Item
1. Business
Overview
We
are an early-stage blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which
we refer to throughout this report as our initial business combination. While our efforts to identify a target business may span many
industries and regions worldwide, we have focused our search for prospects within the technology industry. Our ability to locate a potential
target is subject to the uncertainties discussed elsewhere in this report.
Initial
Public Offering
On
December 28, 2020, we consummated our initial public offering of 23,000,000 units (the “Units”). Each unit consists
of one share of Class A common stock of the Company, par value $0.0001 per share (the “Class A Common Stock”),
and one-half of one redeemable warrant of the Company (“warrant”), with each whole warrant entitling the holder thereof
to purchase one share of Class A Common Stock for $11.50 per share. The units were sold at a price of $10.00 per unit, generating
gross proceeds to the Company of $230,000,000.
Simultaneously
with the closing of the initial public offering, we completed the private sale of an aggregate of 7,350,000 warrants (the “Private
Placement Warrants”) to 7GC & Co. Holdings LLC (our “Sponsor”) at a purchase price of $1.50 per Private
Placement Warrant, generating gross proceeds of $6,500,000.
A
total of $230,000,000, comprised of $222,650,000 of the proceeds from the initial public offering (which amount includes $8,050,000 of
the underwriter’s deferred discount) and $7,350,000 of the proceeds of the sale of the Private Placement Warrants, was placed in
a U.S.-based trust account (the “trust account”) maintained by Continental Stock Transfer & Trust Company, acting as
trustee.
Our
Partnership
We
are a partnership between 7GC & Co Sarl, or “7GC” a technology growth fund based in San Francisco, California and Berlin,
Germany, and Hennessy Capital LLC, or “Hennessy Capital”, a leading independent SPAC sponsor based in Wilson, Wyoming and
Los Angeles, California. We seek to leverage the extensive SPAC experience and technology relationships of our officers, directors and
advisors with founders, venture capitalists, and growth equity managers to identify, screen, select, and partner with a high growth,
cutting-edge technology business. Our management team believes that its unique access to technology assets, coupled with a demonstrable
SPAC track record, will be central to its differentiated investment strategy.
7
Global Capital
7GC
is a San Francisco, California and Berlin, Germany based technology growth stage venture capital firm, whose mission is to invest in
emerging global internet category winners by leveraging its value-adding expertise and proprietary network between the U.S. and
Europe. The firm was founded by Dr. Steffen Pauls and Jack Leeney in 2016 to invest capital in U.S. growth stage technology companies
that are at a lifecycle inflection point, which are positioned to become international leaders in software and internet. The firm is
oriented to long-term investor philosophies, holding companies throughout their company lifecycle while delivering strategic support
in the process.
7GC
has been an early and active investor in companies that have demonstrated strong value creation, such as Cheddar TV, a company that was
acquired in April 2019, and hims & hers (“hims”), a company that closed a business combination with Oaktree Acquisition
Corp., a SPAC, in January 2021. 7 Global Capital participated in offerings of hims’ Series A, C and D shares from 2018 to 2020.
7GC invests across internet verticals, with considerable exposure in telehealth, future of work, marketplaces, and digital content services.
7GC is also a current investor in Jio Platforms, Capsule Pharmacy, Jyve, Roofstock, and The Mom Project. The firm also runs a fund of
funds portfolio with LP investments in top-performing early-stage venture capital firms and selectively manages co-investments for
the benefit of the firm’s limited partners.
Hennessy
Capital
Hennessy
Capital LLC is a Wilson, Wyoming and Los Angeles, California based alternative investment firm founded in 2013 by Daniel J. Hennessy.
Since its founding, Hennessy Capital has been one of the leading independent SPAC sponsors, having raised, together with its managing
partners, a total of five SPACs since 2013 aggregating over $1 billion of equity. Hennessy Capital’s mission is to be a strategic
growth partner for founders, management, employees and stockholders.
Mr. Hennessy,
the Founder and Managing Member of Hennessy Capital, is one of the longest tenured and most experienced independent SPAC sponsors. He
has served as the Chairman and Chief Executive Officer of Hennessy Capital Acquisition Corp., Hennessy Capital Acquisition Corp. II,
Hennessy Capital Acquisition Corp. III and Hennessy Capital Acquisition Corp. IV, and successfully orchestrated successful business combinations
with Blue Bird Corporation (NASDAQ: BLBD), Daseke, Inc. (NASDAQ: DSKE), NRC Group Holdings Corp. (NYSE American: NRCG), and Canoo Holdings
Ltd (NASDAQ: GOEV).
In
addition, Mr. Hennessy is a senior advisor to PropTech Investment Corporation II (“PTIC”), which conducted an initial
public offering in December 2020. Thomas D. Hennessy and M. Joseph Beck are the Co-Chief Executive Officers of PTIC and managing
partners of Hennessy Capital. In addition, Jack Leeney and Courtney Robinson currently serve as directors of PTIC.
Since
its founding, Hennessy Capital has developed proprietary SPAC execution expertise and built a network of top-tier third-party advisors
and relationships to assist with target company origination, evaluation, due diligence, and merger execution. This network of advisors
has supported Hennessy Capital in various roles for its various SPACs and is deeply integrated within Hennessy Capital’s SPAC execution
framework. Following the completion of a business combination, we expect a Hennessy Capital representative will serve as a director of
the post-merger public company to support strategic growth initiatives, provide capital markets expertise, and advise on human capital
and leadership matters.
Experienced
Management Team with Deal Sourcing Network
Our
team is led by Jack Leeney, our Chairman and Chief Executive Officer. Since September 2016, Mr.Leeney has served as a Founding Partner
of 7GC, and is responsible for running the firm’s operations. Mr. Leeney led the firm’s investments in Cheddar TV, Capsule
Pharmacy, hims & hers, Jyve, Roofstock, The Mom Project, and Reliance Jio. He currently serves as a director for The Mom Project
and PTIC. Between April 2011 and December 2016, Mr. Leeney served on the boards of directors of Quantenna Communications, Inc. (NASDAQ:
QTNA), DoAt Media Ltd. (Private), CinePapaya (acquired by Comcast), Joyent (acquired by Samsung), BOKU, Inc. (AIM: BOKU), Eventful (acquired
by CBS) and Blueliv (Private). Previously, Mr. Leeney served as the Head of U.S. Investing for Telefonica Ventures between June
2012 and September 2016, the investment arm of Telefonica (NYSE: TEF), as an investor at Hercules Capital (NYSE: HTGC) between May
2011 and June 2012 and began his career as a technology-focused investment banker at Morgan Stanley in 2007 where he worked on the
initial public offerings for Tesla Motors, LinkedIn and Pandora.
