Item 1. Business.
Introduction
We are a blank check company incorporated on December
30, 2020 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 (the “business combination”). We have
identified a target for our business combination, as described below under “—Proposed Business Combination.” If the
proposed business combination is not completed, we will continue to try to identify suitable targets for our business combination. Although
we are not limited to a particular industry or sector for purposes of consummating a business combination, we have primarily been focusing
our search to date on the restaurant, hospitality, and related sectors in North America. We have neither engaged in any operations unrelated
to our proposed business combination, our search for business combination candidates nor generated any revenue to date. Based on our business
activities, we are a “shell company” as defined under the Exchange Act of 1934 (the “Exchange Act”) because we
have no operations and nominal assets consisting almost entirely of cash.
On March 18, 2021, we closed our Initial Public Offering (the
“Initial Public Offering”) of 20,000,000 units (the “Units”) at $10.00 per Unit, generating gross proceeds of
$200.0 million. We granted the underwriters in the Initial Public Offering a 45-day option to purchase up to 3,000,000 additional Units
to cover over-allotments, if any. The underwriters exercised the over-allotment option in part, and on March 26, 2021, purchased 2,233,687
additional Units (the “Over-Allotment”) at the Initial Public Offering price at $10.00 per Unit, generating additional gross
proceeds of approximately $22.3 million.
Simultaneously with the closing of the
Initial Public Offering, we completed the private placement (the “private placement”) of 4,000,000 warrants (each, a “private
placement warrant” and collectively, the “private placement warrants”) at a price of $1.50 per private placement warrant
to FAST Sponsor II LLC (the “Sponsor”), generating proceeds of $6.0 million. We consummated a second closing of the private
placement simultaneously with the closing of the Over-Allotment on March 26, 2021, for an additional 297,825 private placement warrants
at a price of $1.50 per Private Placement Warrant, generating proceeds of approximately $0.4 million.
On January 6, 2021, the Sponsor purchased 5,750,000
shares of our Class B common stock, par value $0.0001 per share (the “founder shares”), for an aggregate price of $25,000.
The initial stockholders agreed to forfeit up to 750,000 founder shares to the extent that the over-allotment option was not exercised
in full by the underwriters, so that the founder shares would represent 20.0% of our issued and outstanding shares after the Initial Public
Offering. On March 26, 2021, the underwriter exercised the option to purchase 2,233,687 additional units, for a total of 22,233,687 Units
and the Sponsor forfeited 191,578 shares of Class B common stock.
Upon the closing of the Initial Public Offering, the Over-Allotment,
and the private placement, $222.3 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial Public Offering,
the Over-Allotment and of the private placement warrants in the private placement were placed in a trust account (the “Trust Account”)
located in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee, and
will be invested only in U.S. “government securities,” within the meaning of Section 2(a)(16) of the Investment Company Act
of 1940, as amended (the “Investment Company Act”), having a maturity of 185 days or less or in money market funds meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations,
as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account
as described below.
As of December 31, 2022, we had approximately
$552,000 in our operating bank account, approximately $2.3 million of interest available to pay for franchise and income taxes (less up
to $100,000 of interest to pay dissolution expenses) and a working capital deficit of approximately $2.1 million (not taking into account
approximately $93,000 of tax liabilities that may be withdrawn from the Trust Account and excluding a working capital loan from our Sponsor.
As of December 31, 2022, approximately $898,000 had been withdrawn from the Trust Account to pay taxes.
As of March 23, 2023, we had approximately $674,537.48
in our operating bank account, $73,477,336.40 in our Trust Account (including approximately $1,372,246.40 of interest available to pay
for franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses)).
Charter Amendments and Redemptions
On March 10, 2023, the Company filed with the
Secretary of State of the State of Delaware three amendments to the Company’s amended and restated certificate of incorporation:
| ● | An
amendment to change the date by which the Company must consummate a business combination from March 18, 2023 the (“Current Outside
Date”) to June 18, 2023, and to allow the Company, without another stockholder vote, by resolution of the Company’s board,
to elect to further extend this date in one-month increments, up to four additional times (the “Extension Amendment”); |
| ● | An amendment to provide for the right of a holder of Class B common stock of the Company to convert into
Class A common stock on a one-for-one basis prior to the closing of a business combination at the election of the holder (the “Founder
Share Amendment”); and |
| ● | An amendment to remove the limitation that the Company shall not consummate a business combination if
it would cause the Company’s net tangible assets to be less than
$5,000,001 and the limitation that the Company shall not redeem public shares that would cause the Company’s net tangible assets
to be less than $5,000,001 (the “Redemption Limitation Amendment”). |
The Company’s stockholders approved the Extension Amendment,
Founder Share Amendment and Redemption Limitation Amendment at a special meeting of stockholders of the Company on March 3, 2023. The
Extension Amendment, Founder Share Amendment and Redemption Limitation Amendment are filed as Exhibit 3.2, 3.3 and 3.4 hereto.
In connection with the Extension Amendment, 15,098,178
shares of the Company’s issued and outstanding Class A common stock were redeemed for cash at a redemption price of approximately
$10.1498 per share, for an aggregate redemption amount of approximately $153.24 million. Immediately following such redemptions, 7,135,509
shares of the Company’s Class A common stock remained outstanding and approximately $72.42 million remained in our Trust Account
before the deposit of funds by us as described in the following paragraph.
Also, in connection with approval of the Extension Amendment and the
extension of the date by which we must consummate a business combination to June 18, 2023, we caused $750,000, or approximately $0.1051
per share of the Company’s Class A common stock outstanding after giving effect to the redemptions disclosed above, to be deposited
in the Trust Account. Such funds were provided by Infinite Acquisitions LLLP pursuant to the Promissory Note with Infinite described below.
Without approval of our public stockholders, we
may, by resolution of the Board, if requested by the Sponsor, and upon 2 business days’ advance notice prior to the Extended Date
or Additional Extended Date, as applicable, extend the Extended Date up to four additional times until October 18, 2023, or a total of
up to seven months after the Current Outside Date, provided that we deposit into the Trust Account, for each such additional month, an
amount determined by multiplying $0.05 by the number of public shares then outstanding, up to a maximum of $250,000, which the Company
shall deposit into the trust account at the beginning of each month (the “Monthly Deposit”), for an aggregate deposit of up
to $1.75 million (if all additional extensions are exercised). For so long as the Merger Agreement has not been terminated in accordance
with its terms and the Business Combination has not been consummated, our Board will extend the Extended Date for the next calendar month.
We have entered into an unsecured promissory note
(the “Promissory Note”) with Infinite Acquisitions LLLP, a Nevada limited liability limited partnership and currently the
holder of the majority of the equity in Falcon’s (“Infinite”), whereby Infinite agreed to lend the Company up to $2
million for the sole purpose of paying the fees and expenses of the Company or the Sponsor incurred or committed to be incurred in furtherance
of the Extension, which amount would be sufficient to fund up to approximately $1.5 million of the Company’s potential additional
deposits into the trust account. The Promissory Note is non-interest bearing and repayable in cash, or, at Pubco’s option, in shares
of Pubco Class A Common Stock at a conversion price of $10.00 per share, at the effective time of the Business Combination and will be
forgiven without payment if the Merger Agreement is terminated. Any additional deposits into the trust account beyond the amount covered
under the Promissory Note are expected to be funded from the Company’s working capital account, which may be funded by working capital
loans from our Sponsor, that would either be repaid upon consummation of a business combination or, at the Sponsor’s discretion,
be converted into warrants of the post business combination entity at a price of $1.50 per warrant.
With respect to the regulation of special purpose
acquisition companies like our Company (“SPACs”), on March 30, 2022, the SEC issued proposed rules (the “SPAC Rule Proposals”)
relating to, among other items, the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940,
as amended (the “Investment Company Act”), including a proposed rule that would provide SPACs a safe harbor from treatment
as an investment company if they satisfy certain conditions that limit a SPAC’s duration, asset composition, business purpose and
activities. There is currently uncertainty concerning the applicability of the Investment Company Act to SPACs. It is possible that a
claim could be made that we have been operating as an unregistered investment company, including under the subjective test of Section
3(a)(1)(A) of the Investment Company Act, based on the current views of the SEC. While the funds in the Trust Account have, since the
Initial Public Offering, been held only in U.S. government securities within the meaning set forth in Section 2(a)(16) of the Investment
Company Act, with a maturity of 185 days or less, or money market funds meeting certain conditions of Rule 2a-7 of the Investment Company
Act, to mitigate the risk of being viewed as operating as an unregistered investment company (including under the subjective test of Section
3(a)(1)(A) of the Investment Company Act), on March 13, 2023, we instructed Continental Stock Transfer & Trust Company, the trustee,
to liquidate the U.S. government securities or money market funds held in the Trust Account and thereafter to hold all funds in the Trust
Account in an interest-bearing bank deposit account until the earlier of consummation of our initial business combination or the Company’s
liquidation. Interest on bank deposit accounts is variable and such accounts currently yield interest of approximately 3.5% per annum.
Following a liquidation of the Trust Account assets, if we are unable to achieve more than minimal interest on the funds held in the Trust
Account, the dollar amount Public Stockholders would otherwise receive upon any redemption or liquidation of the Company may be less than
if the assets in the Trust Account remained in U.S. government securities or money market funds.
Proposed Business Combination
On January 31, 2023, the Company entered into
an Amended and Restated Agreement and Plan of Merger (as the same may be further amended, modified, supplemented or waived from time to
time, the “Merger Agreement”), by and among the Company, Falcon’s Beyond Global, LLC, a Florida limited liability company
(“Falcon’s”), Falcon’s Beyond Global, Inc., a Delaware corporation and wholly owned subsidiary of Falcon’s
which was formerly known as Palm Holdco, Inc. (“Pubco”), and Palm Merger Sub, LLC, a Delaware limited liability company and
a wholly owned subsidiary of Pubco (“Merger Sub”). The Merger Agreement amended and restated the Agreement and Plan of Merger,
dated July 11, 2022, by and among the Company, Falcon’s, Pubco and Merger Sub (as amended by that certain Amendment No. 1 to Agreement
and Plan of Merger, dated September 13, 2022 as previously disclosed in the Current Report on Form 8-K filed by the Company with the Securities
Exchange Commission on September 16, 2022, the “Original Merger Agreement”).
If the transactions contemplated by the
Merger Agreement are completed, the business combination will be effected in two steps: (a) at 8:01 a.m., New York City time, on the date
immediately following the Closing Date (the “SPAC Merger Effective Time”), the Company will merge with and into Pubco (the
“SPAC Merger”), with Pubco surviving as the sole owner of Merger Sub, followed by a contribution by Pubco of all of its cash
(except for cash required to pay certain transaction expenses) to Merger Sub to effectuate the “UP-C” structure; and (b) at
8:02 a.m., New York City time, on the date immediately following the SPAC Merger (the “Acquisition Merger Effective Time”),
Merger Sub will merge with and into Falcon’s (the “Acquisition Merger,” and collectively with the SPAC Merger, the “Business
Combination”), with Falcon’s as the surviving entity of such merger. Following the consummation of the transactions contemplated
by the Merger Agreement (the “Closing”), the direct interests in Falcon’s will be held by Pubco and the holders of the
limited liability company units of Falcon’s (the “Falcon’s Units”) outstanding as of immediately prior to the
Business Combination.
The Merger Agreement provides that, among
other things and upon the terms and subject to the conditions thereof, the following transactions will occur:
(i) On
the date that is three business days after the date on which all conditions to Closing have been satisfied or waived by the applicable
parties (other than those conditions which can be satisfied only at the Closing, but subject to the satisfaction or waiver of such conditions
at Closing) or such other time and place as may be agreed by Falcon’s and the Company (the “Closing Date”), each share
of Class B common stock will convert into one share of Class A common stock (such conversion, the “Class B Exchange”) and
shares of Class A common stock for which redemption rights were exercised will be redeemed.
(ii) At
the SPAC Merger Effective Time, (a) first, each Unit outstanding immediately prior to the SPAC Merger Effective Time will be automatically
separated and the holder thereof will be deemed to hold one share of Class A common stock and one-quarter of one warrant; (b) second,
(1) each current share of Class A common stock (except for each share of Class A common stock converted from the Class B common stock
pursuant to the Class B Exchange) will automatically be cancelled and cease to exist in exchange (the “Conversion”) for the
right to receive (x) 0.5 shares of Pubco’s Class A common stock, par value $0.0001 per share (the “Pubco Class A Common Stock”)
and 0.5 shares of Series A Preferred Stock of Pubco (the “Pubco Series A Preferred Stock”) and (y) 50% of the Additional SPAC
Share Consideration (as defined in the Merger Agreement); (2) each share of Class A common stock converted from the Class B common stock
pursuant to the Class B Exchange will automatically be cancelled and cease to exist in exchange for the right to receive (A) one newly
issued share of Pubco Class A Common Stock and (B) the applicable portion of any Earnout Shares (as defined in the Merger Agreement);
and (3) each warrant of the Company outstanding immediately prior to the SPAC Merger Effective Time will be assumed by Pubco on substantially
the same terms as were in effect immediately prior to the SPAC Merger Effective Time.
