AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. UNLESS SPECIFICALLY STATED,
THIS ANNUAL REPORT DOES NOT GIVE EFFECT TO THE PROPOSED BERKSHIRE GREY BUSINESS COMBINATION AND DOES NOT CONTAIN THE RISKS ASSOCIATED
WITH THE PROPOSED BERKSHIRE GREY BUSINESS COMBINATION. SUCH RISKS AND EFFECTS RELATING TO THE PROPOSED BERKSHIRE GREY BUSINESS
COMBINATION WILL BE INCLUDED IN COMPANY’S REGISTRATION STATEMENT AND PROXY STATEMENT / PROSPECTUS WHEN THEY BECOME AVAILABLE.
Market
Opportunity
While
we may pursue an acquisition in any business industry or sector, if the Berkshire Grey Business Combination is not completed,
we intend to focus our search for a prospective initial business combination on target companies that we believe are uniquely
positioned to capitalize on the opportunities that can be unlocked by the convergence of innovation, government policy and regulation.
Healthcare, financial services, clean energy, consumer products, infrastructure, government to private sector transitions and
media are large markets containing many companies we believe have long-term growth potential driven by disruption and significant
regulatory and public policy considerations that we believe can be unlocked with the experience to guide them through their next
phase of growth. In our judgment, technology is not a sector, but a catalyst and a competency and it will be a critical component
in our evaluation of any potential business combination opportunity.
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Healthcare
— Digitization, consumerization, data accessibility and reforms are redefining
healthcare. However, while medical innovation and new business models can transform lives,
structural challenges within the U.S. healthcare industry limit access, affordability
and quality. We believe that John Delaney’s relationships with healthcare providers
and tech-enabled businesses, coupled with his deep understanding of the regulatory environment,
will provide us with a competitive advantage in identifying business combination opportunities
across the complex and multi-layered U.S. healthcare industry. Furthermore, Revolution
LLC, a Delaware limited liability company and investment firm co-founded by Steve Case,
and its affiliated funds (“Revolution”) has sector expertise through investments
such as Talkspace and Tempus.
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Sports,
Media and Entertainment — We believe that changes in consumer behavior resulting
from the COVID-19 pandemic will endure and create long-term growth prospects across the
sports, media and entertainment sectors. We believe that our founders are well positioned
to generate proprietary and quality deal flow in this category that may present us with
opportunities for business combination targets. For many years, Revolution has closely
followed the changing landscape of sports, sports betting, e-sports, media and entertainment
and the ways in which technology is disrupting the ways in which consumers interact with
sports and sports content. Additionally, Revolution’s partners have extensive access
to professional sports leagues, team owners and sports media investors. Previously, Revolution’s
expertise and access created opportunities for it to invest in three high-performing
assets in this category: Sportradar, DraftKings and Scopely.
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Consumer
and Food — We believe we will gain significant credibility as value-add partners
with attractive deal flow in this sector through Revolution. Revolution has invested
in two category-leading fast casual restaurant brands, Sweetgreen and Cava, which has
led to consistent inbounds from high-growth restaurant and food companies. We also believe
that Revolution’s investments in CustomInk, CLEAR, Glowforge and Orchard, which
are each tech-enabled, consumer-facing companies, also give us market credibility to
look at other emerging consumer brands and services.
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Financial
Services — Technology is redefining financial services. We believe that emerging
technologies will bring about new innovation in the financial services sector, resulting
in disruption of existing participants and creating opportunities for service providers
needed to help incumbents stay relevant. We believe that John Delaney’s experience
as the founder, Chairman and Chief Executive Officer of two public financial service
companies will help us capitalize on opportunities in this sector. Revolution’s
track record in the financial services industry includes its investment in Tala, a company
that is providing loans to millions of people in developing countries around the world.
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Clean
Energy Infrastructure and Services and Carbon Removal — While significant investment
has flowed into renewable power development, we believe that other areas of climate solutions
will begin to see increase capital flows driven by public policy and innovation. We believe
that climate adaptation will produce one of the largest infrastructure builds in U.S.
history, requiring new forms of service providers and financing mechanisms. We further
expect carbon removal to move to the mainstream of climate solutions. During his time
in the U.S. Congress, John Delaney was a leader on policies encouraging infrastructure,
carbon pricing and negative emissions technologies. We believe that his experience building
innovative financial services companies will help us pursue opportunities in these sectors.
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We
expect to favor opportunities with certain industry and business characteristics, including:
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Growth
driven by the acceleration of the digitalization of the U.S. economy, U.S. policy that
encourages investing in U.S. industrial capacity, changes in work, healthcare and education
and sustainability as a driver of long-term value creation;
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Opportunity
for disruption;
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Competitive
returns on capital dynamics; and
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Consolidation
opportunities.
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Key
business characteristics include strong and public market ready management teams, high barriers to entry or significant streams
of recurring revenue, opportunity for operational or balance sheet improvement, opportunity for enhanced market positioning and
visibility that comes with a public market listing, attractive margins and free cash flow, and technological leadership. We will
also consider opportunities where our capital can solve a significant financing need driven by market disruptions or other balance
sheet issues that require a recapitalization of an otherwise healthy business.
Business
Strategy
Our
business strategy is to identify and complete our initial business combination with a company that complements the experience
of our management team and can benefit from its expertise and relationships. Our selection process, if we do not complete the
Berkshire Grey Business Combination, will leverage our founders’ relationship network, experiences and deal sourcing capabilities
to access a broad spectrum of differentiated opportunities. This network and insights have been developed through our founders’
extensive experience and demonstrated success in business, investing and public, including:
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A
track record of building industry-leading and financially disciplined companies in the
lending and credit industries;
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Successful
acquisitions and the creation of strong financial results and enhanced strategic positions;
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Experience
building boards of directors, navigating complex regulatory environments, deploying value
creation strategies, recruiting world-class talent and delivering operating efficiency;
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A
deep understanding of macro geo-political trends;
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An
extensive history of accessing the capital markets across various business cycles, including
financing businesses and assisting companies with transition to public ownership; and
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A
track record of creating and growing multi-billion-dollar platforms in the public markets
and structuring innovative financial solutions.
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Acquisition
Criteria
Consistent
with our business 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, if
we do not complete the Berkshire Grey Business Combination, but we may decide to enter into our initial business combination with
a target business that does not meet these criteria and guidelines. We intend to seek to acquire companies that we believe:
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Utilize
our founders’ network of contacts, which we believe will provides access to differentiated
deal flow, industry analysis and deal-sourcing capabilities;
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Have
enhanced growth prospects based on the acceleration of the digitalization of the U.S.
economy or from changes in U.S. public policy to encourage the reshoring of U.S. manufacturing;
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Are
at an important inflection point, such as requiring additional capital, management expertise,
or public market scale to capitalize on their momentum;
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Are
fundamentally sound companies that are underperforming their potential;
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Are
growth-oriented, market-leading companies within their industries;
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Exhibit
unrecognized value or other characteristics, desirable returns on capital, and a need
for capital to achieve the company’s growth strategy, that we believe have been
misevaluated by the marketplace based on our analysis and due diligence review;
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Have
been materially impacted by possible market dislocations and would benefit from capital
markets access;
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Operate
with a high standard with respect to environmental, social and corporate governance criteria;
and
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Offer
an attractive risk-adjusted return for our stockholders.
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Our
Acquisition Process
In
evaluating a prospective target business, we expect to conduct an extensive due diligence review which may encompass, as applicable
and among other things, meetings with incumbent management and employees, document reviews, interviews of customers and suppliers,
inspection of facilities and a review of financial and other information about the target and its industry. Our search for a business
combination, ability to consummate a business combination, or the operations of a target business with which we ultimately consummate
a business combination, may be materially adversely affected the recent COVID-19 outbreak. See “Risk Factors — Our
search for a business combination, and any target business with which we ultimately consummate a business combination, may be
materially adversely affected by the COVID-19 outbreak and the status of debt and equity markets.”
We
are not prohibited from pursuing an initial business combination with a business that is affiliated with our sponsor, officers
or directors. In the event we seek to complete our initial business combination with a business that is affiliated with our sponsor,
officers or directors, we, or a committee of independent and disinterested directors, will obtain an opinion from an independent
investment banking firm or from an independent accounting firm that such initial business combination is fair to our company from
a financial point of view.
Each
of our sponsor, directors and officers, directly or indirectly, owns founder shares, alignment shares and/or private placement
warrants and, accordingly, may have a conflict of interest in determining whether a particular target business is an appropriate
business with which to effectuate our initial business combination. Further, such officers and directors may have a conflict of
interest with respect to evaluating a particular business combination if the retention or resignation of any such officers and
directors was included by a target business as a condition to any agreement with respect to our initial business combination.
Past
experience or performance of Revolution or our sponsor, officers or directors and their respective affiliates is not a guarantee
of either (1) our ability to successfully identify and execute a transaction or (2) success with respect to any business combination
that we may consummate. You should not rely on the historical record of Revolution or our sponsor, officers or directors or their
respective affiliates as indicative of future performance. No member of our management team has any experience operating special
purpose acquisition companies prior to the Company.
Each
of our officers and directors presently has, and any of them in the future may have additional, fiduciary or contractual obligations
to other entities pursuant to which such officer or director is or will be required to present a business combination opportunity
to such entity subject to his or her fiduciary duties. As a result, 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 need to honor such fiduciary or contractual obligations to present such business combination opportunity to such
entity, before we can pursue such opportunity. If these other entities decide to pursue any such opportunity, we may be precluded
from pursuing the same. However, we do not expect these duties will materially affect our ability to complete our initial business
combination. Our second amended and restated certificate of incorporation provides that we renounce our interest in any business
combination opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely
in his or her capacity as a director or officer of the company and it is an opportunity that we are able to complete on a reasonable
basis.
John
Delaney, our Chief Executive Officer, is also the Executive Chairman of Congressional Bancshares, Inc. and a party to a non-competition
agreement with Congressional Bancshares. For our initial business combination, we intend to focus on industries that complement
John’s background in the financial services, healthcare, technology and consumer and media sectors. As a result of John’s
non-competition agreement, certain companies and businesses that we may target for an initial business combination will be limited.
See “Risk Factors — John Delaney, our Chief Executive Officer, is a party to a non-competition agreement that limits
certain companies and businesses that we may target for an initial business combination. This could negatively impact our prospects
for an initial business combination.”
Steve
Case, a director and one of our founders, is the founder of Revolution, where he serves as Chairman and Chief Executive Officer,
as well as a member of the investment committees of Revolution Growth, Revolution Ventures and Rise of the Rest Seed. In this
capacity, Steve is subject to a contractual duty to offer Revolution certain investment opportunities that meet the investment
criteria of the various investment funds, vehicles and other accounts sponsored by Revolution. To the extent that an investment
opportunity with respect to a business that would otherwise be suitable for our business combination is first presented to Steve
where such a duty exists, he would be required to pursue such investment opportunity through the applicable Revolution fund or
vehicle, and such business would not be available to us for our business combination. See “Risk Factors — Stephen
M. Case, a director and one of our founders, is subject to various duties to offer certain investment opportunities to one or
more entities before our company.”
Revolution
may become aware of a potential business combination opportunity that may be an attractive opportunity for our company. However,
Revolution is not under any obligation to source any potential opportunities for our initial business combination or refer any
such opportunities to our company or provide any other services to our company. Revolution’s role with respect to our company
is expected to be primarily passive and advisory in nature. Revolution has fiduciary and contractual duties to its investment
vehicles and to certain companies in which Revolution has invested. As a result, Revolution may have a duty to offer business
combination opportunities to certain Revolution funds before other parties, including our company, and may seek to engage in transactions
with businesses that could have otherwise been attractive business combination opportunities for us. Additionally, certain companies
in which Revolution has invested may enter into transactions with, provide goods or services to, or receive goods or services
from an entity with which we seek to complete our initial business combination. Transactions of these types may present a conflict
of interest because Revolution may directly or indirectly receive a financial benefit as a result of such transaction.