Mr. Leeney’s
experience of over 13 years working in technology investing at Morgan Stanley, Hercules Capital, Telefonica Ventures, and co-founding 7GC
have resulted in assembling a global team of investment professionals, creating a network with major global technology entrepreneurs
and investment professionals, and investing significantly within venture capital.
Our
management team also includes Christopher Walsh, our Chief Financial Officer and Chief Operating Officer. Since September 2020, Mr. Walsh
has served as a Vice President at 7GC, where he is responsible for sourcing new investment opportunities and due diligence for all fund
investments. Mr. Walsh brings significant investment and financial expertise across private and public capital markets. Mr. Walsh
assisted with the successful launch of Empros Capital in 2016, a boutique merchant bank that worked with pre-IPO and growth-stage
technology companies, where he worked until 2019. Mr. Walsh played an active role in working with Empros Capital’s portfolio
companies, working closely with management teams of several “Unicorn” companies within the FinTech, Enterprise Software,
Online Marketplace, and Mobility verticals. Mr. Walsh began his career as a technology investor at Disruptive Technology Advisers
in 2015, where he invested and advised growth stage companies including Palantir Technologies. Over the last five years, Mr. Walsh
has developed a large network of public and private investors, bankers, advisors, and entrepreneurs, who we believe will aid us in completing
a business combination.
Our
management team’s and advisors’ contacts and relationships are extensive across the technology ecosystem, providing superior
access to potential targets. Our network includes partners at U.S. venture capital and private equity funds with investments in high
growth technology companies and founders of technology companies. We intend to leverage this network to gain exclusive access to and
identify attractive target businesses in the technology industry.
Board
of Directors
We
have recruited and organized a group of highly accomplished and engaged directors, including independent directors, who will bring to
us public company governance, executive leadership, operations oversight and capital markets expertise. Our board members have served
as directors, officers, partners and other executive and advisory capacities for publicly-listed and privately-owned companies
and private equity and venture capital firms. Our directors have extensive experience with public equity investing, mergers and acquisitions,
divestitures and corporate strategy and possess relevant domain expertise in the sectors where we expect to source business combination
targets. We believe their collective expertise, contacts and relationships will make us a highly desirable merger partner. Finally, all
of our directors are individual investors in our sponsor.
In
addition to supporting us in the areas of assessment of key risks and opportunities and due diligence, members of our board of directors
may also advise us after the completion of our business combination in overseeing our strategy and value creation plan where relevant
expertise exists.
Business
Strategy
We
believe we have a competitive advantage in sourcing potential technology firms backed by the world’s premier venture capital firms.
According to CBinsights and Crunchbase data, 36% of unicorn investors hold 75% of all unicorn investments. Our sourcing process will
leverage our management team’s deep relationships with top-tier entrepreneurs and investors in the U.S. venture capital ecosystem
through the 7GC platform including co-investment partners with leading venture capitalist and growth equity funds. Many of these
firms, given 7GC’s strategic approach, bring us organic deal flow. Given our network and thematic approach, we anticipate that
similar target merger candidates may be brought to us by these co-investment partners. In addition, we believe Hennessy Capital’s
reputation, experience, and track record of successful SPAC business combinations will make us a preferred partner for these potential
targets.
Business
Combination Criteria
We
are seeking a business combination with a business:
| |
● |
in a technology sector
or subsector, whose business is characterized within the consumer internet and enterprise SaaS landscape with scaled market leadership; |
| |
● |
model that is immersed
in the “offline to online” phenomenon, creating a digitalization process within an incumbent or legacy-based process; |
| |
● |
close to our proximal co-invest networks
of founders, operators, investors, and advisors; and |
| |
● |
in which we have a differentiated
view on the ability of the target to create value as a public company versus remaining a private business. |
Our
Business Combination Process
In
evaluating prospective business combinations, we have conducted and will continue to conduct a thorough due diligence review processes
that encompass, among other things, a review of historical and projected financial and operating data, meetings with management and their
advisors (if applicable), on-site inspection of facilities and assets, discussion with customers and suppliers, legal reviews and
other reviews as we deem appropriate. We also utilize our expertise analyzing target companies and evaluating operating projections,
financial projections and determining the appropriate return expectations given the risk profile of the target business.
We
are not prohibited from pursuing an initial business combination with a company that is affiliated with our sponsor, officers, directors
or advisors. In the event we seek to complete our initial business combination with a company that is affiliated with our sponsor, officers,
directors or advisors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm
or another independent entity that commonly renders valuation opinions that our initial business combination is fair to our company from
a financial point of view.
Members
of our management team and our advisors directly and indirectly own our founders shares and Private Placement Warrants, and, accordingly,
may have a conflict of interest in determining whether a particular target business is an appropriate business with which to effectuate
our initial business combination. Further, each of our officers and directors may have a conflict of interest with respect to evaluating
a particular business combination if the retention or resignation of any such officers and directors were to be included by a target
business as a condition to any agreement with respect to our initial business combination.
Each
of our officers and directors presently has, and 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, including
PTIC. Accordingly, if any of our officers or directors becomes aware of a business combination opportunity which is suitable for an entity
to which he or she has then-current fiduciary or contractual obligations, he or she will honor his or her fiduciary or contractual
obligations to present such opportunity to such entity. We believe, however, that the fiduciary duties or contractual obligations of
our officers or directors will not materially affect our ability to complete our initial business combination, as we believe any such
opportunities presented would be smaller than what we are interested in, in different fields than what we would be interested in, or
to entities that are not themselves in the business of engaging in business combinations. Our amended and restated certificate of incorporation
will provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is
expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we
are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director
or officer is permitted to refer that opportunity to us without violating another legal obligation.
Our
officers and directors may become an officer or director of another special purpose acquisition company with a class of securities intended
to be registered under the Exchange Act, even before we have entered into a definitive agreement regarding our initial business combination.