(iii) Immediately
prior to the Acquisition Merger Effective Time, following the SPAC Merger, Pubco will contribute to Merger Sub all of the Closing Surviving
Corporation Cash (as defined in the Merger Agreement).
(iv) At
the Acquisition Merger Effective Time, (a) each issued and outstanding Falcon’s Unit (other than the Cancelled Units and Falcon’s
Financing Units (each as defined below)) will be converted into the right to receive (x) a number of shares of Pubco’s non-economic
Class B common stock, par value $0.0001 per share (“Pubco Class B Common Stock”), and a number of limited liability company
interests of Falcon’s (the “New Falcon’s Units”), in each case equal to the Acquisition Merger Exchange Number
(as defined in the Merger Agreement) (the “Per Unit Consideration”) and (y) the applicable portion of any Earnout Shares and
Earnout Units (as defined in the Merger Agreement); (b) each Falcon’s Unit issued in connection with the subscription for and purchase
of Falcon’s Units by Infinite Acquisitions LLLP (the “Falcon’s Financing Units”) will be converted into the right
to receive (x) the Per Unit Consideration and (y) a number of shares of non-economic Pubco Class B Common Stock and a number of New Falcon’s
Units, in each case equal to the Additional Consideration Number (as defined in the Merger Agreement; (c) each Falcon’s Unit held
in treasury of Falcon’s as of immediately prior to the Acquisition Merger Effective Time (collectively, the “Cancelled Units”)
will be cancelled without any conversion and no payment or distribution will be made with respect to such Cancelled Units; (d) the units
of Merger Sub that are issued and outstanding will be converted into and become (x) a number of New Falcon’s Units equal to the
number of shares of Pubco Class A Common Stock outstanding immediately after the SPAC Merger, (y) a number of preferred units of Falcon’s
equal to the number of shares of Pubco Series A Preferred Stock outstanding immediately after the SPAC Merger and (z) a number of warrant
units of Falcon’s equal to the number of warrants of Pubco outstanding immediately after the SPAC Merger, in each case of the foregoing
clauses (x) through (z) after giving effect to the redemption of any shares of common stock of the Company in connection with the exercise
of redemption rights, the Class B Exchange and the Conversion.
Additional information regarding Falcon’s
and the Business Combination is available in the proxy statement/prospectus most recently filed by Pubco with the SEC on February 14,
2023.
The Merger Agreement provides for the following changes from the Original
Merger Agreement:
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● |
Changes to Acquisition Merger Consideration:
The number of shares of Pubco Class B Common Stock and New Company Units to be issued in exchange for current Falcon’s Units (excluding
Falcon’s Financing Units) in the Acquisition Merger was reduced from 88,653,263 to 48,587,077. |
| |
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EBITDA and Revenue Earnouts: In addition to
the 40 million Seller Earnout Shares earned based on the Pubco Common Share Price provided for in the Original Merger Agreement, the
holders of Falcon’s Units immediately before the Closing (other than the holders of Falcon’s Financing Units in their capacity
as holders of Falcon’s Financing Units) will now be entitled to receive a pro rata portion of a total of up to 40 million additional
Seller Earnout Shares based on Pubco’s achievement of specified EBITDA and revenue targets in 2023 and 2024. Up to 2% of the 80
million Seller Earnout Shares will be allocated to each of Sponsor and Jefferies LLC if they are earned. |
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Changes to Sponsor Consideration: |
| |
|
80% of the founder shares held by the Sponsor are now subject to forfeiture
pro rata based on the amount of funds available at the Acquisition Merger Closing that are primarily sourced by the Company and
the Sponsor (including funds in the Trust Account after redemptions) (the “SPAC Capital Received”), measured against a target
amount of $222,336,870; provided the Sponsor will retain a minimum of 1,250,000 founder shares. The Sponsor will continue to forfeit the
remaining 20% of its founder shares, but will now have the opportunity to earn them back (as well as any shares forfeited based on SPAC
Capital Received) based on achievement of the Pubco Common Share Price, Pubco revenue and Pubco EBITDA earnout targets. |
| | The Sponsor further agreed to forfeit 50% of its private placement
warrants if SPAC Capital Received is less than $50 million and to amend the Warrant Agreement to provide that its private placement warrants
are redeemable (subject to the concurrent redemption of other warrants) at a redemption price of $0.01 per warrant if the Reference Value
(as defined below) is at least $18 per share (the “Warrant Agreement Amendment”). “Reference Value” means the
last reported sales price of the shares of Class A Common Stock for any twenty (20) trading days within the thirty (30) trading-day period
ending on the third trading day prior to the date on which notice of the redemption is given. |
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Extension: The Company agreed to take certain actions to extend the date by which it has to complete a Business Combination to October 18, 2023 (the “Extension”). Infinite agreed to fund up to $2,000,000 of expenses related to the Extension pursuant to a promissory note, described in more detail above. |
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Termination: The Termination Date was extended from April 11, 2023 to September 30, 2023. the Company’s termination right if Falcon’s fails to deliver its audited financial statements by a specified date was eliminated. Termination rights in favor of the Company were added in the case where Infinite defaults under the Promissory Note or if Falcon’s enters into certain specified interim financing arrangements (the “Interim Financing Termination”). Mutual termination rights were added in the case where, following a cure period, the Company is not listed on an approved exchange or is in default of the listing requirements of the exchange it is listed on (the “Delisting Termination”) or if the closing condition related to the listing of Pubco shares on an approved exchange is not satisfied following the satisfaction of all other closing conditions (the “Pubco Listing Termination”). |
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Termination Fee: The Company will be entitled to a termination fee of $12,500,000 (minus 50% of any amounts funded by Infinite under the Promissory Note) at the time of termination if the A&R Merger Agreement is terminated for any reason specified in the Merger Agreement other than: (i) mutual agreement of Falcon’s and the Company; (ii) the Company’s breach of the Merger Agreement in a manner that causes the failure of a condition to Closing under the Merger Agreement (when Falcon’s is not also in breach); (iii) the consummation of either Merger is permanently enjoined or prohibited by the terms of a final, non-appealable governmental order or other law if the final, non-appealable governmental order or other law is generally applicable to all special purpose acquisition companies or primarily caused by any action or inaction of the Company; (iv) the Company’s stockholders fail to approve the Business Combination at the special meeting of stockholders called for such purpose; (v) if the Company’s board of directors changes its recommendation to stockholders or fails to recommend the Merger in the proxy statement; (vi) pursuant to the Delisting Termination; or (vii) failure to close by the Termination Date or two days after the Special Meeting (when the Falcon’s is not in breach). In addition, no termination fee will be payable at any time Falcon’s could terminate the Merger Agreement pursuant to the Delisting Termination or because of the Company’s breach of the Merger Agreement in a manner that causes the failure of a condition to Closing under the Merger Agreement. The termination fee will be reduced by 50% and payable at any time within 12 months of termination instead of at the time of termination if the Merger Agreement is terminated pursuant to the Interim Financing Termination or the Pubco Listing Termination, or is terminated at a time when the Company or Falcon’s could terminate the Merger Agreement pursuant to the Pubco Listing Termination. |
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Alternative Financing: The Company may enter into one or more agreements with any investor to effect certain Pre-Approved Financing Arrangements (as defined in the Merger Agreement) without any consent or approval required from Falcon’s. |
The Merger Agreement also makes certain technical and other changes
to the Original Merger Agreement. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in
its entirety by the terms and conditions of the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated
herein by reference. The Merger Agreement contains representations, warranties, and covenants that the parties to the Merger Agreement
made to each other as of the date of the Merger Agreement or other specific dates. The assertions embodied in those representations, warranties,
and covenants were made for purposes of the contract among the parties and are subject to important qualifications and limitations agreed
to by the parties in connection with negotiating the Merger Agreement. The Merger Agreement has been attached to provide investors with
information regarding its terms and is not intended to provide any other factual information about the Company, Falcon’s, Pubco
or any other party to the Merger Agreement. In particular, the representations, warranties, covenants and agreements contained in the
Merger Agreement, which were made only for purposes of the Merger Agreement and as of specific dates, were solely for the benefit of the
parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties (including being qualified by confidential
disclosures made for the purposes of allocating contractual risk between the parties to the Merger Agreement instead of establishing these
matters as facts) and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable
to investors and reports and documents filed with the SEC. Investors should not rely on the representations, warranties, covenants, and
agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of any party to the Merger Agreement.
In addition, the representations, warranties, covenants, and agreements and other terms of the Merger Agreement may be subject to subsequent
waiver or modification. Moreover, information concerning the subject matter of the representations and warranties and other terms may
change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s public
disclosures.
On January 31, 2023, in connection with the Merger Agreement, our Sponsor,
the Company, Falcon’s and Pubco entered into an Amended and Restated Sponsor Support Agreement whereby, among other things, our
Sponsor agreed (i) to exchange its shares of Class B Common Stock for shares of Class A Common Stock in accordance with the Company’s
amended and restated certificate of incorporation such that, prior to the SPAC Merger Effective Time, there shall cease to be outstanding
any shares of Class B Common Stock, (ii) to forfeit a portion of its founder shares and private placement warrants to the extent and as
described above and (iii) to support the Warrant Agreement Amendment. The Sponsor further agreed to vote (or cause to be voted), or execute
and deliver a written consent (or cause a written consent to be executed and delivered) covering, all of its Common Stock (i) in favor
of the Mergers and each other proposal related to the Mergers and the other transactions contemplated thereby, (ii) against any merger
agreement or merger (other than the Merger Agreement and the Mergers), consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the Company (iii) against any change in the business, management or
the board of directors of the Company (other than in connection with the Mergers and the other transactions contemplated by the Merger
Agreement), and (iv) against any proposal, action or agreement that would (w) impede, frustrate, prevent or nullify the Merger Agreement
or any Merger, (x) result in a breach in any respect of any covenant, representation, warranty or any other obligation or agreement of
the Company or the Merger Sub under the Merger Agreement, (y) result in any of the conditions set forth in the Merger Agreement not being
fulfilled or (z) change in any manner the dividend policy or capitalization of, including the voting rights of any class of capital stock
of, the Company.
In addition, the Company and
Infinite entered into a promissory note (the “Promissory Note”) pursuant to which Infinite agreed to advance up to $2,000,000
to the Company, with any advances under the Promissory Note to be used by the Company to pay certain expenses of the Extension. The Promissory
Note is non-interest bearing and repayable, in cash, or, at Pubco’s option, in shares of Pubco Class A Common Stock at a conversion
price of $10.00 per share, at the effective time of the Acquisition Merger and will be forgiven without payment if the Merger Agreement
is terminated.
See our Current Report on Form 8-K filed with
the SEC on February 3, 2023 including the Merger Agreement and related amended supporting agreements. In addition, on February 14, 2023,
Pubco, filed with the SEC a registration statement on Form S-4 (File No. 333-269778) (the “Registration Statement”) that includes
a proxy statement/prospectus relating to the Business Combination as more fully described in the Registration Statement.
Initial Business Combination
The rules of the NYSE require that we must consummate
an initial business combination with one or more operating businesses or assets that together have an aggregate fair market value equal
to at least 80% of the net assets held in the trust account (excluding the amount of any deferred underwriting discount held in trust)
at the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make
the determination as to the fair market value of our initial business combination. Based on the valuation analysis of our management and
board of directors, we have determined that the fair market value of Falcon’s was substantially in excess of 80% of the funds in
the trust account and that the 80% test was therefore satisfied.
If we do not consummate the proposed Business
Combination with Falcon’s and find another business combination targer, if our board of directors is not able to independently determine
the fair market value of our initial business combination (including with the assistance of financial advisors), we will obtain an opinion
from an independent investment banking firm which is a member of FINRA or an independent valuation or appraisal firm with respect to the
satisfaction of such criteria. While we consider it likely that our board of directors will 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 the target’s assets or prospects,
including if such company is at an early stage of development, operations or growth, or if the anticipated transaction involves a complex
financial analysis or other specialized skills and the board of directors determines that outside expertise would be helpful or necessary
in conducting such analysis. As any such opinion, if obtained, would only state that the fair market value meets the 80% of net assets
threshold, unless such opinion includes material information regarding the valuation of the target or the consideration to be provided,
it is not anticipated that copies of such opinion would be distributed to our stockholders. However, if required by Schedule 14A of the
Exchange Act, any proxy solicitation materials or tender offer documents that we will file with the SEC in connection with our initial
business combination will include such opinion. If our securities are not listed on NYSE, we would not be required to satisfy the 80%
requirement. However, we intend to satisfy the 80% requirement even if our securities are not listed on NYSE at the time of our initial
business combination.
Our amended and restated certificate of incorporation requires the
affirmative vote of a majority of our board of directors, which must include a majority of our independent directors, to approve our initial
business combination. The proposed Business Combination with Falcon’s has received the affirmative vote of a majority of our board
of directors, including a majority of our independent directors.
We have previously filed a Registration
Statement on Form 8-A with the SEC to voluntarily register certain of 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.