Our
directors and officers are not required to commit any specified amount of time to our affairs, and, accordingly, will have conflicts
of interest in allocating management time among various business activities, including identifying potential business combinations
and monitoring the related due diligence. See “Risk Factors — Each of our directors and officers 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.”
80%
of Fair Market Value Initial Business Combination Requirement
Nasdaq
listing rules require that our initial business combination must be with one or more operating businesses or assets with a fair
market value equal to at least 80% of the assets held in the trust account (excluding the deferred underwriting commissions and
taxes payable on the income earned on the trust account). We refer to this as the 80% of fair market value test. If our board
of directors is not able to independently determine the fair market value of the target business or businesses, we will obtain
an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions
with respect to the satisfaction of such criteria. We do not currently intend to purchase multiple businesses in unrelated industries
in conjunction with our initial business combination, although there is no assurance that will be the case. We will only complete
an initial business combination if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting
securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required
to register as an investment company under the Investment Company Act. 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 fair market value test.
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 target businesses an alternative to the traditional initial public offering through a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination. In this situation, the owners of the target
business would exchange their capital stock, shares or other equity securities in the target business for our shares or for a
combination of our shares and cash, allowing us to tailor the consideration to the specific needs of the sellers. Although there
are various costs and obligations associated with being a public company, we believe target businesses will find this method a
more certain and cost effective method to becoming a public company than the typical initial public offering. In a typical initial
public offering, there are additional expenses incurred in marketing, road show and public reporting efforts that may not be present
to the same extent in connection with a business combination with us.
Furthermore,
once a proposed business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriter’s ability to complete the offering, as well as general market conditions,
which could delay or 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.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our
Business Startups Act of 2012 (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 equals or exceeds $700 million as of the
end of that year’s second fiscal quarter, and (2) the date on which we have issued more than $1.00 billion in non-convertible
debt securities during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies
may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited
financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market
value of our common stock held by non-affiliates equals or exceeds $250 million as of the end of that year’s second fiscal
quarter, or (2) our annual revenues equalled or exceeded $100 million during such completed fiscal year and the market value
of our common stock held by non-affiliates equals or exceeds $700 million as of the end of that year’s second fiscal quarter.
Competition
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international,
competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have
extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry
knowledge than we do and our financial resources 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 from our Initial Public
Offering and Private Placement, if the proposed Berkshire Grey Business Combination is not completed, 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,
in the event we seek stockholder approval of our initial business combination and we are obligated to pay cash for our shares
of Class A common stock, it will potentially reduce the resources available to us for our initial business combination. Any
of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.
Facilities
We
currently maintain our executive offices at 1717 Rhode Island Avenue, NW 10th floor, Washington, D.C. 20036. The cost for
this space is included in the $10,000 per month fee that we pay our sponsor for office space, administrative and support services.
We consider our current office space adequate for our current operations.
Employees
We
currently have one officer and do not intend to have any full-time employees prior to the completion of our initial business combination.
Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote
as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount
of time that any such person will devote in any time period will vary based on whether a target business has been selected for
our initial business combination and the current stage of the business combination process.
Item 1A. Risk Factors
RISK
FACTORS
An
investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together
with the other information contained in this Annual Report, including our financial statements and related notes, 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. The risks and uncertainties described below are not the only ones we face. Additional risks
and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that
adversely affect our business, financial condition and operating results. For risk factors related to the Berkshire Grey Business
Combination, see the “Risk Factors” section of our preliminary prospectus/proxy statement when it becomes available.
Risks
Relating to Our Search for, and Consummation of or Inability to Consummate, a Business Combination
Our
public stockholders may not be afforded an opportunity to vote on our proposed initial 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 law or stock exchange rules or if we decide to hold a stockholder vote for business or other reasons.
For instance, Nasdaq listing 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 issued and 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 issued and outstanding shares, we would seek stockholder approval of such business combination.
However, except as required by applicable law or stock exchange rules, the decision as to whether we will seek stockholder approval
of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us,
solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms
of the transaction would otherwise require us to seek stockholder approval. Accordingly, we may consummate our initial business
combination even if holders of a majority of the issued and outstanding shares of common stock do not approve of the business
combination we consummate.
If
we seek stockholder approval of our initial business combination, our initial stockholders, directors and officers have agreed
to vote in favor of such initial business combination, regardless of how our public stockholders vote, and, depending on the number
of public stockholders who vote, may have almost enough votes to approve our initial business combination based on the shares
held by our initial stockholders.
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, directors
and officers have agreed (and their permitted transferees will agree), pursuant to the terms of a letter agreement entered into
with us, to vote any founder shares, alignment shares and public shares held by them in favor of our initial business combination.
As a result, in addition to our initial stockholders’ founder shares and alignment shares, we would need 9,583,334, or 33.33%
(assuming all issued and outstanding shares are voted), or one, or 0.000004% (assuming only the minimum number of shares representing
a quorum are voted), of the 28,750,000 public shares sold in our Initial Public Offering to be voted in favor of an initial business
combination in order to have such initial business combination approved. Our directors and officers have also entered into the
letter agreement, imposing similar obligations on them with respect to public shares acquired by them, if any. We expect that
our initial stockholders and their permitted transferees will own at least 25% of our issued and outstanding shares of common
stock at the time of any such stockholder vote. 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 such persons agreed to vote
their founder shares and alignment 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 such Business Combination.
Since
our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have
the right or opportunity to vote on the business combination, unless we seek such stockholder approval. Accordingly, if we do
not seek stockholder approval, your only opportunity to affect the investment decision regarding a potential business combination
may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth
in our tender offer documents mailed to our public stockholders in which we describe our initial business combination.
The
ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to enter into a business combination with a target.
We
may seek to enter into a business combination transaction agreement with a prospective target that requires as a closing condition
that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemption rights,
we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business combination.
The amount of the deferred underwriting commissions payable to the underwriters will not be adjusted for any shares that are redeemed
in connection with a business combination and such amount of deferred underwriting discount is not available for us to use as
consideration in an initial business combination. If we are able to consummate an initial business combination, the per-share
value of shares held by non-redeeming stockholders will reflect our obligation to pay and the payment of the deferred underwriting
commissions. 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 following such redemptions, or any greater net tangible asset or cash requirement that 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 or such greater amount necessary to satisfy a closing condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for
an alternate business combination. Prospective targets will be aware of these risks and, thus, may be reluctant to enter into
a business combination transaction with us.
The
ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us
to complete the most desirable business combination or optimize our capital structure.
At
the time we enter into an agreement for our initial business combination, we will not know how many stockholders may exercise
their redemption rights and, therefore, we will need to structure the transaction based on our expectations as to the number of
shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the
cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need
to reserve a portion of the cash in the Trust Account to meet such requirements, or arrange for third-party financing. In addition,
if a larger number of shares is submitted for redemption than we initially expected, we may need to restructure the transaction
to reserve a greater portion of the cash in the Trust Account or arrange for third-party financing. Raising additional third-party
financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. 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 stockholders would have to wait for liquidation
in order to redeem their shares.
If
our initial business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price,
or requires us to have a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful
increases. If our initial business combination is unsuccessful, stockholders would not receive their pro rata portion of the Trust
Account until we liquidate the Trust Account. If stockholders are in need of immediate liquidity, they could attempt to sell their
shares in the open market; however, at such time our shares may trade at a discount to the pro rata amount per share in the Trust
Account. In either situation, 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 such stockholders are able to sell their shares 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 limit the time we have in which to conduct due diligence on potential
business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete
our initial business combination on terms that would produce value for our stockholders.
Any
potential target business with which we enter into negotiations concerning a business combination will be aware that we must complete
our initial business combination within 24 months from the closing of the 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 end of such time period. In addition, we may have limited time to conduct due
diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We
may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public
stockholders may receive only $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire
worthless.
Our
sponsor, directors and officers have agreed that we must complete our initial business combination within 24 months from the closing
of the Initial Public Offering. We may not be able to find a suitable target business and complete our initial business combination
within such time period. Our ability to complete our initial business combination may be negatively impacted by general market
conditions, volatility in the capital and debt markets and the other risks described herein, including as a result of terrorist
attacks, natural disasters or a significant outbreak of infectious diseases. For example, the outbreak of COVID-19 continues to
grow both in the U.S. and globally and, while the extent of the impact of the outbreak on us will depend on future developments,
it could limit our ability to complete our initial business combination, including as a result of increased market volatility,
decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the
outbreak of COVID-19 and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious
diseases) may negatively impact businesses we may seek to acquire.
If
we have not completed our initial business combination within such time period or during any extended time that we have to consummate
our initial business combination beyond 24 months as a result of a stockholder vote to amend our second amended and restated certificate
of incorporation (an “Extension Period”), we will: (1) cease all operations except for the purpose of winding
up; (2) as promptly as reasonably possible but not more than 10 business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (less
up to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), divided by the number
of then issued and outstanding public shares, which redemption will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidating distributions, if any); and (3) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, liquidate
and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law. In such case, our public stockholders may receive only $10.00 per share, or less than $10.00 per share,
on the redemption of their shares, and our warrants will expire worthless. See “— If third parties bring claims against
us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by stockholders may be
less than $10.00 per share” and other risk factors herein.
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 have not completed our initial business combination within the required
time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on our
redemption of their shares, and our warrants will expire worthless.
We
expect to encounter intense competition from other entities having a business objective similar to ours, including private investors
(which may be individuals or investment partnerships), other blank check companies and other entities, domestic and international,
competing for the types of businesses we intend to acquire. Many of these individuals and entities are well established and have
extensive experience in identifying and effecting, directly or indirectly, acquisitions of companies operating in or providing
services to various industries. Many of these competitors possess greater technical, human and other resources or more local industry
knowledge than we do and our financial resources will be relatively limited when contrasted with those of many of these competitors.
While we believe there are numerous target businesses we could potentially acquire with the net proceeds of the Initial Public
Offering and Private Placement, 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, in the event we seek stockholder approval of our initial business combination
and we are obligated to pay cash for our shares of Class A common stock, it will potentially reduce the resources available to
us for our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating
a business combination. If we have not completed our initial business combination within the required time period, our public
stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our trust
account and our warrants will expire worthless. See “— If third parties bring claims against us, the proceeds held
in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than $10.00 per
share” and other risk factors herein.
Our
search for a business combination, and any target business with which we ultimately consummate a Business Combination, may be
materially adversely affected by the COVID-19 outbreak and other events and the status of debt and equity markets.
In
December 2019, a novel strain of coronavirus was reported to have surfaced, which has and is continuing to spread throughout
parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak
of COVID-19 a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human
Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community
in responding to COVID-19, and on March 11, 2020, the World Health Organization characterized the outbreak as a “pandemic.”
The COVID-19 outbreak has adversely affected, and other events (such as terrorist attacks, natural disasters or a significant
outbreak of other infectious diseases) could adversely affect, economies and financial markets worldwide, business operations
and the conduct of commerce generally, and the business of any potential target business with which we consummate a business combination
could be, or may already have been, materially and adversely affected. Furthermore, we may be unable to complete a business combination
if concerns relating to COVID-19 continue to restrict travel or limit the ability to have meetings with potential investors, or
the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction
in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments,
which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19
and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other events (such
as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) continue for an extensive period
of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate
a business combination, may be materially adversely affected.
In
addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing which may
be impacted by COVID-19 and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious
diseases), including as a result of increased market volatility and decreased market liquidity and third-party financing being
unavailable on terms acceptable to us or at all.
Finally,
the outbreak of COVID-19 may also have the effect of heightening many of the other risks described in this “Risk Factors”
section, such as those related to the market for our securities and crossborder transactions.
If
we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors or any of their respective
affiliates may elect to purchase shares or warrants from public stockholders, which may influence a vote on a proposed business
combination and reduce the public “float” of our securities.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective
affiliates may purchase public shares or warrants in privately negotiated transactions or in the open market either prior to or
following the completion of our initial business combination.