Our
Management Team
Members
of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their
time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time that any member
of our management team devotes in any time period will vary based on whether a target business has been selected for our initial business
combination and the current stage of the business combination process. We believe our management team’s and our advisors’
operating and transaction experience and relationships with companies will provide us with a substantial number of potential business
combination targets. Over the course of their careers, the members of our management team have developed a broad network of contacts
and corporate relationships in many industries. This network has grown through the activities of our management team sourcing, acquiring
and financing businesses, our management team’s relationships with sellers, financing sources and target management teams and the
experience of our management team in executing transactions under varying economic and financial market conditions.
Status
as a Public Company
We
believe our structure as a public company makes us an attractive business combination partner to target businesses. As a public company,
we offer a target business an alternative to the traditional initial public offering through a merger or other business combination with
us. Following an initial business combination, we believe the target business would have greater access to capital and additional means
of creating management incentives that are better aligned with stockholders’ interests than it would as a private company. A target
business can further benefit by augmenting its profile among potential new customers and vendors and aid in attracting talented employees.
In a business combination transaction with us, the owners of the target business may, for example, exchange their shares of stock in
the target business for our shares of Class A common stock (or shares of a new holding company) or for a combination of our shares
of Class A common stock and cash, allowing us to tailor the consideration to the specific needs of the sellers.
Although
there are various costs and obligations associated with being a public company, we believe target businesses will find this method a
more expeditious and cost-effective method to becoming a public company than the typical initial public offering. The typical initial
public offering process takes a significantly longer period of time than the typical business combination transaction process, and there
are significant expenses in the initial public offering process, including underwriting discounts and commissions, marketing and road
show efforts that may not be present to the same extent in connection with an initial business combination with us.
Furthermore,
once a proposed initial business combination is completed, the target business will have effectively become public, whereas an initial
public offering is always subject to the underwriters’ ability to complete the offering, as well as general market conditions,
which could delay or prevent the offering from occurring or could have negative valuation consequences. Following an initial business
combination, we believe the target business would then have greater access to capital and an additional means of providing management
incentives consistent with stockholders’ interests and the ability to use its shares as currency for acquisitions. Being a public
company can offer further benefits by augmenting a company’s profile among potential new customers and vendors and aid in attracting
talented employees.
While
we believe that our structure and our management team’s backgrounds will make us an attractive business partner, some potential
target businesses may view our status as a blank check company, such as our lack of an operating history and our ability to seek stockholder
approval of any proposed initial business combination, negatively.
We
are an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As
such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the independent
registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find
our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities
may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In
other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would
otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain
an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of
the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or
(c) in which we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is
held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued
more than $1.0 billion in non-convertible debt securities during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
shares held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our shares held by non-affiliates exceeds $700 million as of the
prior June 30.
Financial
Position
With
funds available for an initial business combination initially in the amount of approximately $230,000,000 as of December 31, 2020, in
each case before fees and expenses associated with our initial business combination, we offer a target business a variety of options
such as creating a liquidity event for its owners, providing capital for the potential growth and expansion of its operations or strengthening
its balance sheet by reducing its debt or leverage ratio. Because we are able to complete our initial business combination using our
cash, debt or equity securities, or a combination of the foregoing, we have the flexibility to use the most efficient combination that
will allow us to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken
any steps to secure third party financing and there can be no assurance it will be available to us.
Effecting
Our Initial Business Combination
We
are not presently engaged in, and we will not engage in, any operations until we consummate our initial business combination. We will
effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of
the private placement warrants, the proceeds of the sale of our shares in connection with our initial business combination (pursuant
to forward purchase agreements or backstop agreements which we may enter into following the consummation of our initial public offering
or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination
of the foregoing. We may seek to complete our initial business combination with a company or business that may be financially unstable
or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and businesses.
We
may seek to raise additional funds through a private offering of debt or equity securities in connection with the completion of our initial
business combination, and we may effectuate our initial business combination using the proceeds of such offering rather than using the
amounts held in the trust account. In addition, we intend to target businesses larger than we could acquire with the net proceeds of
our initial public offering and the sale of the private placement warrants and may as a result be required to seek additional financing
to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would expect to complete
such financing only simultaneously with the completion of our initial business combination. In the case of an initial business combination
funded with assets other than the trust account assets, our proxy materials or tender offer documents disclosing the initial business
combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing.
There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination.
At this time, we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds
through the sale of securities or otherwise.
Although
our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this
assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside
of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
Sources
of Target Businesses
Target
business candidates have and will continue to be brought to our attention from various unaffiliated sources, including investment bankers
and investment professionals. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us by calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited
basis, since many of these sources will have read this report and know what types of businesses we are targeting. Our officers and directors,
as well as our sponsor and their affiliates, may also bring to our attention target business candidates that they become aware of through
their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows or
conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be
available to us as a result of the business relationships of our officers and directors and our sponsor and their respective industry
and business contacts as well as their affiliates. While we have not engaged the services of professional firms or other individuals
that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future, in which
event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation
based on the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder
may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential
transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion
of a business combination transaction; in which case any such fee will be paid out of the funds held in the trust account. In no event,
however, will our sponsor or any of our existing officers or directors, or any entity with which our sponsor or officers are affiliated,
be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan or other compensation by the
company prior to, or in connection with any services rendered for any services they render in order to effectuate, the completion of
our initial business combination (regardless of the type of transaction that it is). Although none of our sponsor, executive officers
or directors, or any of their respective affiliates, will receive any compensation, finder’s fees or consulting fees from a prospective
business combination target in connection with a contemplated initial business combination, we do not have a policy that prohibits our
sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses
by a target business. We have agreed to pay our sponsor a total of $10,000 per month for office space, utilities and secretarial and
administrative support and to reimburse our sponsor for any out-of-pocket expenses related to identifying, investigating and completing
an initial business combination. Some of our officers and directors and advisors may enter into employment or consulting agreements with
the post-transaction company following our initial business combination. The presence or absence of any such fees or arrangements
will not be used as a criterion in our selection process of an initial business combination candidate.