Status as a Public Company
We believe our structure will make us
an attractive business combination partner to target businesses. As an existing public company, we offer a target business an alternative
to the traditional initial public offering through a merger or other business combination with us. 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 Class A common
stock (or shares of a new holding company) or for a combination of our Class A common stock and cash, allowing us to tailor the consideration
to the specific needs of the sellers. 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 and market and other
uncertainties 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 a 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, 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.
Corporate Information
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including,
but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act
of 2002 (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 sfecurities 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 common stock that is held by non-affiliates exceeds $700 million as
of the end of that year’s second fiscal quarter; and (2) the date on which we have issued more than $1.00 billion in non-convertible
debt during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated
with it in the JOBS Act.
Additionally, we are a “smaller
reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain
reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain
a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates
exceeds $250 million as of the end of that fiscal year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million
during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of
that fiscal year’s second fiscal quarter. To the extent we take advantage of such reduced disclosure obligations, it may also make
comparison of our financial statements with other public companies difficult or impossible.
Financial Position
As of March 10, 2023, we had funds available for a business combination
in the amount of approximately $64.6 million (assuming no further redemptions), after payment of $7,775,000 of deferred underwriting
fees in connection with the proposed business combination with Falcon’s (which deferred underwriting fees would be equal to $7,781,790
in connection with any other 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 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.
Effecting Our Initial Business Combination
General
We intend to effectuate our initial business
combination using cash from the proceeds of the 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 (including pursuant to forward purchase agreements
or backstop agreements), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target,
or a combination of the foregoing. We may seek to complete our initial business combination with a company or business that may be financially
unstable or in its early stages of development or growth, which would subject us to the numerous risks inherent in such companies and
businesses.
If our initial business combination is
paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance of the
cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations of the
post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business combination,
to fund the purchase of other companies or for working capital.
We currently have a pending business combination
with Falcon’s. If our business combination with Falcon’s is not completed, there will be no basis for investors to evaluate
the possible merits or risks of another target business with which we may ultimately complete our initial business combination. 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 affect a target business.
We may need to obtain additional financing
to complete our initial business combination, either because the transaction requires more cash than is available from the proceeds held
in our trust account or because we become obligated to redeem a significant number of our public shares upon completion of the business
combination, in which case we may issue additional securities or incur debt in connection with such business combination. There are no
prohibitions on our ability to issue securities or incur debt in connection with our initial business combination. We are not currently
a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities,
the incurrence of debt or otherwise. An affiliate of our sponsor may receive payment for services provided in connection with any such
additional financing, the terms of which have not been determined nor have any written agreements been executed with respect thereto.
Sources of Target Businesses
We anticipate that target business candidates
will be brought to our attention from various unaffiliated sources, including investment bankers and private investment funds. Target
businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us through calls or mailings.
These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many
of these sources will have read the prospectus relating to the initial public offering and know what types of businesses we are targeting.
Our officers and directors, as well as their affiliates, may also bring to our attention target business candidates of which they become
aware 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 track record and business relationships of our officers and directors. While we do not presently
anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis,
we may engage these firms or other individuals in the future, in which event we may pay a finder’s fee, consulting fee or other
compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We will engage a finder only
to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available to
us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest
to pursue. Payment of a finder’s fee is customarily tied to completion of a transaction, in which case any such fee will be paid
out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers or directors, or any
entity with which they are affiliated, be paid any finder’s fee, consulting fee or other compensation by the company prior to, or
for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction
that it is). In addition, we pay our sponsor $15,000 per month for office space, utilities, secretarial and administrative support services
provided to members of our management team. Any such payments prior to our initial business combination will be made from funds held outside
the trust account. Other than the foregoing, there will be no finder’s fees, reimbursement, consulting fee, monies in respect of
any payment of a loan or other compensation paid by us to our sponsor, officers or directors, or any affiliate of our sponsor or officers
prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless
of the type of transaction that it is).
We are not prohibited from pursuing an
initial business combination with a business combination target that is affiliated with our sponsor, officers or directors, or any of
their respective affiliates, or from completing the business combination through a joint venture or other form of shared ownership with
our sponsor, officers or directors, or any of their respective affiliates. In the event we seek to complete our initial business combination
with a business combination target that is affiliated with our sponsor, officers or directors, or any of their respective affiliates,
we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm which is a member of FINRA
or an independent accounting firm, that such an initial business combination is fair to our company from a financial point of view. We
are not required to obtain such an opinion in any other context.
Evaluation of a Target Business and Structuring of Our
Initial Business Combination
In evaluating a prospective target business,
we expect to conduct a due diligence review which may encompass, among other things, meetings with incumbent management and employees,
document reviews, interviews of customers and suppliers, inspection of facilities, as applicable, as well as a review of financial, operational,
legal and other information which will be made available to us. If we determine to move forward with a particular target, we will proceed
to structure and negotiate the terms of the business combination transaction.
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, and negotiation
with, 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. We will not pay any consulting fees to members of
our management team, or any of their respective affiliates, for services rendered to or in connection with our initial business combination.
Lack of Business Diversification
For an indefinite period of time after
the completion of our initial business combination, the prospects for our success may depend entirely on the future performance of a single
business. Unlike other entities that have the resources to complete business combinations with multiple entities in one or several industries,
it is probable that we will not have the resources to diversify our operations and mitigate the risks of being in a single line of business.
By completing our 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 intend to closely scrutinize
the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that
business, our assessment of the target business’s management may not prove to be correct. In addition, the future management may
not have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of members of our
management team, if any, in the target business cannot presently be stated with any certainty. 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 a business combination, we
may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will
have the ability to recruit additional managers, or that 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
If the proposed Business Combination with Falcon’s is not consummated,
we may conduct redemptions without a stockholder vote pursuant to the tender offer rules of the SEC subject to the provisions of our amended
and restated certificate of incorporation. However, we will seek stockholder approval if it is required by applicable law or stock exchange
listing requirements, or we may decide to seek stockholder approval for business or other 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 NYSE’s listing rules, stockholder
approval would typically be required for our initial business combination if, for example:
| ● | we issue (other than in a public offering for cash) shares
of common stock that will either (a) be equal to or in excess of 20% of the number of shares of common stock then outstanding or
(b) have voting power equal to or in excess of 20% of the voting power then outstanding; |
| ● | any of our directors, officers or substantial security holders
(as defined by the NYSE rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired
and if the number of shares of common stock to be issued, or if the number of shares of common stock into which the securities may be
convertible or exercisable, exceeds either (a) 1% of the number of shares of common stock or 1% of the voting power outstanding before
the issuance in the case of any of our directors and officers or (b) 5% of the number of shares of common stock or 5% of the voting power
outstanding before the issuance in the case of any substantial security holders; or |
| ● | the issuance or potential issuance of common stock will result
in our undergoing a change of control. |
Permitted Purchases of Our Securities
If, as we expect to do for our proposed Business
Combination with Falcon’s, 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 public shares or public warrants or a combination thereof 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 shareholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance
with applicable law and NYSE rules. Additionally, at any time at or prior to our initial business combination, subject to applicable securities
laws (including with respect to material non-public information), our initial stockholders, directors, officers, advisors or their affiliates
may enter into transactions with investors and others to provide them with incentives to acquire public shares, vote their public shares
in favor of our initial business combination or not redeem their public shares. However, they have no current commitments, plans or intentions
to engage in such transactions and have not formulated any terms or conditions for any such transactions. None of the funds held in the
trust account will be used to purchase shares or public warrants in such transactions. If they engage in such transactions, they will
be restricted from making any such purchases when they are in possession of any material non-public information or if such purchases are
prohibited by Regulation M under the Exchange Act.
In the event that our sponsor, initial
stockholders, directors, officers, advisors or their affiliates purchase public shares in privately negotiated transactions from public
stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business combination,
such selling stockholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial
business combination. 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 be required
to comply with such rules.
The purpose of any such transactions
could be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval
of the business combination, (ii) 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 or (iii) reduce the number of public warrants outstanding or to vote such warrants on any matters submitted to the warrant
holders for approval in connection with our initial business combination. Any such transactions may result in the completion of our initial
business combination that may not otherwise have been possible.
Our sponsor, initial stockholders, officers,
directors and/or their affiliates anticipate that they may identify the stockholders with whom our initial stockholders, officers, directors
or their affiliates may pursue privately negotiated transactions by either the stockholders contacting us directly or by our receipt of
redemption requests submitted by stockholders (in the case of Class A common stock) 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 transaction, they would identify and contact only potential selling or redeeming 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 but only if such shares have not already been
voted at the stockholder meeting related to our initial business combination. Our sponsor, officers, directors, advisors or any of their
affiliates will select which stockholders to purchase shares from based on a negotiated price and number of shares and any other factors
that they may deem relevant, and will be restricted from purchasing shares if such purchases comply with Regulation M under the Exchange
Act and the other U.S. federal securities laws. Our sponsor, officers, directors and/or their affiliates will be restricted from making
purchases of shares if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act. We expect 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, calculated 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 (net
of permitted withdrawals), 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 $10.00 per public share. The redemption rights will include the requirement that a
beneficial holder must identify itself in order to validly redeem its shares. The per share amount we will distribute to investors who
properly redeem their shares will not be reduced by the deferred underwriting commissions we will pay to the underwriters. Our initial
stockholders, 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 public shares they may hold in connection with the completion of our initial
business combination.
Limitations on Redemptions
In the event that the proposed Business Combination
with Falcon’s is not consummated, our proposed initial business combination may impose a minimum cash requirement for: (i) cash
consideration to be paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the
retention of cash to satisfy other conditions. 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 in connection with such initial business combination, and all shares of Class A common
stock submitted for redemption will be returned to the holders thereof. We may, however, raise funds through the issuance of equity or
equity-linked securities or through loans, advances or other indebtedness in connection with our initial business combination, including
pursuant to forward purchase agreements or backstop arrangements, in order to, among other reasons, satisfy such minimum cash requirement.
Manner of Conducting Redemptions
We will provide our public stockholders
with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination either
(i) in connection with a stockholder meeting called to approve the initial business combination or (ii) without a stockholder vote by
means of a tender offer. Except for as required by applicable law or stock exchange listing requirements, the decision as to whether we
will seek stockholder approval of a proposed initial business combination or will allow stockholders to sell their shares to us in a tender
offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction and
whether the terms of the transaction would otherwise require us to seek stockholder approval. 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 typically
require stockholder approval. So long as we obtain and maintain a listing for our securities on the NYSE, we will be required to comply
with NYSE’s shareholder approval rules.
The requirement that we provide our public
stockholders with the opportunity to redeem their public shares by one of the two methods listed above will be contained in provisions
of our amended and restated certificate of incorporation and will apply whether or not we maintain our registration under the Exchange
Act or our listing on the NYSE. Such provisions may be amended if approved by holders of 65% of our common stock entitled to vote thereon.
If we provide our public stockholders
with the opportunity to redeem their public shares in connection with a stockholder meeting, we will:
| ● | conduct the redemptions in conjunction with a proxy solicitation
pursuant to Regulation 14A under the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer
rules, and |
| ● | file proxy materials with the SEC. |
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 our outstanding capital stock representing a majority of the voting power of all outstanding shares of our capital stock entitled
to vote at such meeting. Our initial stockholders will count towards this quorum and, pursuant to the letter agreement, our sponsor,
executive officers and directors have agreed to vote any founder shares they hold and any public shares purchased after the 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, it is possible our initial business combination could be approved
without any holders of public shares voting in favor of the 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 or
whether they were a stockholder on the record date for the stockholder meeting held to approve the proposed transaction.
Because of the structure of the proposed Business
Combination with Falcon's, we will be able to complete such Business Combination with Falcon's only if a majority of the outstanding shares
of common stock 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 our outstanding capital stock representing a majority of the voting power of all outstanding shares
of our capital stock entitled to vote at such meeting. Our initial stockholders will count towards this quorum and, pursuant to the letter
agreement, our sponsor, executive officers and directors have agreed to vote any founder shares they hold and any public shares purchased
after the Initial Public Offering (including in open market and privately-negotiated transactions) in favor of our initial business combination.
As a result, in addition to our initial stockholders’ founder shares, we would need only 788,544, or 11.1%, of the 7,135,509 outstanding
public shares to be voted in favor of the Business Combination with Falcon's in order to have such Business Combination with Falcon's
approved.
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:
| ● | conduct the redemptions pursuant to Rule 13e-4 and Regulation
14E under 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 under the Exchange Act, which regulates the solicitation of proxies. |
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.
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, and instead may search for an alternate business combination.
Upon the public announcement of our initial
business combination, if we elect to conduct redemptions pursuant to the tender offer rules, 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, in order to comply
with Rule 14e-5 under the Exchange Act.