Any
such price per share may be different than the amount per share a public stockholder would receive if it elected to redeem its
shares in connection with our initial business combination. Additionally, at any time at or prior to our initial business combination,
subject to applicable securities laws (including with respect to material nonpublic information), our sponsor, directors, officers,
advisors or any of their respective affiliates may enter into transactions with investors and others to provide them with incentives
to acquire public shares, vote their public shares in favor of our initial business combination or not redeem their public shares.
However, our sponsor, directors, officers, advisors or any of their respective affiliates are under no obligation or duty to do
so and 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. The purpose of such purchases could be to vote such shares in favor of our initial business
combination and thereby increase the likelihood of obtaining stockholder approval of our initial business combination or to satisfy
a closing condition in an agreement with a target that requires us to have a minimum net worth or a certain amount of cash at
the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose
of any such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants
on any matters submitted to the warrant holders for approval in connection with our initial business combination. This may result
in the completion of our initial business combination that may not otherwise have been possible.
In
addition, if such purchases are made, the public “float” of our securities 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 stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination,
or fails to comply with the procedures for tendering its shares, such shares may not be redeemed.
We
will comply with the tender offer rules or proxy rules, as applicable, when conducting redemptions in connection with our initial
business combination. Despite our compliance with these rules, if a stockholder fails to receive our 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 stockholder fails to comply with these procedures, its shares may not be redeemed.
Stockholders
will not be entitled to certain protections afforded to investors of some other blank check companies.
Because
the net proceeds of the 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 was not at the time selected, we may be deemed to be a “blank
check” company under the U.S. securities laws. However, because we have net tangible assets in excess of $5,000,000 and
filed a Current Report on Form 8-K, including an audited balance sheet of the company demonstrating this fact, we are exempt
from rules promulgated by the SEC to protect investors in blank check companies, such as Rule 419. Accordingly, investors
will not be afforded the benefits or protections of those rules.
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer
rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 15% of our Class A common stocks.
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 memorandum and articles of association provide
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 redeeming
its shares with respect to more than an aggregate of 15% of the shares sold in the Initial Public Offering, which we refer to
as the “Excess Shares,” without our prior consent. However, we would not be restricting our stockholders’ ability
to vote all of their shares (including Excess Shares) for or against our initial business combination. Your inability to redeem
the Excess Shares will reduce your influence over our ability to complete our initial business combination and you could suffer
a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive
redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a result, you
will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell your
shares in open market transactions, potentially at a loss.
As
the number of special purpose acquisition companies increases, there may be more competition to find an attractive target for
an initial business combination. This could increase the costs associated with completing our initial business combination and
may result in our inability to find a suitable target for our initial business combination.
In
recent years, the number of special purpose acquisition companies that have been formed has increased substantially. Many companies
have entered into business combinations with special purpose acquisition companies, and there are still many special purpose acquisition
companies seeking targets for their initial business combination, as well as many additional special purpose acquisition companies
currently in registration. As a result, at times, fewer attractive targets may be available, and it may require more time, effort
and resources to identify a suitable target for an initial business combination.
In
addition, because there are more special purpose acquisition companies seeking to enter into an initial business combination with
available targets, the competition for available targets with attractive fundamentals or business models may increase, which could
cause target companies to demand improved financial terms. Attractive deals could also become scarcer for other reasons, such
as economic or industry sector downturns, geopolitical tensions or increases in the cost of additional capital needed to close
business combinations or operate targets post- business combination. This could increase the cost of, delay or otherwise complicate
or frustrate our ability to find a suitable target for and/or complete our initial business combination.
If
the funds not being held in the Trust Account are insufficient to allow us to operate for at least the 24 months following
the closing of the Initial Public Offering, 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 for at least the 24 months following
the closing of the Initial Public Offering, assuming that our initial business combination is not completed during that time.
We expect to incur significant costs in pursuit of our acquisition plans. Management’s plans to address this need for capital
through potential loans from certain of our affiliates are discussed in “Item 7—Management’s Discussion and
Analysis of Financial Condition and Results of Operations.” However, our affiliates are not obligated to make loans to us
in the future, and we may not be able to raise additional financing from unaffiliated parties necessary to fund our expenses.
Any such event in the future may negatively impact the analysis regarding our ability to continue as a going concern at such time.
We
believe that, as of December 31, 2020, the funds available to us outside of the Trust Account will be sufficient to allow us to
operate for at least the 24 months following the closing of the Initial Public Offering; however, we cannot assure you that our
estimate is accurate. Of the funds available to us following the closing of the Initial Public Offering, 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 or investors on terms more
favorable to such target businesses) with respect to a particular proposed business combination, although we do not have any current
intention to do so. If we entered into a letter of intent 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 have not completed our initial
business combination within the required time period, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless. See “—
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per share” and other risk factors herein.
Changes
in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate
and complete an initial business combination.
In
recent months, the market for directors and officers liability insurance for special purpose acquisition companies has changed
in ways adverse to us and our management team. Fewer insurance companies are offering quotes for directors and officers liability
coverage, the premiums charged for such policies have generally increased and the terms of such policies have generally become
less favorable. These trends may continue into the future.
The
increased cost and decreased availability of directors and officers liability insurance could make it more difficult and more
expensive for us to negotiate and complete an initial business combination. In order to obtain directors and officers liability
insurance or modify its coverage as a result of becoming a public company, the post-business combination entity might need to
incur greater expense and/or accept less favorable terms. Furthermore, any failure to obtain adequate directors and officers liability
insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers
and directors.
In
addition, after completion of any initial business combination, our directors and officers could be subject to potential liability
from claims arising from conduct alleged to have occurred prior to such initial business combination. As a result, in order to
protect our directors and officers, the post-business combination entity may need to purchase additional insurance with respect
to any such claims (“run-off insurance”). The need for run-off insurance would be an added expense for the post-business
combination entity and could interfere with or frustrate our ability to consummate an initial business combination on terms favorable
to our investors.
If
third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses
and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to any monies held in the Trust Account for the benefit of our public stockholders, such parties may not execute such agreements,
or even if they execute such agreements they may not be prevented from bringing claims against the Trust Account, including, but
not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including
the funds held in the Trust Account. If any third party refuses to execute an agreement waiving such claims to the monies held
in the Trust Account, our management will perform an analysis of the alternatives available to it and will enter into an agreement
with a third party that has not executed a waiver only 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 we are 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 have not completed our initial business combination within the required
time period, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per public
share initially held in the Trust Account, due to claims of such creditors.
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third party (other than our independent registered
public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed
entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $10.00 per public share
or (2) 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 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 the 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,
our sponsor will not be responsible to the extent of any liability for such third-party claims. We have not independently verified
whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets
are securities of our company. Our sponsor may not have sufficient funds available to satisfy those obligations. We have not asked
our sponsor to reserve for such obligations, and therefore, no funds are currently set aside to cover any such obligations. As
a result, if any such claims were successfully made against the Trust Account, the funds available for our initial business combination
and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial
business combination, and you would receive such lesser amount per public share in connection with any redemption of your public
shares. None of our directors or officers will indemnify us for claims by third parties including, without limitation, claims
by vendors and prospective target businesses.
Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting in a reduction in the amount of
funds in the Trust Account available for distribution to our public stockholders.
In
the event that the proceeds in the Trust Account are reduced below the lesser of (1) $10.00 per public share or (2) 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 interest which may be withdrawn to pay taxes, and our sponsor asserts that
it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent
directors would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we
currently expect that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification
obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so
in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of
funds in the Trust Account available for distribution to our public stockholders may be reduced below $10.00 per share.
The
securities in which we invest the funds held in the Trust Account could bear a negative rate of interest, which could reduce the
value of the assets held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00
per share.
The
proceeds held in the Trust Account will be invested only in U.S. government treasury bills with a maturity of 185 days or
less or in money market funds investing solely in U.S. Treasuries. While short-term U.S. government treasury obligations currently
yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe
and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled
out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable
to complete our initial business combination or make certain amendments to our second amended and restated certificate of incorporation,
our public stockholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any
interest income, net of taxes paid or payable (less, in the case we are unable to complete our initial business combination, $100,000
of interest). Negative interest rates could reduce the value of the assets held in trust such that the per-share redemption amount
received by public stockholders may be less than $10.00 per share.
If,
after we distribute the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition
or an involuntary winding-up or 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 winding-up or bankruptcy petition
or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders
could be viewed under applicable debtor/creditor and/or insolvency laws as a voidable performance. As a result, a liquidator could
seek to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having
breached its fiduciary duty to our creditors and/or having acted in bad faith by paying public stockholders from the Trust Account
prior to addressing the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If,
before distributing the proceeds in the Trust Account to our public stockholders, we file a winding-up or bankruptcy petition
or an involuntary winding-up or 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 winding-up or bankruptcy petition
or an involuntary winding-up or bankruptcy petition is filed against us that is not dismissed, the proceeds held in the Trust
Account could be subject to applicable insolvency law, and may be included in our liquidation estate and subject to the claims
of third parties with priority over the claims of our stockholders. To the extent any liquidation claims deplete the Trust Account,
the per-share amount that would otherwise be received by our stockholders in connection with our liquidation would 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 initial 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;
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each
of which may make it difficult for us to complete our initial business combination.
In
addition, we may have imposed upon us burdensome requirements, including:
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registration
as an investment company with the SEC;
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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 that we are currently not subject to.
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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 U.S. government treasury bills with a maturity of 185 days or less or
in money market funds investing solely in U.S. Treasuries 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 have not completed our initial business
combination within the required time period, our public stockholders may receive only approximately $10.00 per share, or less
in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our
ability to negotiate and complete our initial business combination, and results of operations.
We
are and will be subject to laws and regulations enacted by national, regional and local governments. In particular, we will be
required to comply with certain SEC and other legal requirements, our business combination may be contingent on our ability to
comply with certain laws and regulations and any post-business combination company may be subject to additional laws and regulations.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and
regulations and their interpretation and application may also change from time to time, including as a result of changes in economic,
political, social and government policies, and those changes could have a material adverse effect on our business, including our
ability to negotiate and complete our initial business combination, and results of operations. In addition, a failure to comply
with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including
our ability to negotiate and complete our initial business combination, and results of operations.
If
we have not completed our initial business combination within the allotted time period, our public stockholders may be forced
to wait beyond such allotted time period before redemption from our Trust Account.
If
we have not completed our initial business combination within 24 months from the closing of the Initial Public Offering or during
any Extension Period, we will distribute the aggregate amount then on deposit in the Trust Account, including interest (less up
to $100,000 of interest to pay dissolution expenses and which interest shall be net of taxes payable), pro rata to our public
stockholders by way of redemption and cease all operations except for the purposes of winding up of our affairs, as further described
herein. Any redemption of public stockholders from the Trust Account shall be effected automatically by function of our second
amended and restated certificate of incorporation prior to any voluntary winding up. If we are required to windup, liquidate the
Trust Account and distribute such amount therein, pro rata, to our public stockholders, as part of any liquidation process, such
winding up, liquidation and distribution are subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. In that case, investors may be forced to wait beyond the allotted time
period before the redemption proceeds of our Trust Account become available to them and they receive the return of their pro rata
portion of the proceeds from our Trust Account. We have no obligation to return funds to investors prior to the date of our redemption
or liquidation unless, prior thereto, we consummate our initial business combination or amend certain provisions of our second
amended and restated certificate of incorporation and then only in cases where investors have properly sought to redeem their
shares of Class A common stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions
if we have not completed our initial business combination within the required time period and do not amend certain provisions
of our second amended and restated certificate of incorporation prior thereto.
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.
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 (the “DGCL”), stockholders may be held liable for claims by third parties against
a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed
to our public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination
within the required time period may be considered a liquidating distribution under Delaware law. If a corporation complies with
certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against
it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period
during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions
are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of
such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder
would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon
as reasonably possible following the 24th month from the closing of the Initial Public Offering (or the end of any Extension Period)
in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing
procedures.