We
are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated with
our sponsor, officers, directors or advisors or making the initial business combination through a joint venture or other form of shared
ownership with our sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial
business combination target that is affiliated with our sponsor, officers, directors or advisors, we, or a committee of independent directors,
would obtain an opinion from an independent investment banking firm or from another independent entity that commonly renders valuation
opinions that such an initial business combination is fair to our company from a financial point of view. We are not required to obtain
such an opinion in any other context.
Potential
target companies with whom we may engage in discussions with may have had prior discussions with other blank check companies, bankers
in the industry and/or other professional advisors including blank check companies with which our executive officers or board of directors
were affiliated. We may pursue transactions with such potential targets (i) if such other blank check companies are no longer pursuing
transactions with such potential targets, (ii) if we become aware that such potential targets are interested in a potential initial
business combination with us and (iii) if we believe such transactions would be attractive to our stockholders. We have not contacted
any of the prospective target businesses that any special purpose acquisition company affiliated with our officers, directors and advisors
has considered and rejected while they were a blank check company searching for target businesses with which to consummate an initial
business combination. However, we may contact such targets if we become aware that such targets are interested in a potential initial
business combination with us and such transaction would be attractive to our stockholders.
If
any of our officers or directors becomes aware of an initial business combination opportunity that falls within the line of business
of any entity to which he or she has pre-existing fiduciary or contractual obligations, he or she may be required to present such
business combination opportunity to such entity prior to presenting such business combination opportunity to us. Our officers and directors
currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us.
Selection
of a Target Business and Structuring of our Initial Business Combination
Nasdaq
rules require that we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value
of the assets held in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on
the trust account) at the time of our signing a definitive agreement in connection with our initial business combination. The fair market
value of our initial business combination will be determined by our Board of Directors based upon one or more standards generally accepted
by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses
or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our Board of Directors is not able
to independently determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment
banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria.
While we consider it unlikely that our Board of Directors will not be able to make an independent determination of the fair market value
of our initial business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular
target or if there is a significant amount of uncertainty as to the value of a target’s assets or prospects. We do not intend to
purchase multiple businesses in unrelated industries in conjunction with our initial business combination. Subject to this requirement,
our management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although
we will not be permitted to effectuate our initial business combination with another blank check company or a similar company with nominal
operations. Additionally, pursuant to Nasdaq rules, any initial business combination must be approved by a majority of our independent
directors.
We
will structure our initial business combination either (i) in such a way so that the post-transaction company in which our public
stockholders own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in
such a way so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business
in order to meet certain objectives of the target management team or stockholders. However, we will only complete an initial business
combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act of 1940, as amended, or the “Investment Company Act”. Even if the post-transaction company owns or acquires
50% or more of the voting securities of the target, our stockholders prior to the initial business combination may collectively own a
minority interest in the post-transaction company, depending on valuations ascribed to the target and us in the initial business
combination. For example, we could pursue a transaction in which we issue a substantial number of new shares in exchange for all of the
outstanding capital stock of a target. In this case, we would acquire a 100% controlling interest in the target. However, as a result
of the issuance of a substantial number of new shares, our stockholders immediately prior to our initial business combination could own
less than a majority of our outstanding shares subsequent to our initial business combination. If less than 100% of the equity interests
or assets of a target business or businesses are owned or acquired by the post-transaction company, the portion of such business
or businesses that is owned or acquired is what will be taken into account for purposes of Nasdaq’s 80% fair market value test.
If the initial business combination involves more than one target business, the 80% fair market value test will be based on the aggregate
value of all of the transactions and we will treat the target businesses together as the initial business combination for purposes of
a tender offer or for seeking stockholder approval, as applicable.
As
a result, in addition to our initial stockholders’ founder shares, we would need only 8,625,001, or 37.5%, of the 23,000,000 public
shares sold in our initial public offering to be voted in favor of an initial business combination (assuming all outstanding shares are
voted; or 1,437,502, or 6.25%, assuming only the minimum number of shares representing a quorum are voted and assuming our sponsor, officers
and directors do not purchase any public shares) in order to have our initial business combination approved (in each case assuming the
over-allotment option is not exercised). We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior
written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum
and voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial
business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against
the proposed transaction. Our amended and restated certificate of incorporation will provide that we will only redeem our public shares
so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation
of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the
SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement
relating to our initial business combination. For example, the proposed initial business combination may require: (i) cash consideration
to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate purposes
or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business combination.
In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted
for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination
exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares, and
all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
To
the extent we effect our initial business combination with a company or business that may be financially unstable or in its early stages
of development or growth we may be affected by numerous risks inherent in such company or business. Although our management will endeavor
to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all significant
risk factors.
In
evaluating a prospective business target, we will conduct a thorough due diligence review which encompasses, among other things, meetings
with incumbent management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as
a review of financial and other information that will be made available to us.
The
time required to select and evaluate a target business and to structure and complete our initial business combination, and the costs
associated with this process, are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification
and evaluation of a prospective target business with which our initial business combination is not ultimately completed will result in
our incurring losses and will reduce the funds we can use to complete another business combination.
Lack
of Business Diversification
For
an indefinite period of time after the completion of our initial business combination, the prospects for our success may depend entirely
on the future performance of a single business. Unlike other entities that have the resources to complete business combinations with
multiple entities in one or several industries, it is probable that we will not have the resources to diversify our operations and mitigate
the risks of being in a single line of business. In addition, we are focusing our search for an initial business combination in a single
industry. By completing our initial business combination with only a single entity, our lack of diversification may:
| |
● |
subject us to negative
economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact on the particular industry
in which we operate after our initial business combination, and |
| |
● |
cause us to depend on the
marketing and sale of a single product or limited number of products or services. |
Limited
Ability to Evaluate the Target’s Management Team
Although
we closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business
combination with that business, our assessment of the target business’ management may not prove to be correct. In addition, the
future management may not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future
role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination
as to whether any of the members of our management team will remain with the combined company will be made at the time of our initial
business combination. While it is possible that one or more of our directors will remain associated in some capacity with us following
our initial business combination, it is unlikely that any of them will devote their full efforts to our affairs subsequent to our initial
business combination. Moreover, we cannot assure you that members of our management team will have significant experience or knowledge
relating to the operations of the particular target business.
We
cannot assure you that any of our key personnel will remain in senior management or advisory positions with the combined company. The
determination as to whether any of our key personnel will remain with the combined company will be made at the time of our initial business
combination.