We intend to require our public stockholders
seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to, at
the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to our transfer agent
electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the date set forth in
the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to two business days
prior to the date on which the vote on the proposal to approve the initial business combination is to be held. In addition, if we conduct
redemptions in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to
also submit a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial
owner of such shares is included. The proxy materials or tender offer documents, as applicable, that we will furnish to holders of our
public shares in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy
such delivery requirements. We believe that this will allow our transfer agent to efficiently process any redemptions without the need
for further communication or action from the redeeming public stockholders, which could delay redemptions and result in additional administrative
cost. If the proposed initial business combination is not approved and we continue to search for a target business, we will promptly return
any certificates or shares delivered by public stockholders who elected to redeem their shares.
Our Merger Agreement with Falcon’s does
not have a minimum cash requirement. In the event that the proposed Business Combination with Falcon’s is not consummated, our proposed
initial business combination may impose a minimum cash requirement for: (i) cash consideration to be paid to the target or its owners,
(ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to satisfy other conditions.
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 in connection
with such initial business combination, and all shares of Class A common stock submitted for redemption will be returned to the holders
thereof, and instead may search for an alternate business combination. However, we may raise funds through the issuance of equity or equity-linked
securities or through loans, advances or other indebtedness in connection with our initial business combination, including pursuant to
forward purchase agreements or backstop arrangements we may enter into, in order to, among other reasons, satisfy such minimum cash requirement.
Limitation on Redemption Upon Completion of Our Initial
Business Combination If We Seek Stockholder Approval
If, as we expect to do for our proposed Business
Combination with Falcon’s, we seek stockholder approval of our initial business combination and we do not conduct redemptions in
connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is
acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming
its shares with respect to Excess Shares, without our prior consent. We believe this restriction will discourage stockholders from accumulating
large blocks of shares, and subsequent attempts by such holders to use their ability to exercise their redemption rights against a proposed
business combination as a means to force us or our management to purchase their shares at a significant premium to the then-current market
price or on other undesirable terms. Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold
in the Initial Public Offering could threaten to exercise its redemption rights if such holder’s shares are not purchased by us,
our sponsor 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 the 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 a business combination with a target that requires as a closing condition that we have a minimum net worth
or a certain amount of cash.
However, we would not be restricting
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Delivering Stock Certificates in Connection with the
Exercise of Redemption Rights
As described above, we intend to require
our public stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street
name,” to, at the holder’s option, either deliver their stock certificates to our transfer agent or deliver their shares to
our transfer agent electronically using The Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) system, prior to the
date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy materials, this date may be up to
two business days prior to the vote on the proposal to approve the initial business combination. In addition, if we conduct redemptions
in connection with a stockholder vote, we intend to require a public stockholder seeking redemption of its public shares to also submit
a written request for redemption to our transfer agent two business days prior to the vote in which the name of the beneficial owner of
such shares is included. The proxy materials or tender offer documents, as applicable, that we will furnish to holders of our public shares
in connection with our initial business combination will indicate whether we are requiring public stockholders to satisfy such delivery
requirements, which will include the requirement that a beneficial holder must identify itself in order to validly redeem its shares.
Accordingly, a public stockholder would have up to two business days prior to the vote on the initial business combination if we distribute
proxy materials, or from the time we send out our tender offer materials until the close of the tender offer period, as applicable, to
submit or tender its shares if it wishes to seek to exercise its redemption rights. In the event that a stockholder fails to comply with
these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed. 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 process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will
typically charge the broker submitting or tendering shares a fee of approximately $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 submit or 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.
Any request to redeem such shares, once
made, may be withdrawn at any time up to two business days prior to the date of the stockholder meeting set forth in the proxy materials
or tender offer documents, as applicable (unless we elect to allow additional withdrawal rights). 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 a different initial business combination with a different target until June 18, 2023.
The Company may, without a stockholder vote, by resolution of the Company’s board, elect to further extend this date in one-month
increments, up to four additional times.
Redemption of Public Shares and Liquidation if No Initial
Business Combination
Our amended and restated certificate of incorporation
provides that we have until June 18, 2023 to complete our initial business combination (which date the Company may, without a stockholder
vote, by resolution of the Company’s board, elect to further extend in one-month increments, up to four additional times). If we
are unable to complete our initial business combination by June 18, 2023 or during any further extension period, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including interest earned on the funds held in the trust account (net of permitted withdrawals and 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), and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
liquidate and dissolve, subject in 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 June 18, 2023 or during any further extension period.
Our initial stockholders, 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 they hold if we fail to complete our initial business combination by June 18, 2023
or any extended period of time that we may have to consummate an initial business combination as a result of the exercise of any of the
four one-month extension options or another amendment to our amended and restated certificate of incorporation. However, if our initial
stockholders, sponsor or management team acquire public shares, they will be entitled to liquidating distributions from the trust account
with respect to such public shares if we fail to complete our initial business combination by June 18, 2023 or during any further extension
period.
Our initial stockholders, sponsor, officers and
directors have agreed, pursuant to a letter agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation 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 June 18, 2023 (or during any further extension period) or with respect to any other material provisions relating
to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders with the opportunity
to redeem their public shares 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 (net of permitted withdrawals),
divided by the number of then outstanding public shares.
We expect that all costs and expenses
associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out
of the approximately $850,000 of proceeds held outside the trust account, although we cannot assure you that there will be sufficient
funds for such purpose. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan
of dissolution, to the extent that there is any interest accrued in the trust account not required to pay taxes, we may request the trustee
to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of
the 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 (not taking into account any additional deposits) and any tax
payments or expenses for the dissolution of the trust, the per-share redemption amount received by stockholders upon our dissolution would
be approximately $10.00. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which
would have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share redemption amount
received by stockholders will not be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must
provide for all claims against us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient
assets. These claims must be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we
intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’
claims.
Although we will seek to have all vendors,
service providers (other than our independent registered public accounting firm), prospective target businesses and other entities with
which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, 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 consider
whether competitive alternatives are reasonably available to us and will only enter into an agreement with such third party if management
believes that such third party’s engagement would be in the best interests of the company under the circumstances. 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. The underwriters of
the Initial Public Offering and our independent registered public accounting firm 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. In order to protect the amounts held in the trust account, 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 other 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 public 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 the 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 we 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. As a result, if any such claims were successfully made against the trust account, the funds available for our
initial business combination and redemptions could be reduced to less than $10.00 per public share. In such event, we may not be able
to complete our initial business combination, and you would receive such lesser amount per share in connection with any redemption of
your public shares. None of our officers 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 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, in each case less taxes payable, 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 in any particular instance. Accordingly, we cannot assure you
that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.00 per share.
We will seek to reduce the possibility
that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers
(other than our independent registered public accounting firm), prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. Our sponsor
will also not be liable as to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities,
including liabilities under the Securities Act. We will have access to up to approximately $850,000 from the proceeds of the 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 June 18, 2023 (or during any further extension period pursuant to our charter)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 the funds
in 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 June 18, 2023 (or during any further extension period pursuant to our charter), 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 June 18, 2023
or during any further extension period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account (net
of permitted withdrawals and 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) 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 after June 18, 2023 (or any further extension period) 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 ten 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 public accounting firm), prospective target businesses or other
entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account. As a result of this obligation, the claims that could be made against us are significantly limited and the
likelihood that any claim that would result in any liability extending to the trust account is remote. Further, our sponsor may be liable
only to the extent necessary to ensure that the amounts in the trust account are not reduced below (i) $10.00 per public share or (ii) such
lesser amount per public share held in the trust account as of the date of the liquidation of the trust account, due to reductions in
value of the trust assets, in each case net of the amount of interest withdrawn to pay taxes. This liability will not apply with respect
to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account except as to any claims
under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities
Act. 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, and thereby exposing itself and our company to claims
of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure
you that claims will not be brought against us for these reasons.
Our public stockholders will be entitled to receive
funds from the trust account only (i) in the event of the redemption of our public shares if we do not complete our initial business
combination by June 18, 2023 or during any further extension period, (ii) in connection with a stockholder vote to amend our amended
and restated certificate of incorporation 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 June 18, 2023 (as may be extended to October 18, 2023 pursuant to our amended and
restated certificate of incorporation) or with respect to any other material provisions relating to stockholders’ rights or pre-initial
business combination activity or (iii) if they redeem their respective shares for cash upon the completion of our initial business
combination, and then only in connection with those public shares that such stockholder has properly elected to redeem. In no other circumstances
will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval in connection
with our initial business combination, a stockholder’s voting in connection with the business combination alone will not result
in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such stockholder must have
also exercised its redemption rights described above. 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 may encounter competition from other entities having a business objective similar
to ours, including other special purpose acquisition companies, private equity groups and leveraged buyout funds, public companies and
operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience identifying
and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical,
human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation to pay
cash in connection with public stockholders who exercise their redemption rights may reduce the resources available to us for our initial
business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by
certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business
combination.
Employees
We currently have two officers: Sandy Beall and
Garrett Schreiber. 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 will devote in any time period will vary based on whether a target business has been selected for our initial business combination
and the stage of the 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.
Item
1A. Risk Factors.
An investment in our securities involves a
high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in
this Form 10-K, the prospectus associated with our Initial Public Offering and the registration statement of which such prospectus forms
a part, before making a decision to invest in our securities. If any of the following events occur, our business, financial condition
and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you
could lose all or part of your investment. For risk factors related to the Business Combination, see the proxy statement/prospectus filed
by Pubco with the SEC on February 14, 2023.
Summary of Risk Factors
| |
● |
Our stockholders may not be afforded an opportunity to vote on our proposed initial business combination (in the event that the proposed Business Combination with Falcon’s is not consummated), and even if we hold a vote, holders of our founder shares will participate in such vote, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination. |
| ● | Your only opportunity to affect the investment decision regarding
a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash. |
| ● | If we seek stockholder approval of our initial business combination,
our initial stockholders and management team have agreed to vote in favor of such initial business combination, regardless of how our
public stockholders vote. |
| |
● |
In the event that the proposed Business Combination with Falcon’s is not consummated, the ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination with another target. |
| ● | The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize
our capital structure. |
| ● | The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful
and that you would have to wait for liquidation in order to redeem your shares. |
| |
● |
In the event that the proposed Business Combination with Falcon’s is not consummated, the requirement that we complete our initial business combination by June 18, 2023 (as may be extended to October 18, 2023 pursuant to our amended and restated certificate of incorporation) may give potential target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders. |
| ● | Our search for a business combination, and any target business
with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus (COVID-19) outbreak
and the status of debt and equity markets. |
| |
● |
We may not be able to complete our initial business combination by June 18, 2023 (as may be extended to October 18, 2023 pursuant to our amended and restated certificate of incorporation), in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate. |
| ● | If we seek stockholder approval of our initial business combination,
our sponsor, initial stockholders, directors, executive officers, advisors and their affiliates may elect to purchase shares or public
warrants from public stockholders, which may influence a vote on a proposed business combination and reduce the public “float”
of our Class A common stock. |
| ● | If a stockholder fails to receive notice of our offer to
redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its
shares, such shares may not be redeemed. |
| ● | The securities in which we invest the funds held in the trust
account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption
amount received by public shareholders may be less than $10.00 per share. |
| ● | Unanticipated changes in our effective tax rate or challenges
by tax authorities could harm our future results. |
| ● | You will not be entitled to protections normally afforded
to investors of many other blank check companies. |
| ● | If
we seek stockholder approval of our initial business combination and we do not conduct redemptions
pursuant to the tender offer rules, and if you or a “group” of stockholders are
deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to
redeem all such shares in excess of 15% of our Class A common stock. |
| ● | Because
of our limited resources and the significant competition for business combination opportunities,
it may be more difficult for us to complete our initial business combination. If we are unable
to complete our initial business combination, our public stockholders may receive only their
pro rata portion of the funds in the trust account that are available for distribution to
public stockholders, and our warrants will expire worthless. |
| |
● |
If the net proceeds of the initial public offering not being held in
the trust account are insufficient to allow us to operate until at least October 18, 2023, it could limit the amount available to fund
our search for a target business or businesses and complete our initial business combination, and we will depend on loans from our sponsor
or management team to fund our search and to complete our initial business combination. |
| ● | If
third parties bring claims against us, the proceeds held in the trust account could be reduced
and the per-share redemption amount received by stockholders may be less than $10.00 per
share. |
| ● | Our
directors may decide not to enforce the indemnification obligations of our sponsor, resulting
in a reduction in the amount of funds in the trust account available for distribution to
our public stockholders. |
| ● | If,
before distributing the proceeds in the trust account to our public stockholders, we file
a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, the claims of creditors in such proceeding may have priority over the claims of
our stockholders and the per-share amount that would otherwise be received by our stockholders
in connection with our liquidation may be reduced. |
| ● | If,
after we distribute the proceeds in the trust account to our public stockholders, we file
a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board
of directors may be viewed as having breached their fiduciary duties to our creditors, thereby
exposing the members of our board of directors and us to claims of punitive damages. |
| ● | If
we are deemed to be an investment company under the Investment Company Act, we may be required
to institute burdensome compliance requirements and our activities may be restricted, which
may make it difficult for us to complete our initial business combination. |
| ● | Changes
in laws or regulations, or a failure to comply with any laws and regulations, may adversely
affect our business, including our ability to negotiate and complete our initial business
combination, and results of operations. |
| ● | Our
stockholders may be held liable for claims by third parties against us to the extent of distributions
received by them upon redemption of their shares. |
| ● | We
may not hold an annual meeting of stockholders until after the consummation of our initial
business combination, which could delay the opportunity for our stockholders to elect directors. |
| ● | Because
we are neither limited to evaluating a target business in a particular industry sector nor
have we selected any specific target businesses with which to pursue our initial business
combination, you will be unable to ascertain the merits or risks of any particular target
business’s operations. |
| |
● |
NYSE may delist our securities from its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions. |
| ● | You
will not have any rights or interests in funds from the trust account, except under certain
limited circumstances. Therefore, to liquidate your investment, you may be forced to sell
your public shares or warrants, potentially at a loss. |
| ● | Holders
of our Class A common stock will not be entitled to vote on any appointment of directors
prior to our initial business combination. |
| ● | We
are not registering the shares of our Class A common stock issuable upon exercise of the
warrants under the Securities Act or any state securities laws at this time, and such registration
may not be in place when an investor desires to exercise warrants, thus precluding such investor
from being able to exercise its warrants except on a cashless basis and potentially causing
such warrants to expire worthless. |
| ● | We are a blank check company with no operating history and
no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. |
| ● | Subsequent to our completion of our initial business combination,
we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative
effect on our financial condition, results of operations and the price of our securities, which could cause you to lose some or all of
your investment. |
| ● | Past performance by our management team and their affiliates
may not be indicative of future performance of an investment in us. |
| ● | We may seek business combination opportunities in industries
or sectors that may be outside of our management’s areas of expertise. |
| ● | We may not have sufficient funds to satisfy indemnification
claims of our directors and officers. |
| ● | You may only be able to exercise your public warrants on
a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of Class A common stock from
such exercise than if you were to exercise such warrants for cash. |
| ● | The grant of registration rights to our initial stockholders
and holders of our private placement warrants may make it more difficult to complete our initial business combination, and the future
exercise of such rights may adversely affect the market price of our shares of Class A common stock. |
Risks Relating to our Search for, and Consummation of or Inability
to Consummate, a Business Combination
Our stockholders may not be afforded an opportunity
to vote on our proposed initial business combination (in the event that the proposed Business Combination with Falcon’s is not consummated),
which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination.