Because
we do not intend to comply with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us
at such time provides for our payment of all existing and pending claims or claims that may be potentially brought against us
within the ten 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, consultants, etc.) or prospective target businesses. If our plan
of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder,
and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you
that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially
be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may
extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account distributed to our
public stockholders upon the redemption of our public shares in the event we do not complete our initial business combination
within the required time period is not considered a liquidating distribution under Delaware law and such redemption distribution
is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then
be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating distribution.
We
may not hold an annual stockholder meeting until after the consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect directors.
While
we currently intend to hold a special meeting in lieu of our annual meeting of stockholders for 2021 in connection with the Berkshire
Grey Business Combination, we may not hold an annual meeting of stockholders until after we consummate our initial business combination
(unless required by Nasdaq) 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 our initial business combination, they may attempt to force us to hold one by submitting an application to
the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL. Until we hold an annual meeting of stockholders,
public stockholders may not be afforded the opportunity to discuss company affairs with management. In addition, prior to our
initial business combination, (a) as holders of our shares of Class A common stock, our public stockholders will not have the
right to vote on the election of our directors, and (b) holders of a majority of the issued and outstanding shares of our Class
B common stock and Class C common stock, voting together as a single class, may remove a member of our board of directors for
any reason.
The
grant of registration rights to our initial stockholders and their permitted transferees may make it more difficult to complete
our initial business combination, and the future exercise of such rights may adversely affect the market price of our shares of
Class A common stock.
At
or after the time of our initial business combination, our initial stockholders and their permitted transferees can demand that
we register the resale of their founder shares after those shares convert to our Class A common stock. In addition, our sponsor
and its permitted transferees can demand that we register the resale of the Private Placement Warrants and the shares of Class
A common stock issuable upon exercise of the Private Placement Warrants, and holders of warrants that may be issued upon conversion
of working capital loans may demand that we register the resale of such warrants or the Class A common stock issuable upon
exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a
significant number of securities for trading in the public market may have an adverse effect on the market price of our shares
of Class A common stock. In addition, the existence of the registration rights may make our initial business combination more
costly or difficult to conclude. This is because the stockholders of the target business may increase the equity stake they seek
in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our shares of Class
A common stock that is expected when the shares of Class A common stock owned by our initial stockholders or their permitted transferees,
our Private Placement Warrants or warrants issued in connection with working capital loans are registered for resale.
Because
we are not limited to a particular industry, sector or geographic area or any specific target businesses with which to pursue
our initial business combination, if the Berkshire Grey Business Combination is not completed, stockholders will be unable to
ascertain the merits or risks of any particular target business’s operations.
We
may seek to complete a business combination with an operating company of any size (subject to our satisfaction of the 80% of fair
market value test) and in any industry, sector or geographic area. However, we will not, under our second amended and restated
certificate of incorporation, be permitted to effectuate our initial business combination solely with another blank check company
or similar company with nominal operations. If the Berkshire Grey Business Combination is not completed, there will be no basis
to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows,
liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be affected by
numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable
business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business
and operations of a financially unstable or development stage entity. Although our directors and officers will endeavor to evaluate
the risks inherent in a particular target business, we cannot assure 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 not ultimately prove to be less favorable to our investors
than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholder or
warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business combination
could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy
for such reduction in value.
We
may seek acquisition opportunities in industries outside of our management’s areas of expertise.
We
may consider a business combination in industries outside of our management’s areas of expertise, if a business combination
candidate is presented to us and we determine that such candidate offers an attractive acquisition opportunity for our company.
In the event we elect to pursue an acquisition outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and our management’s expertise would not be relevant
to an understanding of the business that we elect to acquire. As a result, our management may not be able to adequately ascertain
or assess all of the significant risk factors relevant to such acquisition. Accordingly, any stockholder or warrant holder who
chooses to remain a stockholder or warrant holder, respectively, following our initial business combination could suffer a reduction
in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy for such reduction in value.
Although
we have identified general criteria and guidelines that we believe are important in evaluating prospective target businesses,
we may enter into our initial business combination with a target that does not meet such criteria and guidelines, and as a result,
the target business with which we enter into our initial business combination may not have attributes entirely consistent with
our general criteria and guidelines.
Although
we have identified general criteria and guidelines for evaluating prospective target businesses, if the Berkshire Grey Business
Combination is not completed, 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 criteria and 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 applicable law or stock
exchange listing requirements, or we decide to obtain stockholder approval for business or other reasons, it may be more difficult
for us to attain stockholder approval of our initial business combination if the target business does not meet our general criteria
and guidelines. If we have not completed our initial business combination within the required time period, our public stockholders
may receive only approximately $10.00 per share, or less in certain circumstances, on the liquidation of our Trust Account and
our warrants will expire worthless.
We
may seek acquisition opportunities with an early stage company, 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 an early stage company, 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 investing in a business without a proven business model and with limited historical
financial data, volatile revenues or earnings, intense competition and difficulties in obtaining and retaining key personnel.
Although our directors and officers will endeavor to evaluate the risks inherent in a particular target business, we may not be
able to properly ascertain or assess all of the significant risk factors and we may not have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business.
We
are not required to obtain an opinion regarding fairness. Consequently, stockholders 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 initial business combination with an affiliated entity, we are not required to obtain an opinion 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 shares of Class A common stock or preferred stock to complete our initial business combination or under an
employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock
upon the conversion of the Class B common stock and/or Class C common stock (subject to our public shares meeting certain
trading price thresholds) at a ratio greater than one-to-one at the time of our initial business combination as a result of the
anti-dilution provisions contained in our second amended and restated certificate of incorporation. Any such issuances would dilute
the interest of our stockholders and likely present other risks.
Our
second amended and restated certificate of incorporation authorizes the issuance of up to 75,000,000 shares of Class A common
stock, par value $0.0001 per share, 10,000,000 shares of Class B common stock, par value $0.0001 per share, 15,000,000 share of
our Class C common stock, par value $0.0001 per share, and 1,000,000 shares of undesignated preferred stock, par value $0.0001
per share. As of December 31, 2020, there were 46,250,000, 6,166,667 and 9,250,000 authorized but unissued shares of Class A common
stock, Class B common stock and Class C common stock, respectively, available for issuance, which amount takes into account shares
reserved for issuance upon exercise of outstanding warrants but not upon conversion of the Class B common stock or Class C common
stock. Shares of Class B common stock and Class C common stock are convertible into shares of our Class A common stock, initially
at a one-for-one ratio but subject to adjustment as set forth herein. As of December 31, 2020, there was no preferred stock issued
and outstanding.
We
may issue a substantial number of additional shares of Class A common stock, and may issue shares of preferred stock, in order
to complete our initial business combination or under an employee incentive plan after completion of our initial business combination.
We may also issue shares of Class A common stock to redeem the warrants or upon conversion of the Class B common stock or Class
C common stock at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution
provisions contained in our second amended and restated certificate of incorporation. However, our second amended and restated
certificate of incorporation provide, 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 (1) receive funds from the trust account or (2) vote pursuant
to our second amended and restated certificate of incorporation on any initial business combination or any amendments to our second
amended and restated certificate of incorporation. The issuance of additional shares of common or preferred stock:
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may
significantly dilute the equity interest of public stockholders, which dilution would increase if the anti-dilution provisions
in the Class B common stock or Class C common stock resulted in the issuance of shares of Class A common stock on a greater than
one-to-one basis upon conversion of the Class B common stock or Class C common stock;
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may
subordinate the rights of holders of common stock if shares of preferred stock are issued with rights senior to those afforded
our common stock;
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could
cause a change of control if a substantial number of shares of our common stock 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
directors and officers;
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may
have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person
seeking to obtain control of us;
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may
adversely affect prevailing market prices for our Units, Class A common stock and/or warrants; and
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may
not result in adjustment to the exercise price of our 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 have not completed our initial business combination within the required
time period, our public stockholders may receive only approximately $10.00 per share, or less than such amount in certain circumstances,
on the liquidation of our Trust Account and our warrants will expire worthless.
We
anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants,
attorneys and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point
for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to complete our initial business combination for any number of reasons including those beyond our control.
Any such event will result in a loss to us of the related costs incurred which could materially adversely affect subsequent attempts
to locate and acquire or merge with another business. If we have not completed our initial business combination within the required
time period, our public stockholders may receive only approximately $10.00 per share, or less in certain circumstances, on the
liquidation of our Trust Account and our warrants will expire worthless.
We
may, if the Berkshire Grey Business Combination is not completed, engage in a business combination with one or more target businesses
that have relationships with entities that may be affiliated with our sponsor, directors or officers which may raise potential
conflicts of interest.
If
the Berkshire Grey Business Combination is not completed, in light of the involvement of our sponsor, directors and officers with
other entities, we may decide to acquire one or more businesses affiliated with our sponsor, directors and officers. Certain of
our directors and officers also serve as officers and board members for other entities, including those described under “Item
10. Directors, Executive Officer and Corporate Governance—Conflicts of Interest.” Such entities may compete with us
for business combination opportunities. Although we will not be specifically focusing on, or targeting, any transaction with any
affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria and guidelines
for a business combination and such transaction was approved by a majority of our independent and disinterested directors. Despite
our agreement that we, or a committee of independent and disinterested directors, will obtain an opinion from an independent investment
banking firm or another valuation or appraisal firm that regularly renders fairness opinions on the type of target business we
are seeking to acquire, regarding the fairness to our company from a financial point of view of a business combination with one
or more businesses affiliated with our sponsor, directors or officers, 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 initial stockholders will lose their entire investment in us if our initial 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.
Our
initial stockholders hold 9,583,333 founder shares as of the date of this Annual Report, including 9,363,333 held by our sponsor.
The founder shares will be worthless if we do not complete an initial business combination. In addition, our sponsor purchased
an aggregate of 5,166,667 Private Placement Warrants, each exercisable for one Class A common stock share, for a purchase
price of $7,750,000 in the aggregate, or $1.50 per warrant, that will also be worthless if we do not complete a business combination.
Each Private Placement Warrant may be exercised for one Class A common stock share at a price of $11.50 per share, subject
to adjustment as provided herein.
The
founder shares and alignment shares are identical to the shares of Class A common stock included in the Units sold in the
Initial Public Offering except that: (1) prior to our initial business combination, only holders of our Class B common
stock and holders of our Class C common stock, voting together as a single class, have the right to vote on the election of directors
and holders of a majority of our outstanding shares of Class B common stock and Class C common stock, voting together as
a single class, may remove a member of the board of directors for any reason; (2) the founder shares and alignment shares
are subject to certain transfer restrictions contained in a letter agreement that our initial stockholders, directors and officers
have entered into with us; (3) pursuant to such letter agreement, our initial stockholders, directors and officers have agreed
to waive: (i) their redemption rights with respect to any founder shares, alignment shares and public shares held by them,
as applicable, in connection with the completion of our initial business combination; (ii) their redemption rights with respect
to any founder shares, alignment shares and public shares held by them in connection with a stockholder vote to amend our second
amended and restated certificate of incorporation (A) to modify the substance or timing of our obligation to allow redemption
in connection with our initial business combination or to redeem 100% of our public shares if we do not complete our initial business
combination within 24 months from the closing of the Initial Public Offering or (B) with respect to any other provision
relating to stockholders’ rights or pre-initial business combination activity; and (iii) their rights to liquidating
distributions from the trust account with respect to any founder shares and alignment shares they hold if we fail to complete
our initial business combination within 24 months from the closing of the Initial Public Offering or during any Extension
Period (although they will be entitled to liquidating distributions from the trust account with respect to any public shares they
hold if we fail to complete our initial business combination within the prescribed time frame); (4) the founder shares will automatically
convert into shares of our Class A common stock at the time of our initial business combination on a one-for-one basis,
subject to adjustment pursuant to certain anti-dilution rights, as described in more detail below; (5) the alignment shares
will automatically convert into shares of our Class A common stock at the earlier of (i) a time after the completion of our initial
business combination in which the sale price of shares of our Class A common stock equals or exceeds $15.25 if occurring before
the third anniversary of our initial business combination, $23.00 if occurring before the sixth anniversary of our initial business
combination or $35.00 if occurring before the ninth anniversary of our initial business combination, and (ii) subsequent to the
completion of our initial business combination, the date on which we complete a merger, stock exchange, reorganization or other
similar transaction that results in both a change of control and all of our public stockholders having the right to exchange their
shares of Class A common stock for cash, securities or other property, in each case, on a one-for-one basis, subject to adjustment
pursuant to certain anti-dilution rights, as described in more detail below; (6) the alignment shares will be returned to
us for cancellation in the event that they have not converted into shares of our Class A common stock nine years after our initial
business combination; and (7) the founder shares and alignment shares are entitled to registration rights. If we submit our
initial business combination to our public stockholders for a vote, our initial stockholders have agreed (and their permitted
transferees will agree), pursuant to the terms of a letter agreement entered into with us, to vote their founder shares, alignment
shares and any public shares held by them purchased during or after the Initial Public Offering in favor of our initial business
combination.