Following
an initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business.
We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders
May Not Have the Ability to Approve Our Initial Business Combination
We
may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval
if it is required by law or applicable stock exchange rule, or we may decide to seek stockholder approval for business or other legal
reasons. Presented in the table below is a graphic explanation of the types of initial business combinations we may consider and whether
stockholder approval is currently required under Delaware law for each such transaction.
| Type of Transaction | |
| Whether
Stockholder
Approval is
Required | |
| Purchase of assets | |
| No | |
| Purchase of stock of target not involving a merger with the company | |
| No | |
| Merger of target into a subsidiary of the company | |
| No | |
| Merger of the company with a target | |
| Yes | |
Under
Nasdaq’s listing rules, stockholder approval would be required for our initial business combination if, for example:
| |
● |
we issue shares of Class A
common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding; |
| |
● |
any of our directors, officers
or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or
greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential
issuance of common stock could result in an increase in outstanding common shares or voting power of 5% or more; or |
| |
● |
the issuance or potential
issuance of common stock will result in our undergoing a change of control. |
Permitted
Purchases of our Securities
If
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates
may purchase shares or public warrants in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers, advisors
or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they have
no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such
transactions. If they engage in such transactions, they will not make any such purchases when they are in possession of any material
nonpublic information not disclosed to the seller or if such purchases are prohibited by Regulation M under the Exchange Act. We do not
currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender offer rules under the Exchange
Act or a going-private transaction subject to the going-private rules under the Exchange Act; however, if the purchasers determine
at the time of any such purchases that the purchases are subject to such rules, the purchasers will comply with such rules. Any such
purchases will be reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject
to such reporting requirements. None of the funds held in the trust account will be used to purchase shares or public warrants in such
transactions prior to completion of our initial business combination.
The
purpose of any such purchases of shares could be to vote such shares in favor of the initial business combination and thereby increase
the likelihood of obtaining stockholder approval of the initial business combination or to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a certain amount of cash at the closing of our initial business combination,
where it appears that such requirement would otherwise not be met. The purpose of any such purchases of public warrants could be to reduce
the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrantholders for approval in connection
with our initial business combination. Any such purchases of our securities may result in the completion of our initial business combination
that may not otherwise have been possible. In addition, if such purchases are made, the public “float” of our shares
of Class A common stock or warrants may be reduced and the number of beneficial holders of our securities may be reduced, which
may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities exchange.
Our
sponsor, officers, directors, advisors and/or their affiliates anticipate that they may identify the stockholders with whom our sponsor,
officers, directors, advisors or their affiliates may pursue privately negotiated purchases by either the stockholders contacting us
directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection with
our initial business combination. To the extent that our sponsor, officers, directors, advisors or their affiliates enter into a private
purchase, they would identify and contact only potential selling stockholders who have expressed their election to redeem their shares
for a pro rata share of the trust account or vote against our initial business combination, whether or not such stockholder has already
submitted a proxy with respect to our initial business combination. Our sponsor, officers, directors, advisors or their affiliates will
only purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any
purchases by our sponsor, officers, directors, advisors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under
the Exchange Act will only be made to the extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe
harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has
certain technical requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor,
officers, directors, advisors and/or their affiliates will not make purchases of common stock if the purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act. Any such purchases will be reported pursuant to Section 13 and Section 16 of the
Exchange Act to the extent such purchases are subject to such reporting requirements.
Redemption
Rights for Public Stockholders upon Completion of our Initial Business Combination
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on
deposit in the trust account as of two business days prior to the consummation of the initial business combination including interest
earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding
public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be approximately
$10.00 per public share. The per-share amount we will distribute to investors who properly redeem their shares will not be reduced
by the deferred underwriting commissions we will pay to Cantor Fitzgerald & Co. (“Cantor”). Our sponsor, officers and
directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption rights with respect
to any founder shares and any public shares held by them in connection with the completion of our initial business combination.
Manner
of Conducting Redemptions
We
will provide our public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon
the completion of our initial business combination either (i) in connection with a stockholder meeting called to approve the initial
business combination or (ii) by means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed
initial business combination or conduct a tender offer will be made by us, solely in our discretion, and will be based on a variety of
factors such as the timing of the transaction and whether the terms of the transaction would require us to seek stockholder approval
under the law or stock exchange listing requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require
stockholder approval while direct mergers with our company where we do not survive and any transactions where we issue more than 20%
of our outstanding common stock or seek to amend our amended and restated certificate of incorporation would require stockholder approval.
If we structure an initial business combination with a target company in a manner that requires stockholder approval, we will not have
discretion as to whether to seek a stockholder vote to approve the proposed initial business combination. We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC unless stockholder approval is required by law or stock exchange
listing requirements, or we choose to seek stockholder approval for business or other legal reasons. So long as we obtain and maintain
a listing for our securities on Nasdaq, we will be required to comply with such rules.
If
a stockholder vote is not required and we do not decide to hold a stockholder vote for business or other legal reasons, we will, pursuant
to our amended and restated certificate of incorporation:
| |
● |
conduct the redemptions
pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and |
| |
● |
file tender offer documents
with the SEC prior to completing our initial business combination which contain substantially the same financial and other information
about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies. |
Upon
the public announcement of our initial business combination, we or our sponsor will terminate any plan established in accordance with
Rule 10b5-1 to purchase shares of our Class A common stock in the open market if we elect to redeem our public shares
through a tender offer, to comply with Rule 14e-5 under the Exchange Act.
In
the event we conduct redemptions pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days,
in accordance with Rule 14e-1(a) under the Exchange Act, and we will not be permitted to complete our initial business combination
until the expiration of the tender offer period. In addition, the tender offer will be conditioned on public stockholders not tendering
more than a specified number of public shares which are not purchased by our sponsor, which number will be based on the requirement that
we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may
be contained in the agreement relating to our initial business combination. If public stockholders tender more shares than we have offered
to purchase, we will withdraw the tender offer and not complete the initial business combination.