We may choose not to hold a stockholder vote to approve our initial
business combination if the business combination would not require stockholder approval under applicable law or stock exchange listing
requirements. Except as required by applicable law or stock exchange listing requirements, the decision as to whether we will seek stockholder
approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us,
solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the
transaction would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial business combination even
if holders of a majority of our common stock do not approve of the business combination we complete.
Your only opportunity to affect the investment decision regarding
a potential business combination may be limited to the exercise of your right to redeem your shares from us for cash.
If we decide to complete a business combination without seeking stockholder
approval, public stockholders may not have the right or opportunity to vote on the business combination, unless we seek such stockholder
vote. Accordingly, your only opportunity to affect the investment decision regarding our initial business combination may be limited to
exercising your redemption rights within the period of time (which will be at least 20 business days) set forth in our tender offer documents
mailed to our public stockholders in which we describe our initial business combination.
If we seek stockholder approval of our initial business combination,
our initial stockholders and management team have agreed to vote in favor of such initial business combination, regardless of how our
public stockholders vote.
Our initial stockholders own 43.8% of our outstanding
common stock. Our initial stockholders and management team also may from time to time purchase Class A common stock prior to our initial
business combination. Our amended and restated certificate of incorporation provides that, if we seek stockholder approval of an initial
business combination, such initial business combination will be approved if we receive the affirmative vote of a majority of the shares
voted at such meeting, including the founder shares. Accordingly, if we seek stockholder approval of our initial business combination,
the agreement by our initial stockholders and management team to vote in favor of our initial business combination will increase the likelihood
that we will receive the requisite stockholder approval for such initial business combination.
In the event that the proposed Business Combination
with Falcon’s is not consummated, the ability of our public stockholders to redeem their shares for cash may make our financial
condition unattractive to potential business combination targets, which may make it difficult for us to enter into a business combination
with another target.
In the event that the proposed Business Combination
with Falcon’s is not consummated, we may seek to enter into a business combination transaction agreement with a prospective target
that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many public stockholders exercise
their redemption rights, we would not be able to meet such closing condition and, as a result, would not be able to proceed with the business
combination. Consequently, if accepting all properly submitted redemption requests would make us unable to satisfy a minimum cash condition
as described above, we would not proceed with such redemption and the related business combination and may instead search for an alternate
business combination. Prospective targets will be aware of this risk and, thus, may be reluctant to enter into a business combination
transaction with us.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination
or optimize our capital structure.
At the time we enter into an agreement
for our initial business combination, we will not know how many stockholders may exercise their redemption rights, and therefore will
need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial
business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us
to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account to meet such requirements,
or arrange for third party financing. In addition, if a larger number of shares is submitted for redemption than we initially expected,
we may need to restructure the transaction to reserve a greater portion of the cash in the trust account or arrange for third party financing.
Raising additional third party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable
levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class B common stock results in
the issues of shares of Class A common stock on a greater than one-to-one basis upon conversion of the shares of Class B common stock
at the time of our initial business combination. In addition, the amount of the deferred underwriting commissions payable to the underwriters
will not be adjusted for any shares that are redeemed in connection with an initial business combination. The per share amount we will
distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commissions
and after such redemptions, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions.
The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital
structure.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination
would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business combination agreement
requires us to use a portion of the cash in the trust account to pay the purchase price, or requires us to have a minimum amount of cash
at closing, the probability that our initial business combination would be unsuccessful is increased. If our initial business combination
is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the trust account. If you are in
need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such time our shares may trade at a
discount to the pro rata amount per share in the trust account. In either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with your exercise of redemption rights until we liquidate or you are able to sell
your shares in the open market.
In the event that the proposed Business Combination
with Falcon’s is not consummated, the requirement that we complete our initial business combination by June 18, 2023 (as may be
extended to October 18, 2023 pursuant to our amended and restated certificate of incorporation) may give potential target businesses leverage
over us in negotiating a business combination and may limit the time we have in which to conduct due diligence on potential business combination
targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination
on terms that would produce value for our stockholders.
Any potential target business with which we enter
into negotiations concerning a business combination will be aware that we must complete our initial business combination by June 18, 2023
(as may be extended to October 18, 2023 pursuant to our amended and restated certificate of incorporation). Consequently, such target
business may obtain leverage over us in negotiating a business combination, knowing that if we do not complete our initial business combination
with that particular target business, we may be unable to complete our initial business combination with any target business. This risk
will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may
enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
Our search for a business combination,
and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the coronavirus
(COVID-19) outbreak and the status of debt and equity markets.
The COVID-19 outbreak has and a
significant outbreak of other infectious diseases could result in a widespread health crisis that could adversely affect the economies
and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could
be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating
to COVID-19 continues to restrict travel, limit the ability to have meetings with potential investors or the target business’s personnel,
vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts
our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including
new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact,
among others. If the disruptions posed by COVID-19 or other matters of global concern continue for an extensive period of time, our
ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination,
may be materially adversely affected.
In addition, our ability to consummate
a transaction may be dependent on the ability to raise equity and debt financing, which may be impacted by COVID-19 and other events,
including as a result of increased market volatility, decreased market liquidity in third-party financing being unavailable on terms
acceptable to us or at all.
We
may not be able to complete our initial business combination by June 18, 2023 (as may be extended to October 18, 2023 pursuant to our
amended and restated certificate of incorporation), in which case we would cease all operations except for the purpose of winding up
and we would redeem our public shares and liquidate.
We may not be able to complete our initial business
combination by June 18, 2023 or, if all the extensions under our charter are exercised, October 18, 2023. Our ability to complete our
initial business combination may be negatively impacted by general market conditions, volatility in the capital and debt markets and the
other risks described herein. If we have not completed our initial business combination within such time period or during any extension
period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including interest earned on the funds held in the trust account (net of permitted withdrawals and 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), and (iii)
as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
liquidate and dissolve, subject in each case, to our obligations under Delaware law to provide for claims of creditors and the requirements
of other applicable law.
If we seek stockholder approval of
our initial business combination, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may enter into
certain transactions, including purchasing shares or warrants from the public, which may influence the outcome of a proposed business
combination and reduce the public “float” of our securities.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender
offer rules, our sponsor, initial stockholders, directors, officers, advisors or their affiliates may purchase public shares or public
warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the completion
of our initial business combination, although they are under no obligation to do so. There is no limit on the number of shares our initial
shareholders, directors, officers, advisors or their affiliates may purchase in such transactions, subject to compliance with applicable
law and NYSE rules. Additionally, at any time at or prior to our initial business combination, subject to applicable securities laws (including
with respect to material non-public information), our initial stockholders, directors, officers, advisors or their affiliates may
enter into transactions with investors and others to provide them with incentives to acquire public shares, vote their public shares in
favor of our initial business combination or not redeem their public shares. However, other than as expressly stated herein, they have
no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such
transactions. None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
In the event that our sponsor, initial
stockholders, directors, officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders
who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections
to redeem their shares. The purpose of any such transactions could be to (i) vote such shares in favor of the business combination and
thereby increase the likelihood of obtaining stockholder approval of the business combination, (ii) 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 or (iii) reduce the number of public warrants outstanding
or to vote such warrants on any matters submitted to the warrant holders for approval in connection with our initial business combination.
Any such transactions may result in the completion of our initial business combination that may not otherwise have been possible. In addition,
if such transactions are consummated, the public “float” of our 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. We expect 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. In addition, if such purchases are made,
the public “float” of our Class A common stock or public warrants and the number of beneficial holders of our securities may
be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of our securities on a national securities
exchange.
If a stockholder fails to receive
notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures
for tendering its shares, such shares may not be redeemed.
We will comply with the proxy rules or
tender offer rules, as applicable, when conducting redemptions in connection with our initial business combination. Despite our compliance
with these rules, if a stockholder fails to receive our proxy materials or tender offer documents, as applicable, such stockholder may
not become aware of the opportunity to redeem its shares. In addition, proxy materials or tender offer documents, as applicable, that
we will furnish to holders of our public shares in connection with our initial business combination will describe the various procedures
that must be complied with in order to validly tender or submit public shares for redemption. For example, we intend to require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to, at the holder’s option, either deliver their stock certificates to our transfer agent, or to deliver their shares to our transfer
agent electronically prior to the date set forth in the proxy materials or tender offer documents, as applicable. In the case of proxy
materials, this date may be up to two business days prior to the date on which the vote on the proposal to approve the initial business
combination is to be held. In addition, if we conduct redemptions in connection with a stockholder vote, we intend to require a public
stockholder seeking redemption of its public shares to also submit a written request for redemption to our transfer agent two business
days prior to the vote in which the name of the beneficial owner of such shares is included. In the event that a stockholder fails to
comply with these or any other procedures disclosed in the proxy or tender offer materials, as applicable, its shares may not be redeemed.
Unanticipated changes in our effective
tax rate or challenges by tax authorities could harm our future results.
We are subject to income taxes in the
United States and may become subject to various non-U.S. jurisdictions as well. Our effective tax rate could be adversely affected by
changes in the allocation of our pre-tax earnings and losses among countries with differing statutory tax rates, in certain non-deductible
expenses as a result of acquisitions, in the valuation of our deferred tax assets and liabilities, or in federal, state, local or non-U.S.
tax laws and accounting principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents.
Increases in our effective tax rate would adversely affect our operating results. In addition, we may be subject to income tax audits
by various tax jurisdictions throughout the world. The application of tax laws in such jurisdictions may be subject to diverging and sometimes
conflicting interpretations by tax authorities in these jurisdictions. Although we believe our income tax liabilities are reasonably estimated
and accounted for in accordance with applicable laws and principles, an adverse resolution of one or more uncertain tax positions in any
period could have a material impact on the results of operations for that period.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds of the initial
public offering and the sale of the private placement warrants are intended to be used to complete an initial business combination with
a target business that has not been selected, we may be deemed to be a “blank check” company under the United States securities
laws. However, because we have net tangible assets in excess of $5,000,000 and have filed a Current Report on Form 8-K, including an audited
balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors in blank check companies,
such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules. Among other things, this means
our units will be immediately tradable and we will have a longer period of time to complete our initial business combination than do companies
subject to Rule 419. Moreover, if the initial public offering were subject to Rule 419, that rule would prohibit the release of any interest
earned on funds held in the trust account to us unless and until the funds in the trust account were released to us in connection with
our completion of an initial business combination.
If we seek stockholder approval of
our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in
excess of 15% of our Class A common stock.
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant to the tender
offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of
such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section
13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 15% of the shares
sold in the initial public offering without our prior consent, which we refer to as the “Excess Shares.” However, we would
not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business
combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete our initial business combination
and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you
will not receive redemption distributions with respect to the Excess Shares if we complete our initial business combination. And as a
result, you will continue to hold that number of shares exceeding 15% and, in order to dispose of such shares, would be required to sell
your shares in open market transactions, potentially at a loss.