The
personal and financial interests of our sponsor, directors and officers may influence their motivation in identifying and selecting
a target business combination, completing an initial business combination and influencing the operation of the business following
the initial business combination. This risk may become more acute as the deadline to complete our initial business combination
nears.
We
may issue notes or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely
affect our leverage and financial condition and thus negatively impact the value of our stockholders’ investment in us.
We
may choose to incur substantial debt to complete our initial 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 is payable
on demand;
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our
inability to obtain necessary additional financing if the debt contains covenants restricting
our ability to obtain such financing while the debt is outstanding;
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our
inability to pay dividends on our shares of Class A common stock;
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using
a substantial portion of our cash flow to pay principal and interest on our debt, which
will reduce the funds available for dividends on our common stock shares 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 be able to complete only one business combination with the proceeds of the Initial Public Offering and the sale of the Private
Placement Warrants, which will cause us to be solely dependent on a single business which may have a limited number of products
or services. This lack of diversification may negatively impact our operations and profitability.
We
may effectuate our initial business combination with a single target business or multiple target businesses simultaneously or
within a short period of time. However, we may not be able to effectuate our initial business combination with more than one target
business because of various factors, including the existence of complex accounting issues and the requirement that we prepare
and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single
entity, our lack of diversification may subject us to numerous economic, competitive and regulatory 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 combination 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 initial business combination.
We
may attempt to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to
complete our initial business combination and give rise to increased costs and risks that could negatively impact our operations
and profitability.
If
the Berkshire Grey Business Combination is not completed, we may determine to simultaneously acquire several businesses that are
owned by different sellers, which would require 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. Very
little public information generally exists about private companies, and we could be required to make our decision on whether to
pursue a potential initial business combination on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at all.
We
do not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for us to
complete a business combination with which a substantial majority of our stockholders do not agree.
Our
second amended and restated certificate of incorporation do 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
following such redemptions, or any greater net tangible asset or cash requirement that may be contained in the agreement relating
to our initial business combination. As a result, we may be able to complete our initial business combination even though a substantial
majority of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder
approval of our initial business combination and do not conduct redemptions in connection with our initial business combination
pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, directors,
officers, advisors or any of their respective affiliates. In the event the aggregate cash consideration we would be required to
pay for all public shares 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 common stock shares submitted for redemption will be returned to the holders
thereof, and we instead may search for an alternate business combination.
In
order to effectuate an initial business combination, blank check companies have, in the past, amended various provisions of their
charters and modified governing instruments, including their warrant agreements. We cannot assure you that we will not seek to
amend our second 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 some of our stockholders may not support.
In
order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions
of their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have
amended the definition of business combination, increased redemption thresholds and extended the time to consummate an initial
business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged
for cash and/or other securities. Amending our amended and restated memorandum and articles of association requires at least a
special resolution of our stockholders as a matter of Delaware law. A resolution is deemed to be a special resolution as a matter
of Delaware law where it has been approved by either (1) holders of at least two-thirds (or any higher threshold specified
in a company’s articles of association) of a company’s shares of Class A common stock at a general meeting for which
notice specifying the intention to propose the resolution as a special resolution has been given or (2) if so authorized
by a company’s articles of association, by a unanimous written resolution of all of the company’s stockholders. Our
amended and restated memorandum and articles of association provide that special resolutions must be approved either by holders
of at least two-thirds of our shares of Class A common stock who attend and vote at a general meeting (i.e., the lowest threshold
permissible under Delaware law) (other than amendments relating to provisions governing the appointment or removal of directors
prior to our initial business combination, which require the approval of a majority of at least 90% of our shares of Class A common
stock attending and voting in a general meeting), or by a unanimous written resolution of all of our stockholders. The warrant
agreement provides that (a) the terms of the warrants may be amended without the consent of any holder for the purpose of
(i) curing any ambiguity or correct any mistake, including to conform the provisions of the warrant agreement to the description
of the terms of the warrants and the warrant agreement set forth in the prospectus related to the Initial Public Offering, or
defective provision or (ii) adding or changing any provisions with respect to matters or questions arising under the warrant
agreement as the parties to the warrant agreement may deem necessary or desirable and that the parties deem to not adversely affect
the rights of the registered holders of the warrants and (b) all other modifications or amendments require the vote or written
consent of at least 50% of the then outstanding public warrants and, solely with respect to any amendment to the terms of the
Private Placement Warrants or any provision of the warrant agreement with respect to the Private Placement Warrants, at least
50% of the then outstanding Private Placement Warrants. We cannot assure you that we will not seek to amend our second amended
and restated certificate of incorporation or governing instruments, including the warrant agreement, or extend the time to consummate
an initial business combination in order to effectuate our initial business combination. To the extent any of such amendments
would be deemed to fundamentally change the nature of any of the securities offered through this registration statement, we would
register, or seek an exemption from registration for, the affected securities.
Certain
provisions of our second amended and restated certificate of incorporation that relate to our pre-business combination activity
(and corresponding provisions of the agreement governing the release of funds from our Trust Account) may be amended with the
approval of holders of at least two-thirds of our shares of Class A common stock who attend and vote at a general meeting, which
is a lower amendment threshold than that of some other blank check companies. It may be easier for us, therefore, to amend our
amended and restated memorandum and articles of association and the trust agreement to facilitate the completion of an initial
Business Combination that some of our stockholders may not support.
Some
other blank check companies have a provision in their charter which prohibits the amendment of certain of its provisions, including
those which relate to a company’s pre-business combination activity, without approval by holders of a certain percentage
of the company’s shares. In those companies, amendment of these provisions typically requires approval by holders holding
between 90% and 100% of the company’s public shares. Our amended and restated memorandum and articles of association provide
that any of its provisions, including those related to pre-business combination activity (including the requirement to deposit
proceeds of the Initial Public Offering and the sale of Private Placement Warrants into the Trust Account and not release such
amounts except in specified circumstances), may be amended if approved by holders of at least 65% of our shares of Class A common
stock who attend and vote at a general meeting, and corresponding provisions of the trust agreement governing the release of funds
from our Trust Account may be amended if approved by holders of at least 65% of our shares of Class A common stock (other than
amendments relating to provisions governing the appointment or removal of directors prior to our initial business combination,
which require the approval of a majority of at least 90% of our shares of Class A common stock attending and voting in a general
meeting). Our initial stockholders, who collectively own 25% of our shares of common stock, may participate in any vote to amend
our second 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 second amended and restated certificate of incorporation
which govern our pre-business combination behavior more easily than some other blank check companies, and this may increase our
ability to complete our initial business combination with which you do not agree. In certain circumstances, our stockholders may
pursue remedies against us for any breach of our amended and restated memorandum and articles of association.
We
may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or abandon a particular business combination.
If
the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants available to us 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 redeem 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 initial business combination, we may require such financing
to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse
effect on the continued development or growth of the target business. None of our directors, officers or stockholders are required
to provide any financing to us in connection with or after our initial business combination. If we have not completed our initial
business combination within the required time period, our public stockholders may receive only approximately $10.00 per share,
or less in certain circumstances, on the liquidation of our Trust Account, and our warrants will expire worthless.
Our
initial stockholders will control the appointment of our board of directors until consummation of our initial business combination
and will hold a substantial interest in us. As a result, they will appoint all of our directors prior to our initial business
combination and may exert a substantial influence on actions requiring stockholder vote, potentially in a manner that you do not
support.
Our
initial stockholders own 25% of our issued and outstanding shares of common stock. In addition, prior to our initial business
combination, holders of the founder shares and alignment shares, voting together as a single class, will have the right to appoint
all of our directors and may remove members of the board of directors for any reason. Holders of our public shares will have no
right to vote on the appointment of directors during such time. These provisions of our amended and restated memorandum and articles
of association may only be amended by a special resolution passed by a majority of at least 90% of our shares of Class A common
stock attending and voting in a general meeting. As a result, you will not have any influence over the appointment of directors
prior to our initial business combination.
In
addition, as a result of their substantial ownership in our company, our initial stockholders may exert a substantial influence
on other actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our second
amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase
any shares of Class A common stock in the aftermarket or in privately negotiated transactions, this would increase their influence
over these actions. Accordingly, our initial stockholders will exert significant influence over actions requiring a stockholder
vote at least until the completion of our initial business combination.
A
provision of our warrant agreement may make it more difficult for us to consummate an initial business combination.
Unlike
some blank check companies, if
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we
issue additional common stock shares or equity-linked securities for capital raising purposes in connection with the closing of
the initial business combination at an issue price or effective issue price of less than $9.20 per Class A common stock share
(with such issue price or effective issue price to be determined in good faith by our board of directors and, in the case of any
such issuance to our sponsor or its affiliates, without taking into account any founder shares held by our sponsor or such affiliates,
as applicable, prior to such issuance) (the “Newly Issued Price”),
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the
aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available
for the funding of our initial business combination on the date of the completion of our initial business combination (net of
redemptions), and
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the
volume weighted average trading price of our shares of Class A common stock during the 20 trading day period starting on the trading
day prior to the day on which we consummate our initial business combination (such price, the “Market Value”) is below
$9.20 per share,
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then
the exercise price of the warrants will be adjusted to be equal to 115% of the higher of the Market Value and the Newly Issued
Price, the $18.00 per share redemption trigger price applicable to our warrants will be adjusted (to the nearest cent) to be equal
to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price applicable
to our warrants will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
This may make it more difficult for us to consummate an initial business combination with a target business.
Our
warrants, founder shares and alignment shares may have an adverse effect on the market price of our shares of Class A common stock
and make it more difficult to effectuate our initial business combination.
We
have issued warrants to purchase 9,583,333 shares of Class A common stock, at a price of $11.50 per whole share (subject to adjustment
as provided herein), as part of the Units and, simultaneously with the closing of the Initial Public Offering, we issued in the
Private Placement an aggregate of 5,166,667 Private Placement Warrants, each exercisable to purchase one Class A common stock
share at a price of $11.50 per share, subject to adjustment as provided herein. Our initial stockholders currently hold 3,833,333
shares of Class B common stock and 5,750,000 shares of Class C common stock. The shares of our Class B common stock
are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment as set forth herein. The shares
of our Class C common stock will automatically convert into shares of Class A common stock at the earlier of (i) our meeting certain
stock price performance thresholds following the completion of our initial business combination, and (ii) subsequent to the completion
of our initial business combination, the date on which we complete a merger, stock exchange, reorganization or other similar transaction
that results in both a change of control and all of our public stockholders having the right to exchange their shares of Class
A common stock for cash, securities or other property, in each case, on a one-for-one basis, subject to adjustment as provided
herein. In addition, if our sponsor, an affiliate of our sponsor or certain of our directors and officers make any working capital
loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.50 per warrant at the option of the lender.