If,
however, stockholder approval of the transaction is required by law or stock exchange listing requirement, or we decide to obtain stockholder
approval for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
| |
● |
conduct the redemptions
in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies,
and not pursuant to the tender offer rules, and |
| |
● |
file proxy materials with
the SEC. |
In
the event that we seek stockholder approval of our initial business combination, we will distribute proxy materials and, in connection
therewith, provide our public stockholders with the redemption rights described above upon completion of the initial business combination.
If
we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common
stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in
person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding
shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders will count toward this quorum and pursuant
to the letter agreement, our sponsor, officers and directors have agreed to vote their founder shares and any public shares purchased
during or after our initial public offering (including in open market and privately negotiated transactions) in favor of our initial
business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will
have no effect on the approval of our initial business combination once a quorum is obtained. As a result, in addition to our initial
stockholders’ founder shares, we would need only 6,562,501, or 37.5%, of the 17,500,000 public shares sold in our initial public
offering to be voted in favor of an initial business combination (assuming all outstanding shares are voted; or 1,093,752, or 6.25%,
assuming only the minimum number of shares representing a quorum are voted and assuming our sponsor, officers and directors do not purchase
any public shares) in order to have our initial business combination approved (in each case assuming the over-allotment option is
not exercised). We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written
notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum and
voting thresholds, and the voting agreements of our initial stockholders, may make it more likely that we will consummate our initial
business combination. Each public stockholder may elect to redeem its public shares irrespective of whether they vote for or against
the proposed transaction. Our amended and restated certificate of incorporation will provide that we will only redeem our public
shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation
of our initial business combination and after payment of underwriters’ fees and commissions (so that we are not subject to the
SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement
relating to our initial business combination. For example, the proposed initial business combination may require: (i) cash consideration
to be paid to the target or its owners, (ii) cash to be transferred to the target for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions in accordance with the terms of the proposed initial business
combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that
are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial
business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem
any shares, and all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation
on Redemption upon Completion of our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with
our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation will 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 seeking redemption
rights with respect to more than an aggregate of 15% of the shares sold in our initial public offering, which we refer to as the “Excess
Shares.” Such restriction shall also be applicable to our affiliates. We believe this restriction will discourage stockholders
from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights
against a proposed initial business combination as a means to force us or our management to purchase their shares at a significant premium
to the then-current market price or on other undesirable terms. Absent this provision, a public stockholder holding more than an
aggregate of 15% of the shares sold in our initial public offering could threaten to exercise its redemption rights if such holder’s
shares are not purchased by us or our management at a premium to the then-current market price or on other undesirable terms. By
limiting our stockholders’ ability to redeem no more than 15% of the shares sold in our initial public offering without our prior
consent, we believe we will limit the ability of a small group of stockholders to unreasonably attempt to block our ability to complete
our initial business combination, particularly in connection with an initial business combination with a target that requires as a closing
condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting our stockholders’
ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering
Stock Certificates in Connection with Redemption Rights
We
may require our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares
in “street name,” to either tender their certificates to our transfer agent prior to the meeting held to approve a proposed
initial business combination by a date set forth in the proxy materials mailed to such holders or to deliver their shares to the transfer
agent electronically using the Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s
option. The proxy materials that we will furnish to holders of our public shares in connection with our initial business combination
will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly, a public stockholder would
have from the time we send out our proxy materials until the date set forth in such proxy materials to tender its shares if it wishes
to seek to exercise its redemption rights. Given the relatively short exercise period, it is advisable for stockholders to use electronic
delivery of their public shares.
There
is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them
through the DWAC System. The transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether
or not to pass this cost on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders
seeking to exercise redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights
regardless of the timing of when such delivery must be effectuated.
The
foregoing is different from the procedures used by many blank check companies. In order to perfect redemption rights in connection with
their business combinations, many blank check companies would distribute proxy materials for the stockholders’ vote on an initial
business combination, and a holder could simply vote against a proposed initial business combination and check a box on the proxy card
indicating such holder was seeking to exercise his or her redemption rights. After the initial business combination was approved, the
company would contact such stockholder to arrange for him or her to deliver his or her certificate to verify ownership. As a result,
the stockholder then had an “option window” after the completion of the initial business combination during which he or she
could monitor the price of the company’s stock in the market. If the price rose above the redemption price, he or she could sell
his or her shares in the open market before actually delivering his or her shares to the company for cancellation. As a result, the redemption
rights, to which stockholders were aware they needed to commit before the stockholder meeting, would become “option” rights
surviving past the completion of the initial business combination until the redeeming holder delivered its certificate. The requirement
for physical or electronic delivery prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once
the initial business combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the date set forth in the proxy materials. Furthermore,
if a holder of a public share delivered its certificate in connection with an election of redemption rights and subsequently decides
prior to the applicable date not to elect to exercise such rights, such holder may simply request that the transfer agent return the
certificate (physically or electronically). It is anticipated that the funds to be distributed to holders of our public shares electing
to redeem their shares will be distributed promptly after the completion of our initial business combination.
If
our initial business combination is not approved or completed for any reason, then our public stockholders who elected to exercise their
redemption rights would not be entitled to redeem their shares for the applicable pro rata share of the trust account. In such case,
we will promptly return any certificates delivered by public holders who elected to redeem their shares.
If
our initial proposed initial business combination is not completed, we may continue to try to complete an initial business combination
with a different target until December 28, 2022.
Redemption
of Public Shares and Liquidation if no Initial Business Combination
Our
amended and restated certificate of incorporation provides that we will have only 24 months from the closing of our initial public
offering to complete our initial business combination (or until December 28, 2022). If we are unable to complete our initial business
combination by December 28, 2022, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account
and not previously released to us to pay our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number
of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we
fail to complete our initial business combination by December 28, 2022.
Our
sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating
distributions from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination
by December 28, 2022. However, if our sponsor, officers or directors acquire public shares in or after our initial public offering, they
will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial
business combination by December 28, 2022.
Our
sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our
amended and restated certificate of incorporation (i) to modify the substance or timing of our obligation to redeem 100% of our
public shares if we do not complete our initial business combination by December 28, 2022 or (ii) with respect to any other
provision relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders
with the opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the
trust account and not previously released to us to pay our taxes divided by the number of then outstanding public shares. However, we
will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately
prior to or upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (so that
we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect to
an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed
with the amendment or the related redemption of our public shares at such time.