Because of our limited resources and
the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination.
If we are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion of the
funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We expect to encounter competition from
other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships),
other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire.
Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various industries. Many of these competitors possess similar or greater
technical, human and other resources to ours or more local industry knowledge than we do and our financial resources will be relatively
limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially
acquire with the net proceeds of the initial public offering and the sale of the private placement warrants, our ability to compete with
respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated
to offer holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction
with a stockholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for our
initial business combination. Additionally, our outstanding warrants, and the future dilution they potentially represent, may not be viewed
favorably by target businesses. Any of these obligations may place us at a competitive disadvantage in successfully negotiating and completing
a business combination. If we are unable to complete our initial business combination, our public stockholders may receive only their
pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire
worthless.
If the net proceeds of the initial public
offering not being held in the trust account are insufficient to allow us to operate until at least October 18, 2023, it could limit
the amount available to fund our search for a target business or businesses and complete our initial business combination, and we will
depend on loans from our sponsor or management team to fund our search and to complete our initial business combination.
Of the net proceeds of the initial public offering,
only $850,000 was initially available to us outside the trust account. We believe that the funds available to us outside of the trust
account are sufficient to allow us to operate at least until October 18, 2023; however, we cannot assure you that our estimate is accurate.
Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search
for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision
in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with
other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed business combination,
although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the
right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach
or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business.
If we are required to seek additional
capital, we would need to borrow funds from our sponsor, management team or other third parties to operate or may be forced to liquidate.
Neither our sponsor, members of our management team nor any of their affiliates is under any obligation to advance funds to us in such
circumstances. Any such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion
of our initial business combination. Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination
entity at a price of $1.50 per warrant at the option of the lender. The warrants would be identical to the private placement warrants.
Prior to the completion of our initial business combination, other
than the Promissory Note with Infinite, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor
as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to
funds in our trust account. If we are unable to complete our initial business combination because we do not have sufficient funds available
to us, we will be forced to cease operations and liquidate the trust account. Consequently, our public stockholders may only receive an
estimated $10.00 per share, or possibly less, on our redemption of our public shares, and our warrants will expire worthless.
If third parties bring claims against
us, the proceeds held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than
$10.00 per share.
Our placing of funds in the trust account
may not protect those funds from third party claims against us. Although we will seek to have all vendors, service providers (other than
our independent registered public accounting firm), prospective target businesses and other entities with which we do business execute
agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit
of our public stockholders, such parties may not execute such agreements, or even if they execute such agreements they may not be prevented
from bringing claims against the trust account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility
or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with
respect to a claim against our assets, including the funds held in the trust account. If any third party refuses to execute an agreement
waiving such claims to the monies held in the trust account, our management will perform an analysis of the alternatives available to
it and will 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. The underwriters of the initial public offering will not
execute agreements with us waiving such claims to the monies held in the trust account. Examples of possible instances where we may engage
a third party that refuses to execute a waiver include the engagement of a third party consultant whose particular expertise or skills
are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases
where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements
with us and will not seek recourse against the trust account for any reason. Upon redemption of our public shares, if we are unable to
complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with
our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought
against us within the ten years following redemption. Accordingly, the per-share redemption amount received by public stockholders could
be less than the $10.00 per public share initially held in the trust account, due to claims of such creditors. Pursuant to the letter
agreement the form of which is filed as an exhibit to the registration statement relating to the initial public offering, 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 other 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 public 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 the 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 we 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. As a result, if any such claims were successfully made
against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00
per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount
per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third
parties including, without limitation, claims by vendors and prospective target businesses.
Our directors may decide not to enforce
the indemnification obligations of our sponsor, resulting in a reduction in the amount of funds in the trust account available for distribution
to our public stockholders.
In the event that the proceeds in the
trust account are reduced below the lesser of (i) $10.00 per 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 public share due to reductions in the value of the
trust assets, in each case less taxes payable, and our sponsor asserts that it is unable to satisfy its obligations or that it has no
indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against
our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action
on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising
their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors
choose not to enforce these indemnification obligations, the amount of funds in the trust account available for distribution to our public
stockholders may be reduced below $10.00 per share.
If, before distributing
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is
filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders
and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in
our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any
bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received by our stockholders in connection with
our liquidation may be reduced.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed
as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and us to claims of
punitive damages.
If, after we distribute the proceeds
in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against
us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy
laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek
to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its
fiduciary duty to our creditors and/or having acted in bad faith, by paying public stockholders from the trust account prior to addressing
the claims of creditors, thereby exposing itself and us to claims of punitive damages.
If the Company is deemed to be an investment
company for purposes of the Investment Company Act, the Company may be forced to abandon its efforts to complete a business combination
and instead be required to liquidate. To mitigate the risk of that result, on or prior to the 24-month anniversary of the effective date
of the registration statement relating to the Initial Public Offering, the Company instructed Continental Stock Transfer & Trust
Company to liquidate the securities held in the Trust Account and instead hold all funds in the Trust Account in a bank deposit account.
On March 30, 2022, the SEC issued the proposed
rules (the “SPAC Rule Proposals”) relating, among other things, to circumstances in which special purpose acquisition companies
(“SPACs”) such as the Company could potentially be subject to the Investment Company Act and the regulations thereunder. The
SPAC Rule Proposals would provide a safe harbor for such companies from the definition of “investment company” under Section 3(a)(1)(A) of
the Investment Company Act, provided that a SPAC satisfies certain criteria.
To comply with the duration limitation of the
proposed safe harbor, a SPAC would have a limited time period to announce and complete a de-SPAC transaction. Specifically, to comply
with the safe harbor, the SPAC Rule Proposals would require a company to file a Current Report on Form 8-K announcing that it
has entered into an agreement with a target company for a business combination no later than 18 months after the effective date of
the registration statement for its initial public offering (“IPO”). The company would then be required to complete its
initial business combination no later than 24 months after the effective date of the registration statement for its IPO.
There is currently uncertainty concerning the
applicability of the Investment Company Act to a SPAC, including a company like the Company, that does not complete its initial business
combination within the proposed time frame set forth in the proposed safe harbor rule. As indicated above, the Company completed the Initial
Public Offering on March 18, 2021 and has operated as a blank check company searching for a target business with which to consummate
a business combination since such time (or approximately 24 months after the effective date of the Initial Public Offering, as of
the date of this proxy statement). As a result, it is possible that a claim could be made that the Company has been operating as an unregistered
investment company if the SPAC Rule Proposals are adopted as proposed. If the Company were deemed to be an investment company for purposes
of the Investment Company Act, the Company might be forced to abandon its efforts to complete a business combination and instead be required
to liquidate. If the Company is required to liquidate, the Company’s investors would not be able to realize the benefits of owning
shares in a successor operating business, including the potential appreciation in the value of the Company’s shares and warrants
or rights following such a transaction, and the Company’s warrants or rights would expire worthless.
The funds in the Trust Account were have, since
the Initial Public Offering, been held only in U.S. government treasury obligations with a maturity of 185 days or less or in
money market funds investing solely in U.S. government treasury obligations and meeting certain conditions under Rule 2a-7 under
the Investment Company Act which invest only in direct U.S. government treasury obligations. To mitigate the risk of the Company
being deemed to have been operating as an unregistered investment company under the Investment Company Act, the Company on or prior to
the 24-month anniversary of the effective date of the registration statement relating to the Company, or March 15, 2023, instructed
Continental Stock Transfer & Trust Company, the trustee with respect to the Trust Account, to liquidate the U.S. government
treasury obligations or money market funds held in the Trust Account and thereafter to hold all funds in the Trust Account in an interest-bearing bank
deposit account (i.e., in one or more bank accounts) until the earlier of the consummation of a business combination or the Company’s
liquidation. Interest on bank deposit accounts is variable and such accounts currently yield interest of approximately 3.5% per annum.
Following such liquidation of the assets in the Trust Account, if the Company is unable to achieve more than minimal interest, on the
funds held in the Trust Account, the dollar amount its public stockholders would otherwise receive upon any redemption or liquidation
of the Company would be less than if the assets in the trust account had remained in U.S. government securities or money market funds.
Changes in laws or regulations, or
a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete
our initial business combination, and results of operations.
We are subject to laws and regulations
enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations
and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our
business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted
and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business
combination, and results of operations.
Our stockholders may be held liable
for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the 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 June 18, 2023 or, if all the extensions under our charter are exercised, October 18, 2023, may be considered a liquidating distribution
under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it
makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought
against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to redeem our
public shares as soon as reasonably possible following the expiration of the time we have to complete a business combination under our
charter in the event we do not complete our initial business combination and, therefore, we do not intend to comply with the foregoing
procedures.
Because we do not comply with Section 280, Section 281(b) of the DGCL
requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims
or claims that may be potentially brought against us within the ten years following our dissolution. However, because we are a blank check
company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire,
the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.
If our plan of distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would likely be barred after the third anniversary of the dissolution. We cannot assure you that we will
properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims
to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary
of such date. Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of
our public shares in the event we do not complete our initial business combination by June 18, 2023 or, if all the extensions under our
charter are exercised, October 18, 2023, 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.
We may not hold an annual meeting
of stockholders until after the consummation of our initial business combination, which could delay the opportunity for our stockholders
to elect directors.
In accordance with NYSE corporate governance
requirements, we are not required to hold an annual meeting until no later than one year after our first fiscal year end following our
listing on the NYSE. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes
of electing directors in accordance with our bylaws unless such election is made by written consent in lieu of such a meeting. We may
not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus
we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us
to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting
an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
Involvement of members of our management
and companies with which they are affiliated in civil disputes and litigation or governmental investigations unrelated to our business
affairs could materially impact our ability to consummate an initial business combination.
Members of our management team and companies
with which they are affiliated have been, and in the future will continue to be, involved in a wide variety of business affairs, including
transactions, such as sales and purchases of businesses, and ongoing operations. As a result of such involvement, members of our management
and companies with which they are affiliated in past have been, and may in the future be, involved in civil disputes and litigation and
governmental investigations relating to their business affairs unrelated to our company. Any such claims or investigations may be detrimental
to our reputation and could negatively affect our ability to identify and complete an initial business combination in a material manner
and may have an adverse effect on the price of our securities.
Although we have identified general
criteria and guidelines that we believe are important in evaluating prospective target businesses, we may enter into our initial business
combination with a target that does not meet such criteria and guidelines, and as a result, the target business with which we enter into
our initial business combination may not have attributes entirely consistent with our general criteria and guidelines.
Although we have identified general criteria
and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into our initial
business combination will not have all of these positive attributes. If we complete our initial business combination with a target that
does not meet some or all of these guidelines, such combination may not be as successful as a combination with a business that does meet
all of our general criteria and guidelines. In addition, if we announce a prospective business combination with a target that does not
meet our general criteria and guidelines, a greater number of stockholders may exercise their redemption rights, which may make it difficult
for us to meet any closing condition with a target business that requires us to have a minimum net worth or a certain amount of cash.
In addition, if stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or
other reasons, it may be more difficult for us to attain stockholder approval of our initial business combination if the target business
does not meet our general criteria and guidelines. If we are unable to complete our initial business combination, our public stockholders
may only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders,
and our warrants will expire worthless.
We are not required to obtain an opinion
from an independent accounting or investment banking firm, and consequently, you may have no assurance from an independent source that
the price we are paying for the business is fair to our company from a financial point of view.
Unless we complete our initial business
combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm which is a
member of FINRA or an independent accounting firm that such an initial business combination is fair to our company from a financial point
of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors, who will determine fair
market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy solicitation
or tender offer materials, as applicable, related to our initial business combination.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition
and thus negatively impact the value of our stockholders’ investment in us.
Although, besides the Promissory Note with Infinite, we have no commitments
as of the date of this Annual Report on Form 10-K to issue any notes or other debt securities, or to otherwise incur outstanding debt
following the initial public offering, we may choose to incur substantial debt to complete our initial business combination. We and our
officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest
or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount available
for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
| ● | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our
debt obligations; |
| ● | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach
certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
| ● | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing
while the debt is outstanding; |
| ● | our inability to pay dividends on our Class A common stock; |
| ● | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for
dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
| ● | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| ● | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government
regulation; and |
| ● | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements,
execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
We may only be able to complete one
business combination with the proceeds of the initial public offering and the sale of the private placement warrants, which will cause
us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification may
negatively impact our operations and profitability.
As of March 10, 2023, we had funds available for
a business combination in the amount of approximately $64.6 million (assuming no further redemptions), after payment of $7,775,000
of deferred underwriting fees in connection with the proposed business combination with Falcon’s (which deferred underwriting fees
would be equal to $7,781,790 in connection with any other business combination).