Such warrants would be identical to the Private Placement Warrants. To the extent we issue shares of Class A common stock to effectuate
a business combination, the potential for the issuance of a substantial number of additional shares of Class A common stock upon
exercise of these warrants or conversion rights could make us a less attractive acquisition vehicle to a target business. Any
such issuance will increase the number of issued and outstanding shares of Class A common stock and reduce the value of the shares
of Class A common stock issued to complete the business combination. Therefore, our warrants and founder shares may make it more
difficult to effectuate a business combination or increase the cost of acquiring the target business.
The
Private Placement Warrants are identical to the warrants sold as part of the Units except that, so long as they are held by our
sponsor or its permitted transferees: (1) they will not be redeemable by us (except under certain limited exceptions); (2)
they (including the shares of Class A common stock issuable upon exercise of these warrants) may not, subject to certain limited
exceptions, be transferred, assigned or sold by our sponsor until 30 days after the completion of our initial business combination;
(3) they may be exercised by the holders on a cashless basis; and (4) they (including the shares of Class A common stock
issuable upon exercise of these warrants) are entitled to registration rights.
Because
we must furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous
initial business combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a business combination meeting certain financial
significance tests include historical and/or pro forma financial statement disclosure in periodic reports. We will include the
same financial statement disclosure in connection with our tender offer documents, whether or not they are required under the
tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled to, accounting
principles generally accepted in the United States of America (“U.S. GAAP”) or international financial reporting
standards as issued by the International Accounting Standards Board (“IFRS”), depending on the circumstances and the
historical financial statements may be required to be audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (“PCAOB”). These financial statement requirements may limit the pool of potential
target businesses we may acquire because some targets may be unable to provide such financial statements in time for us to disclose
such financial statements in accordance with federal proxy rules and complete our initial business combination within the prescribed
time frame.
Compliance
obligations under the Sarbanes-Oxley Act may make it more difficult for us to effectuate our initial Business Combination, require
substantial financial and management resources, and increase the time and costs of completing an acquisition.
Section 404
of the Sarbanes-Oxley Act requires that we evaluate and report on our system of internal controls beginning with our Annual Report
on Form 10-K for the year ending December 31, 2021. Only in the event we are deemed to be a large accelerated filer
or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent
registered public accounting firm attestation requirement on our internal control over financial reporting. The fact that we are
a blank check company makes compliance with the requirements of the Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target business with which we seek to complete our initial business combination may not be
in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the
internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial business
combination, we may face additional burdens in connection with investigating, agreeing to and completing such combination, and
if we effect such initial business combination, we would be subject to a variety of additional risks that may negatively impact
our operations.
If
our management team pursues a company with operations or opportunities outside of the United States for our initial business
combination, we would be subject to risks associated with cross-border business combinations, including in connection with investigating,
agreeing to and completing our initial business combination, conducting due diligence in a foreign market, having such transaction
approved by any local governments, regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange
rates.
If
we effect our initial business combination with such a company, we would be subject to any special considerations or risks associated
with companies operating in an international setting (including how relevant governments respond to such factors), including any
of the following:
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costs
and difficulties inherent in managing cross-border business operations and complying with commercial and legal requirements of
overseas markets;
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rules
and regulations regarding currency redemption;
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complex
corporate withholding taxes on individuals;
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laws
governing the manner in which future business combination 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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tax
consequences, such as tax law changes, including termination or reduction of tax and other incentives that the applicable government
provides to domestic companies, and variations in tax laws as compared to the United States;
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currency
fluctuations and exchange controls, including devaluations and other exchange rate movements;
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rates
of inflation, price instability and interest rate fluctuations;
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liquidity
of domestic capital and lending markets;
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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, natural disasters, wars and other forms of social instability;
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deterioration
of political relations with the United States;
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obligatory
military service by personnel; and
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government
appropriation of assets.
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For
example, many businesses operating in the consumer internet, mobile gaming, or broader technology sectors have, or seek to have,
operations in the People’s Republic of China (“China”) and the relationship between China and the U.S., which
is subject to periodic tension, may impact our ability complete a business combination with any such business. Additionally, if
we complete a business combination with any such business, the post-business combination company may be adversely effected by
changes in such relationship.
We
may not be able to adequately address these additional risks. If we were unable to do so, we may be unable to complete such combination
or, if we complete such combination, our operations might suffer, either of which may adversely impact our results of operations
and financial condition.
Our
independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt
about our ability to continue as a “going concern.”
As
of December 31, 2020, the Company had $780,292 in its operating bank accounts, $287,491,254 in securities held in the Trust Account
to be used for a business combination or to repurchase or redeem its common stock in connection therewith and working capital
of $1,445,281, which excludes $23,624 of franchise taxes. As of December 31, 2020, no amount on deposit in the Trust Account represented
interest income, which would be available to pay the Company’s tax obligations.
Until
the consummation of our initial business combination, the Company will be using the funds not held in the Trust Account for identifying
and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel
expenditures, selecting the target business to acquire, and structuring, negotiating and consummating our initial business combination.
We expect to incur significant costs in pursuit of our acquisition plans.
Management’s
plans to address this need for capital through this offering are discussed in the section of this prospectus titled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.” Our plans to raise capital and to consummate
our initial business combination may not be successful. These factors, among others, raise substantial doubt about our ability
to continue as a going concern. The financial statements contained elsewhere in this Annual Report on Form 10-K do not include
any adjustments that might result from our inability to continue as a going concern.
Risks
Relating to the Post-Business Combination Company
We
may face risks related to businesses in the broader technology sectors.
Business
combinations with businesses in the broader technology sectors entail special considerations and risks. If we are successful in
completing a business combination with such a target business, we may be subject to, and possibly adversely affected by certain
risks, including:
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an
inability to compete effectively in a highly competitive environment with many incumbents having substantially greater resources;
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an
inability to manage rapid change, increasing consumer expectations and growth;
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an
inability to build strong brand identity and improve subscriber or customer satisfaction and loyalty;
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a
reliance on proprietary technology to provide services and to manage our operations, and the failure of this technology to operate
effectively, or our failure to use such technology effectively;
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an
inability to deal with our subscribers’ or customers’ privacy concerns;
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an
inability to attract and retain subscribers or customers;
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an
inability to license or enforce intellectual property rights on which our business may depend;
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any
significant disruption in our computer systems or those of third parties that we may utilize or rely on in our operations;
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an
inability by us, or a refusal by third parties, to license content to us upon acceptable terms;
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potential
liability for negligence, copyright, or trademark infringement or other claims based on the nature and content of materials that
we may distribute;
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competition
for advertising revenue;
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competition
for the leisure and entertainment time and discretionary spending of subscribers or customers, which may intensify in part due
to advances in technology and changes in consumer expectations and behavior;
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disruption
or failure of our networks, systems or technology as a result of computer viruses, “cyber-attacks,” misappropriation
of data or other malfeasance, as well as outages, natural disasters, terrorist attacks, accidental releases of information or
similar events;
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an
inability to obtain necessary hardware, software and operational support; and
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reliance
on third-party vendors or service providers.
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Any
of the foregoing could have an adverse impact on our operations following a business combination. However, our efforts in identifying
prospective target businesses will not be limited to the technology industries. Accordingly, if we acquire a target business in
another industry, these risks we will be subject to risks attendant with the specific industry in which we operate or target business
which we acquire, which may or may not be different than those risks listed above.
Subsequent
to our completion of our initial business combination, we may be required to subsequently take write-downs or write-offs, restructuring
and impairment or other charges that could have a significant negative effect on our financial condition, results of operations
and the price of our securities, which could cause you to lose some or all of your investment.
Even
if we conduct extensive due diligence on a target business with which we combine, we cannot assure that this diligence will identify
all material issues that may be present with a particular target business that it would be possible to uncover all material issues
through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not
later arise. As a result of these factors, we may be forced to later write down or write off assets, restructure our operations,
or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies
certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary
risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that
we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges
of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing
debt held by a target business or by virtue of our obtaining post-combination debt financing. Accordingly, any stockholder or
warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial Business Combination
could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have a remedy
for such reduction in value.
If
third parties bring claims against us, the proceeds held in the trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share.
Our
placing of funds in the trust account may not protect those funds from third-party claims against us. Although we will seek to
have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses
and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind
in or to any monies held in the trust account for the benefit of our public stockholders, such parties may not execute such agreements,
or even if they execute such agreements they may not be prevented from bringing claims against the trust account, including, but
not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including
the funds held in the trust account. If any third-party refuses to execute an agreement waiving such claims to the monies held
in the trust account, our management will perform an analysis of the alternatives available to it and will enter into an agreement
with a third-party that has not executed a waiver only 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 we are 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 have not completed our initial business combination within the required
time period, or upon the exercise of a redemption right in connection with our initial business combination, we will be required
to provide for payment of claims of creditors that were not waived that may be brought against us within the ten years following
redemption. Accordingly, the per-share redemption amount received by public stockholders could be less than the $10.00 per public
share initially held in the trust account, due to claims of such creditors.
Our
sponsor has agreed that it will be liable to us if and to the extent any claims by a third-party (other than our independent registered
public accounting firm) for services rendered or products sold to us, or a prospective target business with which we have discussed
entering into a transaction agreement, reduce the amount of funds in the trust account to below (1) $10.00 per public share or
(2) 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 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 underwriter of the 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, our sponsor
will not be responsible to the extent of any liability for such third-party claims. We have not independently verified whether
our sponsor has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities
of our company. Our sponsor may not have sufficient funds available to satisfy those obligations. We have not asked our Sponsor
to reserve for such obligations, and therefore, no funds are currently set aside to cover any such obligations. As a result, if
any such claims were successfully made against the trust account, the funds available for our initial business combination and
redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able to complete our initial business
combination, and you would receive such lesser amount per share in connection with any redemption of your public shares. None
of our directors or officers will indemnify us for claims by third parties including, without limitation, claims by vendors and
prospective target businesses.
After
our initial business combination, our results of operations and prospects could be subject, to a significant extent, to the economic,
political, social and government policies, developments and conditions in the country in which we operate.
The
economic, political and social conditions, as well as government policies, of the country in which our operations are located
could affect our business. Economic growth could be uneven, both geographically and among various sectors of the economy and such
growth may not be sustained in the future. If in the future such country’s economy experiences a downturn or grows at a
slower rate than expected, there may be less demand for spending in certain industries. A decrease in demand for spending in certain
industries could materially and adversely affect our ability to find an attractive target business with which to consummate our
initial business combination and if we effect our initial business combination, the ability of that target business to become
profitable.
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 our initial business combination so that the post-transaction company in which our public stockholders own shares
will own less than 100% of the equity interests or assets of a target business, but we will complete such business combination
only if the post-transaction company owns or acquires 50% or more of the issued and outstanding voting securities of the target
or otherwise acquires a controlling interest in the target business sufficient for us not to be required to register as an investment
company under the Investment Company Act. We will not consider any transaction that does not meet such criteria. Even if the post-transaction
company owns 50% or more of the voting securities of the target, our stockholders prior to our initial business combination may
collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target
and us in our initial business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new common stock shares in exchange for all of the issued and outstanding capital stock, shares or other equity securities
of a target, or issue a substantial number of new shares to third parties in connection with financing our initial business combination.
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 common stock shares, our stockholders immediately prior to such transaction could own less than a majority of our issued and
outstanding common stock shares subsequent to such transaction. In addition, other minority stockholders may subsequently combine
their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially
acquired. Accordingly, this may make it more likely that our management will not be able to maintain our control of the target
business.
We
may have limited ability to assess the management of a prospective target business and, as a result, may affect our initial business
combination with a target business whose management may not have the skills, qualifications or abilities to manage a public company.