We
expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be
funded from amounts remaining out of the proceeds held outside the trust account, although we cannot assure you that there will be sufficient
funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in the trust account to pay any tax obligations
we may owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution,
to the extent that there is any interest accrued in the trust account not required to pay taxes on interest income earned on the trust
account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those
costs and expenses.
If
we were to expend all of the net proceeds of our initial public offering and the sale of the private placement warrants, other than the
proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the per-share redemption
amount received by stockholders upon our dissolution would be approximately $10.00. The proceeds deposited in the trust account could,
however, become subject to the claims of our creditors which would have higher priority than the claims of our public stockholders. We
cannot assure you that the actual per-share redemption amount received by stockholders will not be substantially less than $10.00.
Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision
for payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make
any distribution of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that
we will have funds sufficient to pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that
they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of
fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order
to gain an advantage with respect to a claim against our assets, including the funds held in the trust account. If any third party refuses
to execute an agreement waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives
available to it and will only enter into an agreement with a third party that has not executed a waiver if management believes that such
third party’s engagement would be significantly more beneficial to us than any alternative. Examples of possible instances where
we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular
expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute
a waiver or in cases where management is unable to find a service provider willing to execute a waiver. WithumSmith+Brown, PC, our independent
registered public accounting firm, and the underwriters of our initial public offering will not execute agreements with us waiving such
claims to the monies held in the trust account.
In
addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. Our sponsor
has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us,
or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or
business combination agreement, reduce the amount of funds in the trust account to below the lesser of (i) $10.00 per public share and
(ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less
than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided that such liability
will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies
held in the trust account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters
of our initial public offering against certain liabilities, including liabilities under the Securities Act.
However,
we have not asked our sponsor to reserve for such indemnification obligations, nor have we independently verified whether our sponsor
has sufficient funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company.
Therefore, we cannot assure you that our sponsor would be able to satisfy those obligations. None of our officers or directors will indemnify
us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In
the event that the proceeds in the trust account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation of the trust account, due to reductions in value of the trust assets,
in each case net of the amount of interest which may be withdrawn to pay taxes, and our sponsor asserts that it is unable to satisfy
its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against our sponsor to enforce its indemnification obligations. While we currently expect
that our independent directors would take legal action on our behalf against our sponsor to enforce its indemnification obligations to
us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the
cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent
directors determine that a favorable outcome is not likely. We have not asked our sponsor to reserve for such indemnification obligations
and we cannot assure you that our sponsor would be able to satisfy those obligations. Accordingly, we cannot assure you that due to claims
of creditors the actual value of the per-share redemption price will not be less than $10.00 per public share.
We
will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers (except for our independent registered public accounting firm), prospective target businesses
or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or
to monies held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of
our initial public offering against certain liabilities, including liabilities under the Securities Act. We will have access to certain
funds from the proceeds of our initial public offering with which to pay any such potential claims (including costs and expenses incurred
in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and
it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust
account could be liable for claims made by creditors.
Under
the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public
shares in the event we do not complete our initial business combination by December 28, 2022 may be considered a liquidating distribution
under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure
that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims
can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect
to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed
to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination by December 28, 2022 is not considered a liquidating distribution under Delaware
law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may
bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of
a liquidating distribution. If we are unable to complete our initial business combination by December 28, 2022, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the
trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes (less
up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public
shares as soon as reasonably possible following December 28, 2022 and, therefore, we do not intend to comply with those procedures. As
such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any
liability of our stockholders may extend well beyond the third anniversary of such date.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to
us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against
us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained
in our underwriting agreement, we will seek to have all vendors, service providers (other than our independent registered accounting
firm), prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to any monies held in the trust account. As a result of this obligation, the claims that could be
made against us are significantly limited and the likelihood that any claim that would result in any liability extending to the trust
account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the trust account are
not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as of the date
of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount of interest withdrawn
to pay taxes and will not be liable as to any claims under our indemnity of the underwriters of our initial public offering against certain
liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against
a third party, our sponsor will not be responsible to the extent of any liability for such third-party claims.
If
we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the
trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of
third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and
our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) the completion
of our initial business combination, (ii) the redemption of any public shares properly tendered in connection with a stockholder
vote to amend any provisions of our amended and restated certificate of incorporation (A) to modify the substance or timing of our
obligation to offer redemption rights in connection with any proposed initial business combination or to redeem 100% of our public shares
if we do not complete our initial business combination by December 28, 2022 or (B) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity, and (iii) the redemption of all of our public shares
if we are unable to complete our business combination by December 28, 2022, subject to applicable law. Stockholders who do not exercise
their redemption rights in connection with an amendment to our certificate of incorporation would still be able to exercise their
redemption rights in connection with a subsequent business combination. In no other circumstances will a stockholder have any right or
interest of any kind to or in the trust account. In the event we seek stockholder approval in connection with our initial business combination,
a stockholder’s voting in connection with the initial business combination alone will not result in a stockholder’s redeeming
its shares to us for an applicable pro rata share of the trust account. Such stockholder must have also exercised its redemption rights
as described above. These provisions of our amended and restated certificate of incorporation, like all provisions of our amended and
restated certificate of incorporation, may be amended with a stockholder vote.
Competition
In
identifying, evaluating and selecting a target business for our initial business combination, we have encountered and may continue to
encounter competition from other entities having a business objective similar to ours, including other blank check companies, private
equity groups and leveraged buyout funds, and operating businesses seeking strategic business combinations. Many of these entities are
well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover,
many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target
businesses is limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial
business combination of a target business. Furthermore, our obligation to pay cash in connection with our public stockholders who exercise
their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and
the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may
place us at a competitive disadvantage in successfully negotiating an initial business combination.
Facilities
Our
executive offices are located at 388 Market Street, Suite 1300, San Francisco, CA 94111 and our telephone number is (628) 400-9284. Our
executive offices are provided to us by our sponsor. We pay our sponsor a total of $10,000 per month for office space, utilities and
secretarial and administrative support. We consider our current office space adequate for our current operations.
Employees
We
currently have two officers. These individuals 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 they devote in any time period varies based on the stage of the initial business combination process we are in. We do not intend
to have any full-time employees prior to the completion of our initial business combination.