We may effectuate our initial business
combination with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may
not be able to effectuate our initial business combination with more than one target business because of various factors, including the
existence of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present
operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By completing
our initial business combination with only a single entity, our lack of diversification may subject us to numerous economic, competitive
and regulatory developments. Further, we would not be able to diversify our operations or benefit from the possible spreading of risks
or offsetting of losses, unlike other entities which may have the resources to complete several business combinations in different industries
or different areas of a single industry. Accordingly, the prospects for our success may be:
| ● | solely dependent upon the performance of a single business, property or asset, or |
| ● | dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification may subject
us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to our initial business combination.
We may attempt to simultaneously complete
business combinations with multiple prospective targets, which may hinder our ability to complete our initial business combination and
give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously acquire
several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business
is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our
ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks, including
additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers)
and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies
in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and results
of operations.
We may seek acquisition opportunities
with an early stage company, a financially unstable business or an entity lacking an established record of revenue or earnings.
To the extent we complete our initial
business combination with an early stage company, a financially unstable business or an entity lacking an established record of sales
or earnings, we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include
investing in a business without a proven business model and with limited historical financial data, volatile revenues or earnings, intense
competition and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate the
risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors
and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave
us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We may attempt to complete our initial
business combination with a private company about which little information is available, which may result in a business combination with
a company that is not as profitable as we suspected, if at all.
In pursuing our business combination
strategy, we may seek to effectuate our initial business combination with a privately held company. Very little public information generally
exists about private companies, and we could be required to make our decision on whether to pursue a potential initial business combination
on the basis of limited information, which may result in a business combination with a company that is not as profitable as we suspected,
if at all.
We may seek business combination opportunities
with a high degree of complexity that require significant operational improvements, which could delay or prevent us from achieving our
desired results.
We may seek business combination opportunities
with large, highly complex companies that we believe would benefit from operational improvements. While we intend to implement such improvements,
to the extent that our efforts are delayed or we are unable to achieve the desired improvements, the business combination may not be as
successful as we anticipate.
To the extent we complete our initial
business combination with a large complex business or entity with a complex operating structure, we may also be affected by numerous risks
inherent in the operations of the business with which we combine, which could delay or prevent us from implementing our strategy. Although
our management team will endeavor to evaluate the risks inherent in a particular target business and its operations, we may not be able
to properly ascertain or assess all of the significant risk factors until we complete our business combination. If we are not able to
achieve our desired operational improvements, or the improvements take longer to implement than anticipated, we may not achieve the gains
that we anticipate. Furthermore, some of these risks and complexities may be outside of our control and leave us with no ability to control
or reduce the chances that those risks and complexities will adversely impact a target business. Such combination may not be as successful
as a combination with a smaller, less complex organization.
We do not have a specified maximum
redemption threshold. The absence of such a redemption threshold may make it possible for us to complete our initial business combination
with which a substantial majority of our stockholders or warrant holders do not agree.
Our amended and restated certificate of incorporation
does not provide a specified maximum redemption threshold. In addition, in the event that the proposed Business Combination with Falcon’s
is not consummated, our proposed initial business combination may impose a minimum cash requirement for: (i) cash consideration to be
paid to the target or its owners, (ii) cash for working capital or other general corporate purposes or (iii) the retention of cash to
satisfy other conditions. As a result, we may be able to complete our initial business combination even though a substantial majority
of our public stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our
initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender
offer rules, have entered into privately negotiated agreements to sell their shares to our sponsor, officers, directors, advisors or any
of their affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock
that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business
combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares in
connection with such initial business combination, all shares of Class A common stock submitted for redemption will be returned to the
holders thereof, and we instead may search for an alternate business combination.
In order to effectuate an initial business
combination, special purpose acquisition companies have, in the recent past, amended various provisions of their charters and other governing
instruments, including their warrant agreements. We cannot assure you that we will not seek to further amend our amended and restated
certificate of incorporation or governing instruments in a manner that will make it easier for us to complete our initial business combination
that our stockholders may not support.
In order to effectuate a business combination, special purpose acquisition
companies, including us, have amended various provisions of their charters and governing instruments, including their warrant agreements.
For example, special purpose acquisition companies have amended the definition of business combination, increased redemption thresholds
and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements
to require the warrants to be exchanged for cash and/or other securities. On January 31, 2023, our Sponsor agreed to amend the warrant
agreement to provide that its private placement warrants are redeemable (subject to the concurrent redemption of other warrants) at a
redemption price of $0.01 per warrant if the last reported sales price of the shares of our Class A common stock for any twenty (20) trading
days within the thirty (30) trading-day period is at least $18 per share. The provisions of our amended and restated certificate of incorporation
that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release of funds from
our trust account) may be amended with the approval of holders of at least 65% of our outstanding common stock. We may also amend the
terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of
the then outstanding public warrants. In addition, our amended and restated certificate of incorporation requires us to provide our public
stockholders with the opportunity to redeem their public shares for cash if we propose an amendment to our amended and restated certificate
of incorporation to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete an initial
business combination within the required timeframe or with respect to any other material provisions relating to stockholders’ rights
or pre-initial business combination activity. On March 10, 2023, we filed three amendments to our amended and restated certificate of
incorporation, including an extension of the date by which we must complete our initial business combination, and our public stockholders
were provided the opportunity to redeem their public shares for cash. To the extent any of amendments would be deemed to fundamentally
change the nature of our securities, we would register, or seek an exemption from registration for, the affected securities. We cannot
assure you that we will not seek to further amend our charter or governing instruments or further extend the time to consummate an initial
business combination in order to effectuate our initial business combination.
The provisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing
the release of funds from our trust account) may be further amended with the approval of holders of 65% of our common stock, which is
a lower amendment threshold than that of some other special purpose acquisition companies. It may be easier for us, therefore, to amend
our amended and restated certificate of incorporation to facilitate the completion of an initial business combination that some of our
stockholders may not support.
Our amended and restated certificate of incorporation
provides that any of its provisions related to pre-business combination activity (including the requirement to deposit proceeds of the
initial public offering and the sale of the private placement warrants into the trust account and not release such amounts except in specified
circumstances, and to provide redemption rights to public stockholders as described herein) may be amended if approved by holders of at
least 65% of our outstanding common stock entitled to vote thereon and corresponding provisions of the trust agreement governing the release
of funds from our trust account may be amended if approved by holders of at least 65% of our outstanding common stock entitled to vote
thereon. In all other instances, our amended and restated certificate of incorporation may be amended by holders of a majority of our
outstanding common stock entitled to vote thereon, subject to applicable provisions of the DGCL or applicable stock exchange rules. Our
initial stockholders, who collectively beneficially own 43.8% of our outstanding common stock, may participate in any vote to amend our
amended and restated certificate of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose.
As a result, we may be able to further amend the provisions of our amended and restated certificate of incorporation which govern our
pre-business combination behavior more easily than some other special purpose acquisition companies, and this may increase our ability
to complete our initial business combination with which you do not agree. Our stockholders may pursue remedies against us for any breach
of our amended and restated certificate of incorporation.
Our sponsor, officers and directors have agreed,
pursuant to written agreements with us, that they will not propose any amendment to our amended and restated certificate of incorporation
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
prior to June 18, 2023 or, if all the extensions under our charter are exercised, October 18, 2023, or with respect to any other material
provisions relating to stockholders’ rights or pre-initial business combination activity, unless we provide our public stockholders
with the opportunity to redeem their public shares 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 (net of permitted
withdrawals), divided by the number of then outstanding public shares. Our stockholders are not parties to, or third-party beneficiaries
of, these agreements and, as a result, will not have the ability to pursue remedies against our sponsor, officers or directors for any
breach of these agreements. As a result, in the event of a breach, our public stockholders would need to pursue a stockholder derivative
action, subject to applicable law.
Certain agreements related to the
initial public offering may be amended without stockholder approval.
Each of the agreements related to the
initial public offering to which we are a party, other than the warrant agreement and the investment management trust agreement, may be
amended without stockholder approval. Such agreements are: the underwriting agreement; the letter agreement among us and our initial stockholders,
sponsor, officers and directors; the registration rights agreement among us and our initial stockholders; the private placement warrants
purchase agreement between us and our sponsor; and the administrative services agreement among us, our sponsor and an affiliate of our
sponsor. These agreements contain various provisions that our public stockholders might deem to be material. For example, our letter agreement
and the underwriting agreement contain certain lock-up provisions with respect to the founder shares, private placement warrants and other
securities held by our initial stockholders, sponsor, officers and directors. Amendments to such agreements would require the consent
of the applicable parties thereto and would need to be approved by our board of directors, which may do so for a variety of reasons, including
to facilitate our initial business combination. While we do not expect our board of directors to approve any amendment to any of these
agreements prior to our initial business combination, it may be possible that our board of directors, in exercising its business judgment
and subject to its fiduciary duties, chooses to approve one or more amendments to any such agreement. Any amendment entered into in connection
with the consummation of our initial business combination will be disclosed in our proxy solicitation or tender offer materials, as applicable,
related to such initial business combination, and any other material amendment to any of our material agreements will be disclosed in
a filing with the SEC. Any such amendments would not require approval from our stockholders, may result in the completion of our initial
business combination that may not otherwise have been possible, and may have an adverse effect on the value of an investment in our securities.
For example, amendments to the lock-up provision discussed above may result in our initial stockholders selling their securities earlier
than they would otherwise be permitted, which may have an adverse effect on the price of our securities.
We may be unable to obtain additional
financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us
to restructure or abandon a particular business combination. If we do not complete our initial business combination, our public stockholders
may only receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders,
and our warrants will expire worthless.
We believe that the net proceeds of the initial
public offering and the sale of the private placement warrants will be sufficient to allow us to complete our initial business combination.
If the net proceeds of the initial public offering and the sale of the private placement warrants prove to be insufficient, either because
of the size of our initial business combination, the depletion of the available net proceeds in search of a target business, the obligation
to redeem for cash a significant number of shares from stockholders who elect redemption in connection with our initial business combination
or the terms of negotiated transactions to purchase shares in connection with our initial business combination, we may be required to
seek additional financing or to abandon the proposed business combination. We cannot assure you that such financing will be available
on acceptable terms, if at all. The current economic environment has made it especially difficult for companies to obtain acquisition
financing. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination,
we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target
business candidate. If we do not complete our initial business combination, our public stockholders may only receive their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to
fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect
on the continued development or growth of the target business. None of our officers, directors or stockholders is required to provide
any financing to us in connection with or after our initial business combination.
Our initial stockholders control a
substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner
that you do not support.
Our initial stockholders own 43.8% of our issued
and outstanding common stock. Accordingly, they may exert a substantial influence on actions requiring a stockholder vote, potentially
in a manner that you do not support, including amendments to our amended and restated certificate of incorporation. If our initial stockholders
purchase any additional Class A common stock in the aftermarket or in privately negotiated transactions, this would increase their control.
Neither our initial stockholders nor, to our knowledge, any of our officers or directors, have any current intention to purchase additional
securities, other than as disclosed in this Annual Report on Form 10-K. Factors that would be considered in making such additional purchases
would include consideration of the current trading price of our Class A common stock. In addition, our board of directors, whose members
were elected by our sponsor, is and will be divided into three classes, each of which will generally serve for a terms for three years
with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders to elect new directors
prior to the completion of our initial business combination, in which case all of the current directors will continue in office until
at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered” board
of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of their
ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert
control at least until the completion of our initial business combination.
Because we must furnish our stockholders
with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination
with some prospective target businesses.
The U.S. federal proxy rules require
that the proxy statement with respect to the vote on an initial business combination include historical and pro forma financial statement
disclosure. We will include the same financial statement disclosure in connection with our tender offer documents, whether or not they
are required under the tender offer rules. These financial statements may be required to be prepared in accordance with, or be reconciled
to, accounting principles generally accepted in the United States of America (“GAAP”), or international financial reporting
standards as issued by the International Accounting Standards Board (“IFRS”), depending on the circumstances and the historical
financial statements may be required to be audited in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”). These financial statement requirements may limit the pool of potential target businesses we may acquire
because some targets may be unable to provide such financial statements in time for us to disclose such statements in accordance with
U.S. federal proxy rules and complete our initial business combination within the prescribed time frame.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our initial business combination, require substantial financial and management resources,
and increase the time and costs of completing an initial business combination.
Section 404 of the Sarbanes-Oxley Act
requires that we evaluate and report on our system of internal controls. Only in the event we are deemed to be a large accelerated filer
or an accelerated filer, and no longer qualify as an emerging growth company, will we be required to comply with the independent registered
public accounting firm attestation requirement on our internal control over financial reporting. Further, for as long as we remain an
emerging growth company, we will not be required to comply with the independent registered public accounting firm attestation requirement
on our internal control over financial reporting. The fact that we are a blank check company makes compliance with the requirements of
the Sarbanes-Oxley Act particularly burdensome on us as compared to other public companies because a target business with which we seek
to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such business combination.
A new 1% U.S. federal excise tax could be imposed on us in connection
with redemptions of our shares or our liquidation.