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 stockholder or warrant holder who chooses to remain a stockholder or warrant holder, respectively, following our initial business
combination could suffer a reduction in the value of their securities. Such stockholders and warrant holders are unlikely to have
a remedy for such reduction in value.
The
directors and officers of an acquisition candidate may resign upon completion of our initial business combination. The departure
of a business combination target’s key personnel could negatively impact the operations and profitability of our post-combination
business. The role of an acquisition candidate’s key personnel upon the completion of our initial business combination cannot
be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s management team
will remain associated with the acquisition candidate following our initial business combination, it is possible that members
of the management of an acquisition candidate will not wish to remain in place.
After
our initial business combination, it is possible that a majority of our directors and officers will live outside the United States
and all or substantially all of our assets will be located outside the United States; therefore investors may not be able to enforce
federal securities laws or their other legal rights.
It
is possible that after our initial business combination, a majority of our directors and officers will reside outside of the United
States and all or substantially all of our assets will be located outside of the United States. As a result, it may be difficult,
or in some cases not possible, for investors in the United States to enforce their legal rights, to effect service of process
upon all of our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal
penalties on our directors and officers under United States laws.
If
our management following our initial business combination is unfamiliar with U.S. securities laws, they may have to expend time
and resources becoming familiar with such laws, which could lead to various regulatory issues.
Following
our initial business combination, any or all of our management could resign from their positions as officers of the company, and
the management of the target business at the time of the business combination could remain in place. Management of the target
business may not be familiar with U.S. securities laws. If new management is unfamiliar with U.S. securities laws, they may have
to expend time and resources becoming familiar with such laws. This could be expensive and time-consuming and could lead to various
regulatory issues which may adversely affect our operations.
Risks
Relating to Our Management Team
We
are dependent upon our directors and officers and their departure could adversely affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals, and specifically upon John Delaney, our Chief Executive
Officer and director. We believe that our success depends on the continued service of our directors and officers, at least until
we have completed our initial business combination. We do not have an employment agreement with, or key-man insurance on
the life of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers
could have a detrimental effect on us.
Each
of our directors and officers are now, and all of them may in the future may 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 completing the Berkshire Grey Business
Combination or, if it does not complete, we intend to engage in the business of identifying and combining with one or more businesses.
Our sponsor and directors and officers are, or may in the future become, affiliated with entities that are engaged in a similar
business as to the latter. Our sponsor and directors and officers are also not prohibited from sponsoring, or otherwise becoming
involved with, any other blank check companies prior to us completing our initial business combination.
For
a discussion of certain of our officers’ and directors’ other business endeavors, please see “Item 10. Directors,
Executive Officer and Corporate Governance.” We do not have an employment agreement with, or key-man insurance on the life
of, any of our directors or officers. The unexpected loss of the services of one or more of our directors or officers could have
a detrimental effect on us.
Our
directors, officers, security holders and their respective affiliates may have competitive pecuniary interests that conflict with
our interests.
We
have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct
or indirect pecuniary or financial interest in any investment to be acquired or disposed of by us or in any transaction to which
we are a party or have an interest. In fact, we may enter into a business combination with a target business that is affiliated
with our sponsor, our directors or officers, although we do not intend to do so. 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.
In
particular, affiliates of our sponsor have invested in a diverse set of industries. As a result, there may be substantial overlap
between companies that would be a suitable business combination for us and companies that would make an attractive target for
such other affiliates.
John
Delaney, our Chief Executive Officer, is a party to a non-competition agreement that limits certain companies and businesses that
we may target for an initial business combination. This could negatively impact our prospects for an initial business combination.
John
Delaney, our Chief Executive Officer, is also the Executive Chairman of Congressional Bancshares, Inc. and a party to a non-competition agreement
with Congressional Bancshares. Such agreement precludes Mr. Delaney from, either directly or indirectly, whether on his own
behalf, or in the service of or on behalf of others, engaging in the business of banking or of healthcare, rediscount and leverage
lending to the middle market, or any other material business activity engaged in by Congressional Bancshares in a manner or capacity
that competes with the business of Congressional Bancshares.
For
our business combination, we intend to focus on industries that complement Mr. Delaney’s background in the financial
services, healthcare, technology and consumer and media sectors. As a result of Mr. Delaney’s non-competition agreement,
certain companies and businesses that we may target for an initial business combination will be limited. If a court were to conclude
that a violation of the non-competition agreement had occurred, it could enjoin Mr. Delaney from participating in our
company, or enjoin us from engaging in aspects of the business which compete with Congressional Bancshares, as applicable. The
court could also impose monetary damages against Mr. Delaney or us. This could materially harm our business and the trading
prices of our securities. Even if ultimately resolved in our favor, any litigation associated with the non-competition could
be time consuming, costly and distract management’s focus from locating suitable acquisition candidates and operating our
business.
Stephen
M. Case, a director and one of our founders, is subject to various duties to offer certain investment opportunities to one or
more entities before our company.
Stephen
M. Case, a director and one of our founders, is the founder of Revolution, where he serves as Chairman and Chief Executive Officer,
as well as a member of the investment committees of Revolution Growth, Revolution Ventures and Rise of the Rest Seed. In this
capacity, Mr. Case is subject to a contractual duty to offer Revolution certain investment opportunities that meet the investment
criteria of the various investment funds, vehicles and other accounts sponsored by Revolution. To the extent that an investment
opportunity with respect to a business that would otherwise be suitable for our business combination is first presented to Mr.
Case where such a duty exists, he would be required to pursue such investment opportunity through the applicable Revolution fund
or vehicle, and such business would not be available to us for our business combination.
Our
ability to successfully effect our initial business combination and to be successful thereafter will be dependent upon the efforts
of our key personnel, some of whom may join us following our initial business combination. The loss of our or a target’s
key personnel could negatively impact the operations and profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of
our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain
with the target business in senior management or advisory positions following our initial business combination, it is likely that
some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals
we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to
be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could
cause us to have to expend time and resources helping them become familiar with such requirements.
In
addition, the directors and officers of an acquisition candidate may resign upon completion of our initial business combination.
The departure of a business combination target’s key personnel could negatively impact the operations and profitability
of our post-combination business. The role of an acquisition candidate’s key personnel upon the completion of our initial
business combination cannot be ascertained at this time. Although we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition candidate following our initial business combination, it is possible
that members of the management of an acquisition candidate will not wish to remain in place. The loss of key personnel could negatively
impact the operations and profitability of our post-combination business.
Our
key personnel may negotiate employment or consulting agreements with a target business in connection with a particular business
combination. These agreements may provide for them to receive compensation following our initial business combination and as a
result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our
key personnel may be able to remain with the company after the completion of our initial business combination only if they are
able to negotiate employment or consulting agreements in connection with the business combination. Such negotiations would take
place simultaneously with the negotiation of the business combination and could provide for such individuals to receive compensation
in the form of cash payments and/or our securities for services they would render to us after the completion of our initial business
combination. The personal and financial interests of such individuals may influence their motivation in identifying and selecting
a target business, subject to his or her fiduciary duties under Delaware law. However, we believe the ability of such individuals
to remain with us after the completion of our initial 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 initial 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.
Our
directors and officers 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
directors and officers are not required to, and will not, commit their full time to our affairs, which may result in a conflict
of interest in allocating their time between our operations and our search for a business combination and their other businesses.
We do not intend to have any full-time employees prior to the completion of our initial business combination. Each of our officers
and directors may be engaged in several other business endeavors for which he may be entitled to, or otherwise expect to receive,
substantial compensation or other economic benefit and our officers and directors are not obligated to contribute any specific
number of hours per week to our affairs. Certain of our directors and officers also serve as officers and/or board members for
other entities. If our directors’ and officers’ other business endeavors require them to devote substantial amounts
of time to such endeavors 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. For a discussion of certain of our
officers’ and directors’ other business endeavors, please see “Item 10. Directors, Executive Officer and Corporate
Governance.”
Risks
Relating to Our Securities
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 and/or warrants, potentially at a loss.
Our
public stockholders will be entitled to receive funds from the Trust Account only upon the earliest to occur of: (1) our
completion of an initial business combination, and then only in connection with those shares of Class A common stock that such
stockholder properly elected to redeem, subject to the limitations described herein; (2) the redemption of any public shares
properly submitted in connection with a stockholder vote to amend our amended and restated memorandum and articles of association
(A) to modify the substance or timing of our obligation to allow redemption in connection with our initial business combination
or to redeem 100% of our public shares if we do not complete our initial business combination within 24 months from the closing
of the Initial Public Offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial
business combination activity; and (3) the redemption of our public shares if we have not completed an initial business combination
within 24 months from the closing of the Initial Public Offering, 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. Holders of warrants will not have any right to
the proceeds held in the Trust Account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced
to sell your public shares and/or warrants, potentially at a loss.
Nasdaq
may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our
securities and subject us to additional trading restrictions.
Our
Units, Class A common stock and warrants are listed on Nasdaq. Although we expect to meet the minimum initial listing requirements
set forth in the Nasdaq listing rules, we cannot assure you that our securities will be, or will continue to be, listed on Nasdaq
in the future or prior to our initial business combination. In order to continue listing our securities on Nasdaq prior to our
initial business combination, we must maintain certain financial, distribution and share price levels. Generally, we must maintain
a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of our securities (generally
300 public stockholders). Additionally, in connection with our initial business combination, we will be required to demonstrate
compliance with Nasdaq’s initial listing requirements, which are more rigorous than the Nasdaq’s continued listing
requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, in order for our Class A
common stock to be listed upon the consummation of our initial business combination, at such time, our share price would generally
be required to be at least $4.00 per share, our stockholders’ equity would generally be required to be at least $5,000,000
and we would be required to have a minimum of 300 round lot holders of our securities (with at least 50% of such round lot holders
holding securities with a market value of at least $2,500). We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If
Nasdaq delists any of our securities from trading on its exchange and we are not able to list our securities on another national
securities exchange, we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could
face significant material adverse consequences, including:
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a
limited availability of market quotations for our securities;
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reduced
liquidity for our securities;
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a
determination that our Class A common stock are a “penny stock” which will
require brokers trading in our Class A common stock to adhere to more stringent rules
and possibly result in a reduced level of trading activity in the secondary trading market
for our securities;
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a
limited amount of news and analyst coverage; and
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a
decreased ability to issue additional securities or obtain additional financing in the
future.
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The
National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating
the sale of certain securities, which are referred to as “covered securities.” Because our Units, Class A common stock
and warrants are listed on Nasdaq, our Units, Class A common stock and warrants qualify as covered securities under such statute.
Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to
investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can
regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers
to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities
regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale
of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not
qualify as covered securities under such statute and we would be subject to regulation in each state in which we offer our securities.
You
will not be permitted to exercise your warrants unless we register and qualify the issuance of the underlying shares of Class
A common stock or certain exemptions are available.
Pursuant
to terms of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days after
the closing of our initial business combination, we will use our commercially reasonable efforts to file a registration statement
covering the issuance of such shares, and we will use our commercially reasonable efforts to cause the same to become effective
within 60 business days after the closing of our initial business combination and to maintain the effectiveness of such registration
statement and a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed.
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, complete 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 in accordance with the above requirements, we will be required to permit
holders to exercise their warrants on a cashless basis, in which case, the number of shares of Class A common stock that you will
receive upon cashless exercise will be based on a formula subject to a maximum amount of shares equal to 0.361 shares of Class
A common stock per warrant (subject to adjustment). However, no warrant will be exercisable for cash or on a cashless basis, and
we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares
upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption
from registration is available. Notwithstanding the above, if our shares of Class A common stock are at the time of any exercise
of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered security”
under Section 18(b)(1) of the Securities Act, we may, at our option, require holders of public warrants who exercise their
warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the
event we so elect, we will not be required to file or maintain in effect a registration statement, but we will use our commercially
reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the
warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities
laws and no exemption is available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified
or exempt from registration or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such
warrant may have no value and expire worthless. There may be a circumstance where an exemption from registration exists for holders
of our Private Placement Warrants to exercise their warrants while a corresponding exemption does not exist for holders of the
public warrants that were included as part of Units. In such an instance, our sponsor and its permitted transferees (which may
include our directors and executive officers) would be able to exercise their warrants and sell the common stock shares underlying
their warrants while holders of our public warrants would not be able to exercise their warrants and sell the underlying common
stock shares. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to
register or qualify the underlying shares of Class A common stock for sale under all applicable state securities laws. As a result,
we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise their warrants.