Periodic
Reporting and Financial Information
Our
units, Class A common stock and warrants are registered under the Exchange Act, and we have reporting obligations, including the
requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act,
this report contains financial statements audited and reported on by our independent registered public accountants.
We
will provide stockholders with audited financial statements of the prospective target business as part of the tender offer materials
or proxy solicitation materials sent to stockholders to assist them in assessing the target business. In all likelihood, these financial
statements will need to be prepared in accordance with, or reconciled to, GAAP, or IFRS, depending on the circumstances, and the historical
financial statements may be required to be audited in accordance with the standards of the PCAOB. These financial statement requirements
may limit the pool of potential targets we may conduct an initial business combination with because some targets may be unable to provide
such statements in time for us to disclose such statements in accordance with federal proxy rules and complete our initial business combination
within the prescribed time frame. We cannot assure you that any particular target business identified by us as a potential business combination
candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to prepare
its financial statements in accordance with the requirements outlined above. To the extent that these requirements cannot be met, we
may not be able to acquire the proposed target business. While this may limit the pool of potential business combination candidates,
we do not believe that this limitation will be material.
We
will be required to evaluate our internal control procedures for the fiscal year ending December 31, 2021 as required by the Sarbanes-Oxley Act.
Only in the event we are deemed to be a large accelerated filer or an accelerated filer, and no longer qualify as an emerging growth
company, will we be required to have our internal control procedures audited. A target company may not be in compliance with the provisions
of the Sarbanes-OxleyAct regarding adequacy of their internal controls. The development of the internal controls of any such entity to
achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such business combination.
We have filed a Registration Statement on Form 8-A with the SEC to voluntarily register our securities under Section 12
of the Exchange Act. As a result, we are subject to the rules and regulations promulgated under the Exchange Act. We have no current
intention of filing a Form 15 to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation
of our initial business combination.
We
will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary
of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion,
or (c) in which we are deemed to be a large accelerated filer, which means the market value of our shares of Class A common
stock that are held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which
we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
Additionally,
we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
shares held by non-affiliates exceeds $250 million as of the prior June 30, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our shares held by non-affiliates exceeds $700 million as of the
prior June 30.
Item
1A. Risk Factors
As
a smaller reporting company, we are not required to include risk factors in this annual report. However, below is a partial list of material
risks, uncertainties and other factors that could have a material effect on the Company and its operations:
| |
● |
we are an early stage Company
with no revenue or basis to evaluate our ability to select a suitable business target; |
| |
● |
we may not be able to select
an appropriate target business or businesses and complete our initial business combination in the prescribed time frame; |
| |
● |
our expectations around
the performance of a prospective target business or businesses may not be realized; |
| |
● |
we may not be successful
in retaining or recruiting required officers, key employees or directors following our initial business combination; |
| |
● |
our officers and directors
may have difficulties allocating their time between the Company and other businesses and may potentially have conflicts of interest
with our business or in approving our initial business combination; |
| |
● |
we may not be able to obtain
additional financing to complete our initial business combination or reduce number of stockholders requesting redemption; |
| |
● |
we may issue our shares
to investors in connection with our initial business combination at a price that is less than the prevailing market price of our
shares at that time; |
| |
● |
you may not be given the
opportunity to choose the initial business target or to vote on the initial business combination; |
| |
● |
trust account funds may
not be protected against third party claims or bankruptcy; |
| |
● |
an active market for our
public securities’ may not develop and you will have limited liquidity and trading; |
| |
● |
the availability to us
of funds from interest income on the trust account balance may be insufficient to operate our business prior to the business combination;
and |
| |
● |
our financial performance
following a business combination with an entity may be negatively affected by their lack an established record of revenue, cash flows
and experienced management. |
Our
warrants are accounted for as derivative liabilities with changes in fair value each period included in earnings, which may have an adverse
effect on the market price of our Class A common stock or may make it more difficult for us to consummate an initial business combination.
We
account for our warrants as derivative warrant liabilities. At each reporting period (1) the accounting treatment of the warrants will
be re-evaluated for proper accounting treatment as a liability or equity and (2) the fair value of the liability of the public warrants
and private placement warrants will be remeasured and the change in the fair value of the liability will be recorded as other income
(expense) in our income statement. The impact of changes in fair value on earnings may have an adverse effect on the market price of
our Class A common stock. In addition, potential targets may seek a special purpose acquisition company that does not have warrants that
are accounted for as a warrant liability, which may make it more difficult for us to consummate an initial business combination with
a target business.
For
the complete list of risks relating to our operations, see the section titled “Risk Factors” contained in our prospectus
dated December 28, 2020.
We
have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely
affect our ability to report our results of operations and financial condition accurately and in a timely manner.
On
April 12, 2021, the staff of the SEC issued a public statement entitled “Staff Statement on Accounting and Reporting Considerations
for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “Statement”). In the Statement,
the SEC staff expressed its view that certain terms and conditions common to SPAC warrants may require the warrants to be classified
as liabilities on the SPAC’s balance sheet as opposed to equity. Since issuance, our warrants were accounted for as equity within
our balance sheet, and after discussion and evaluation, including with our independent auditors, we concluded that our warrants should
be presented as liabilities with subsequent fair value remeasurement. We corrected this error in our First Amended Filing.
Our
management and our audit committee also concluded that it was appropriate to restate our previously issued financial statements related
to the Company’s application of ASC 480-10-S99-3A to its accounting classification of the Public Share, for the Affected Periods.
See Note 2 for our financial statements included herein.
As
a result, we have identified a material weakness in our internal control over financial reporting. This material weakness could continue
to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner. As part
of the restatements, we identified a material weakness in our internal controls over financial reporting relating to accounting for complex
financial instruments.
Our
management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with GAAP. Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose
any changes and material weaknesses identified through such evaluation of those internal controls. 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 on a timely basis.
For
a discussion of management’s consideration of the material weakness identified see “Note 2” to the accompanying financial
statements, as well as Part II, Item 9A: Controls and Procedures included in this Amendment No. 2.
We
can give no assurance that the measures we have taken and plan to take in the future will remediate the material weakness identified
or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement
and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful
in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify
irregularities or errors or to facilitate the fair presentation of our financial statements.