We
may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders
of at least 50% of the then outstanding public warrants.
Our
warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company,
as warrant agent, and us. The warrant agreement provides that (a) the terms of the warrants may be amended without the consent
of any holder for the purpose of (i) curing any ambiguity or correct any mistake, including to conform the provisions of
the warrant agreement to the description of the terms of the warrants and the warrant agreement set forth in the prospectus related
to the Initial Public Offering, or defective provision or (ii) adding or changing any provisions with respect to matters
or questions arising under the warrant agreement as the parties to the warrant agreement may deem necessary or desirable and that
the parties deem to not adversely affect the rights of the registered holders of the warrants and (b) all other modifications
or amendments require the vote or written consent of at least 50% of the then outstanding public warrants and, solely with respect
to any amendment to the terms of the Private Placement Warrants or any provision of the warrant agreement with respect to the
Private Placement Warrants, at least 50% of the then outstanding Private Placement Warrants. Accordingly, we may amend the terms
of the public warrants in a manner adverse to a holder if holders of at least 50% of the then outstanding public warrants approve
of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then
outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the
exercise price of the warrants, shorten the exercise period or decrease the number of common stock shares 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 the outstanding warrants at any time after they become exercisable and prior to their expiration, at
a price of $0.01 per warrant if, among other things, the last reported sale price of shares of Class A common stock for any 20
trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice
of redemption to the warrant holders (the “Reference Value”) equals or exceeds $18.00 per share (as adjusted). If
and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify
the underlying securities for sale under all applicable state securities laws. As a result, we may redeem the warrants as set
forth above even if the holders are otherwise unable to exercise the warrants. Redemption of the outstanding warrants as described
above could force you to: (1) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous
for you to do so; (2) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants;
or (3) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, we expect
would be substantially less than the market value of your warrants.
In
addition, we have the ability to redeem the outstanding warrants at any time after they become exercisable and prior to their
expiration, at a price of $0.10 per warrant if, among other things, the Reference Value equals or exceeds $10.00 per share (as
adjusted). In such a case, the holders will be able to exercise their warrants prior to redemption for a number of shares of Class
A common stock determined based on the redemption date and the fair market value of our shares of Class A common stock. The value
received upon exercise of the warrants (1) may be less than the value the holders would have received if they had exercised
their warrants at a later time where the underlying share price is higher and (2) may not compensate the holders for the
value of the warrants, including because the number of common stock shares received is capped at 0.361 shares of Class A common
stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
Because
each unit contains one-third of one redeemable warrant and only a whole warrant may be exercised, the Units may be worth less
than Units of other blank check companies.
Each
unit contains one-third of one redeemable warrant. Pursuant to the warrant agreement, no fractional warrants were issued upon
separation of the Units, and only whole warrants trade. This is different from some other blank check companies whose units include
one common stock share and one whole warrant or a greater fraction of one whole warrant to purchase one share. We have established
the components of the Units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination
since the warrants will be exercisable in the aggregate for a third of the number of shares compared to units that each contain
a whole warrant to purchase one whole share, thus making us, we believe, a more attractive business combination partner for target
businesses. Nevertheless, this Unit structure may cause our Units to be worth less than if they included one whole warrant or
a greater fraction of one whole warrant to purchase one whole share.
Our
warrant agreement designates the courts of the State of New York or the United States District Court for the Southern District
of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of our
warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with our company.
Our
warrant agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of
or relating in any way to the warrant agreement, including under the Securities Act, will be brought and enforced in the courts
of the State of New York or the United States District Court for the Southern District of New York, and (ii) that we irrevocably
submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will
waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
Notwithstanding
the foregoing, these provisions of the warrant agreement do not apply to suits brought to enforce any liability or duty created
by the Exchange Act or any other claim for which the federal district courts of the United States of America are the sole and
exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to
have notice of and to have consented to the forum provisions in our warrant agreement. If any action, the subject matter of which
is within the scope of the forum provisions of the warrant agreement, is filed in a court other than a court of the State of New
York or the United States District Court for the Southern District of New York (a “foreign action”) in the name of
any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state
and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum
provisions (an “enforcement action”), and (y) having service of process made upon such warrant holder in any
such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such warrant holder.
This
choice-of-forum provision may limit a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable
for disputes with our company, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our
warrant agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings,
we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely
affect our business, financial condition and results of operations and result in a diversion of the time and resources of our
management and board of directors.
Provisions
in our second amended and restated certificate of incorporation may inhibit a takeover of us, which could limit the price investors
might be willing to pay in the future for our Class A common stock and could entrench management.
Our
second 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 the ability of the board of directors to
designate the terms of and issue new series of preferred stock, and the fact that prior to the completion of our initial business
combination only holders of our shares of Class B common stock and holders of our Class C common stock, which are held by our
initial stockholders, voting together as a single class, are entitled to vote on the election of directors, 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 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.
Our
second amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole
and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit
our stockholders’ ability to obtain a favorable judicial forum for disputes with our company or our company’s directors,
officers or other employees.
Our
second amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative
forum, the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive
forum for any (1) derivative action or proceeding brought on behalf of our company, (2) action asserting a claim of breach of
a fiduciary duty owed by any director, officer, employee or agent of our company to our company or our stockholders, or any claim
for aiding and abetting any such alleged breach, (3) action asserting a claim against our company or any director or officer of
our company arising pursuant to any provision of the DGCL or our second amended and restated certificate of incorporation or our
bylaws, or (4) action asserting a claim against us or any director or officer of our company governed by the internal affairs
doctrine except for, as to each of (1) through (4) above, any claim (a) as to which the Court of Chancery determines that there
is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent
to the personal jurisdiction of the Court of Chancery within ten days following such determination) or (b) which is vested in
the exclusive jurisdiction of a court or forum other than the Court of Chancery. Notwithstanding the foregoing, the provisions
of this paragraph will not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange
Act or otherwise arising under federal securities laws, for which the federal district courts of the United States of America
shall be the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any shares of our
capital stock shall be deemed to have notice of and to have consented to the forum provisions in our second amended and restated
certificate of incorporation. If any action the subject matter of which is within the scope the forum provisions is filed in a
court other than a court located within the State of Delaware (a “foreign action”) in the name of any stockholder,
such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within
the State of Delaware in connection with any action brought in any such court to enforce the forum provisions (an “enforcement
action”), and (y) having service of process made upon such stockholder in any such enforcement action by service upon such
stockholder’s counsel in the foreign action as agent for such stockholder.
This
forum selection clause may discourage claims or limit stockholders’ ability to submit claims in a judicial forum that they
find favorable and may result in additional costs for a stockholder seeking to bring a claim. While we believe the risk of a court
declining to enforce this forum selection clause is low, if a court were to determine the forum selection clause to be inapplicable
or unenforceable in an action, we may incur additional costs in conjunction with our efforts to resolve the dispute in an alternative
jurisdiction, which could have a negative impact on our results of operations and financial condition and result in a diversion
of the time and resources of our management and board of directors.
General
Risk Factors
Our warrants are accounted for as liabilities
and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the Acting Director of
the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting
considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting
Considerations for Warrants Issued by Special Purpose Acquisition Companies (‘SPACs’)” (the “SEC Statement”).
Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following a business
combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the SEC Statement,
we reevaluated the accounting treatment of our 9,583,333 public warrants and 5,166,667 private placement warrants, and determined to
classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As a result, included on our consolidated balance sheet as of December
31, 2020 contained elsewhere in this Annual Report are derivative liabilities related to embedded features contained within our warrants.
Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging, and ASC 820, Fair Value Measurement,
provide for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss
related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair
value measurement, our consolidated financial statements and results of operations may fluctuate quarterly based on factors, which are
outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our
warrants each reporting period and that the amount of such gains or losses could be material.
We have identified a material weakness
in our internal control over financial reporting as of December 31, 2020. If we are unable to develop and maintain an effective system
of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which
may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
Following this issuance of the SEC Statement,
on April 29, 2021, after consultation with our independent registered public accounting firm, management and the Audit Committee of our
Board of Directors (the “Audit Committee”) concluded that, in light of the SEC Statement, it was appropriate to restate (i)
certain items on the Company’s previously issued audited balance sheet dated as of December 10, 2020, which was related to our
Initial Public Offering, and (ii) the Company’s previously issued audited financial statements as of December 31, 2020 and for
the period from September 10, 2020 (inception) to December 31, 2020. See “—Our warrants are accounted for as liabilities
and the changes in value of our warrants could have a material effect on our financial results.” As part of such process, we
identified a material weakness in our internal controls over financial reporting.
A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective internal controls are necessary
for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These
remediation measures may be time consuming and costly, and there is no assurance that these initiatives will ultimately have the intended
effects.
If we identify any new material weaknesses
in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts
or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable
to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange
listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot
assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential
future material weaknesses.
We may face litigation and other risks and uncertainties
as a result of the material weakness in our internal control over financial reporting and the restatement of our financial statements.
Following this issuance of the SEC Statement,
on April 29, 2021, after consultation with our independent registered public accounting firm, management and the Audit Committee concluded
that it was appropriate to restate (i) certain items on the Company’s previously issued audited balance sheet dated as of December
10, 2020, which was related to our IPO, and (ii) the Company’s previously issued audited financial statements as of December 31,
2020 and for the period from September 10, 2020 (inception) to December 31, 2020. See “—Our warrants are accounted for
as liabilities and the changes in value of our warrants could have a material effect on our financial results.” As part of
such process, we identified a material weakness in our internal controls over financial reporting.
As a result of such material weakness, the
restatement of previously issued financials of the Company, the change in accounting for the warrants and other matters raised or that
may in the future be raised by the SEC, we face potential for litigation, inquiries from the SEC and other regulatory bodies, other disputes
or proceedings which may include, among other things, monetary judgments, penalties or other sanctions, claims invoking the federal and
state securities laws and contractual claims. As of the date of this Annual Report, we have no knowledge of any such litigation, inquires,
disputes or proceedings. However, we can provide no assurance that such litigation, inquiries, disputes or proceedings will not arise
in the future. Any such litigation, inquiries, disputes or proceedings, whether successful or not, could have a material adverse effect
on our business, results of operations and financial condition or our ability to complete our initial business combination.
We
are a newly incorporated company with no operating history and no operating revenues, and you have no basis on which to evaluate
our ability to achieve our business objective.
We
are a newly incorporated company incorporated under the laws of the state of Delaware with no operating results. Because we lack
an operating history, you have no basis upon which to evaluate our ability to achieve our business objective of completing our
initial business combination with one or more target businesses. If we fail to complete our initial business combination, we will
never generate any operating revenues.
We
are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage
of certain exemptions from disclosure requirements available to emerging growth companies or smaller reporting companies, this
could make our securities less attractive to investors and may make it more difficult to compare our performance with other public
companies.
We
are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are
not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation
and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have
access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances
could cause us to lose that status earlier, including if the market value of our common stock shares held by non-affiliates exceeds
$700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth
company as of the end of such fiscal year. 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 election to opt out is irrevocable. We have
elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different
application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at
the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential differences in accounting standards used.
Additionally,
we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value
of our common stock shares held by non-affiliates equals or exceeds $250 million as of the end of that year’s second
fiscal quarter, and (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year or the
market value of our common stock shares held by non-affiliates equals or exceeds $700 million as of the end of that year’s
second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of
our financial statements with other public companies difficult or impossible.