On August 16, 2022, President Biden signed into law the Inflation Reduction
Act of 2022 (the “IR Act”), which, among other things, imposes a 1% excise tax on the fair market value of stock repurchased
by “covered corporations” beginning in 2023, with certain exceptions (the “Excise Tax”). The Excise Tax is imposed
on the repurchasing corporation itself, not its stockholders from which the stock is repurchased. Because we are a Delaware corporation
and our securities are trading on NYSE, we are a “covered corporation” for this purpose. The amount of the Excise Tax is generally
1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the Excise Tax,
repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock
repurchases during the same taxable year. In addition, certain exceptions apply to the Excise Tax. The U.S. Department of Treasury has
been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of the Excise Tax. On
December 27, 2022, the U.S. Department of Treasury issued Notice 2023-2 (the “Notice”), which provides interim guidance addressing
the application of the Excise Tax. Under the Notice, liquidating distributions are exempt from the Excise Tax. In addition, redemptions
may also be exempt if they occur in the same year as the liquidation. However, the U.S. Department of Treasury has yet to promulgate proposed
or final regulations for the Excise Tax.
Because the redemptions of our shares in connection
with the extension of the Current Outside Date occurred, and any redemption that occurs as a result of a business combination would occur,
after December 31, 2022, we may be subject to the Excise Tax as a result of any redemptions in connection therewith. Whether and to what
extent we would be subject to the Excise Tax would depend on a number of factors, including (i) the fair market value of the redemptions
and repurchases in connection with the business combination, (ii) the structure of the business combination, (iii) the nature and amount
of any “PIPE” or other equity issuances in connection with the business combination (or otherwise issued not in connection
with the business combination but issued within the same taxable year of the business combination), (iv) if we fail to timely consummate
a business combination and/or liquidate in a taxable year following a redemption of shares and (v) the content of regulations and other
future guidance from the U.S. Department of the Treasury. Fund in the Trust Account, including any interest earned thereon, will not be
used to pay for any Excise Tax liabilities with respect to any redemptions that occur prior to or in connection with a business combination
or liquidation. If we complete a business combination, because the Excise Tax would be payable by us (following the business combination),
and not by the redeeming holder (or out of amounts in the trust account otherwise payable to the redeeming holder), the Excise Tax may
be payable on redemptions made on or after January 1, 2023 (including redemptions in connection with the extension of the Current Outside
Date and a business combination), which would reduce the cash available for ongoing operations following the completion of a business
combination.
Risks Relating to the Post-Business Combination
Company
Subsequent to our completion of our
initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that
could have a significant negative effect on our financial condition, results of operations and the price of our securities, which could
cause you to lose some or all of your investment.
Even if we conduct extensive due diligence
on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present
with a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence,
or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be
forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in
our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known
risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and
not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions
about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be
subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially
finance the initial business combination or thereafter. Accordingly, any stockholders or warrant holders who choose to remain stockholders
or warrant holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or
warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction
was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully
bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business
combination contained an actionable material misstatement or material omission.
Resources could be wasted in researching
business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge
with another business. If we are unable to complete our initial business combination, our public stockholders may only receive their pro
rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire
worthless.
We anticipate that the investigation of and the negotiation, drafting
and execution of relevant agreements, disclosure documents and other instruments related to our proposed Business Combination with Falcon’s
has required, and will continue to require, substantial management time and attention and substantial costs for accountants, attorneys
and others. If we are unable to complete the proposed Business Combination with Falcon’s, such event will result in a loss to us
of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our initial business combination, our public stockholders may only receive their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
Our ability to successfully complete
our initial business combination and to be successful thereafter will be dependent upon the efforts of our key personnel, some of whom
may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability
of our post-combination business.
Our ability to successfully complete our initial business combination
is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be
ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following
our initial business combination, it is likely that some or all of the management of the target business will remain in place. These individuals
may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources
helping them become familiar with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination, and a particular business combination
may be conditioned on the retention or resignation of such key personnel. These agreements may provide for them to receive compensation
following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular
business combination is the most advantageous.
Our key personnel may be able to remain
with our company after the completion of our initial business combination only if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the
business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities
for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel’s
retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their
motivation in identifying and selecting a target business, subject to their fiduciary duties under Delaware law.
We may have a limited ability to assess
the management of a prospective target business and, as a result, may effect our initial business combination with a target business whose
management may not have the skills, qualifications or abilities to manage a public company.
When evaluating the desirability of effecting
our initial business combination with a prospective target business, our ability to assess the target business’s management may
be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target business’s management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target
business’s management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and
profitability of the post-combination business may be negatively impacted. Accordingly, any stockholders or warrant holders who choose
to remain stockholders or warrant holders following the business combination could suffer a reduction in the value of their securities.
Such stockholders or warrant holders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim
that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they
are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable,
relating to the business combination contained an actionable material misstatement or material omission.
The officers and directors of an acquisition
candidate may resign upon completion of our initial business combination. The loss of a business combination target’s key personnel
could negatively impact the operations and profitability of our post-combination business.
Although we contemplate that
certain members of an acquisition candidate’s management team will remain associated with the acquisition candidate following our
initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place.
Our management may not maintain control
of a target business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business,
new management will possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure our initial business combination so that the post-transaction
company in which our public stockholders own shares will own less than 100% of the equity interests or assets of a target business, as
is the case with the proposed Business Combination with Falcon’s, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider
any transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the outstanding voting securities
of the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination
company, as is the case with the proposed Business Combination with Falcon’s. For example, we could pursue a transaction in which
we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock of a target.
In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares
of Class A common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding Class
A common stock subsequent to such transaction. In addition, other minority stockholders may subsequently combine their holdings resulting
in a single person or group obtaining a larger share of the company’s shares than we initially acquired. Accordingly, this may make
it more likely that our management will not maintain control of the target business. We do not expect our current management or shareholders
to maintain control if the proposed Business Combination with Falcon’s is completed.
If we effect our initial business
combination with a company located outside of the United States, we would be subject to a variety of additional risks that may adversely
affect us.
If we pursue a target business with operations or opportunities outside
of the United States for our initial business combination, as is the case with Falcon’s, we may face additional burdens in connection
with investigating, agreeing to and completing such initial business combination, and if we effect such initial business combination,
we would be subject to a variety of additional risks that may negatively impact our operations. Furthermore, we would be subject to risks
associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our initial
business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments, regulators
or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial business combination
with such a company, we would be subject to any special considerations or risks associated with companies operating in an international
setting, including any of the following:
| ● | costs and difficulties inherent in managing cross-border business operations; |
| ● | rules and regulations regarding currency redemption; |
| ● | complex corporate withholding taxes on individuals; |
| ● | laws governing the manner in which future business combinations may be effected; |
| ● | exchange listing and/or delisting requirements; |
| ● | tariffs and trade barriers; |
| ● | regulations related to customs and import/export matters; |
| ● | local or regional economic policies and market conditions; |
| ● | unexpected changes in regulatory requirements; |
| ● | challenges in managing and staffing international operations; |
| ● | tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
| ● | currency fluctuations and exchange controls; |
| ● | challenges in collecting accounts receivable; |
| ● | cultural and language differences; |
| ● | underdeveloped or unpredictable legal or regulatory systems; |
| ● | protection of intellectual property; |
| ● | social unrest, crime, strikes, riots and civil disturbances; |
| ● | regime changes and political upheaval; |
| ● | terrorist attacks and wars; and |
| ● | deterioration of political relations with the United States. |
We may not be able to adequately address
these additional risks. If we were unable to do so, we may be unable to complete such initial business combination, or, if we complete
such initial business combination, our operations might suffer, either of which may adversely impact our business, financial condition
and results of operations.
Our initial business combination and
our structure thereafter may not be tax-efficient to our stockholders and warrant holders. As a result of our business combination, our
tax obligations may be more complex, burdensome and uncertain.
Although we will attempt to structure
our initial business combination in a tax-efficient manner, tax structuring considerations are complex, the relevant facts and law are
uncertain and may change, and we may prioritize commercial and other considerations over tax considerations. For example, in connection
with our initial business combination and subject to any requisite stockholder approval, we may structure our business combination in
a manner that requires stockholders and/or warrant holders to recognize gain or income for tax purposes, effect a business combination
with a target company in another jurisdiction, or reincorporate in a different jurisdiction (including, but not limited to, the jurisdiction
in which the target company or business is located). We do not intend to make any cash distributions to stockholders or warrant holders
to pay taxes in connection with our business combination or thereafter. Accordingly, a stockholder or a warrant holder may need to satisfy
any liability resulting from our initial business combination with cash from its own funds or by selling all or a portion of the shares
received. In addition, stockholders and warrant holders may also be subject to additional income, withholding or other taxes with respect
to their ownership of us after our initial business combination.
In addition, we may effect
a business combination with a target company that has business operations outside of the United States, and possibly, business operations
in multiple jurisdictions, as is the case with Falcon’s. If we effect such a business combination, we could be subject to significant
income, withholding and other tax obligations in a number of jurisdictions with respect to income, operations and subsidiaries related
to those jurisdictions. Due to the complexity of tax obligations and filings in other jurisdictions, we may have a heightened risk related
to audits or examinations by U.S. federal, state, local and non-U.S. taxing authorities. This additional complexity and risk could have
an adverse effect on our after-tax profitability and financial condition.
Risks Relating to our Management Team
We may not have sufficient funds to
satisfy indemnification claims of our directors, officers, employees and agents.
We have agreed to indemnify our officers,
directors, employees and agents to the fullest extent permitted by law. However, our officers, directors, employees and agents have agreed
to waive any right, title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the
trust account for any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we
have sufficient funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify
our officers, directors, employees and agents may discourage stockholders from bringing a lawsuit against our officers, directors, employees
or agents for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation
against our officers, directors, employees and agents, even though such an action, if successful, might otherwise benefit us and our stockholders.
Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards
against our officers, directors, employees and agents pursuant to these indemnification provisions.
Past performance by our management
team and their affiliates may not be indicative of future performance of an investment in us.
Information regarding performance by,
or businesses associated with, our management team or businesses associated with them is presented for informational purposes only. Past
performance by our management team is not a guarantee either (i) of success with respect to any business combination we may consummate
or (ii) that we will be able to locate a suitable candidate for our initial business combination. You should not rely on the historical
record of the performance of our management team’s or businesses associated with them as indicative of our future performance of
an investment in us or the returns we will, or is likely to, generate going forward.
We may seek business combination opportunities
in industries or sectors that may be outside of our management’s areas of expertise.
We will consider a business combination
outside of our management’s areas of expertise if a business combination candidate is presented to us and we determine that such
candidate offers an attractive business combination opportunity for our company. Although our management will endeavor to evaluate the
risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess all
of the significant risk factors. We also cannot assure you that an investment in our securities will not ultimately prove to be less favorable
to investors in the initial public offering than a direct investment, if an opportunity were available, in a business combination candidate.
We are dependent upon our officers
and directors and their loss could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals and, in particular, our officers and directors. We believe that our success depends on the continued service
of our officers and directors, at least until we have completed our initial business combination. In addition, our officers and directors
are not required to commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating
their time among various business activities, including identifying potential business combinations and monitoring the related due diligence.
We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or officers. The unexpected loss
of the services of one or more of our directors or officers could have a detrimental effect on us.
Our officers and directors will allocate
their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs.
This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required
to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our
operations and our search for a business combination and their other businesses. We do not intend to have any full-time employees prior
to the completion of our initial business combination. Each of our officers is engaged in several other business endeavors for which he
may be entitled to substantial compensation, and our officers are not obligated to contribute any specific number of hours per week to
our affairs. Our independent directors also serve as officers and board members for other entities. If our officers’ and directors’
other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels,
it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business
combination.
Our officers and directors presently
have, and any of them in the future may have additional, fiduciary or contractual obligations to other entities and, accordingly, may
have conflicts of interest in determining to which entity a particular business opportunity should be presented.
Following the completion of the initial
public offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining
with one or more businesses. Each of our officers and directors presently has, and any of them in the future may have, additional fiduciary
or contractual obligations to other entities pursuant to which such officer or director is or will be required to present a business combination
opportunity to such entity. Accordingly, such officers and directors may have conflicts of interest in determining to which entity a particular
business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented
to another entity prior to its presentation to us. Our amended and restated certificate of incorporation provides that we renounce our
interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely
in his or her capacity as a director or officer of the 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. However, we do not believe that any such potential conflicts would materially
affect our ability to complete our initial business combination.
Our officers, directors, security
holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly
prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in
any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may
enter into a business combination with a target business that is affiliated with our sponsor, our directors or executive officers, although
we do not intend to do so. Nor do we have a policy that expressly prohibits any such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons or entities may have a conflict between their interests and ours.
The personal and financial interests
of our directors and officers may influence their motivation in timely identifying and selecting a target business and completing a business
combination. Consequently, our directors’ and officers’ discretion in identifying and selecting a suitable target business
may result in a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are
appropriate and in our stockholders’ best interest. If this were the case, it would be a breach of their fiduciary duties to us
as a matter of Delaware law and we or our stockholders might have a claim against such individuals for infringing on our stockholders’
rights. However, we might not ultimately be successful in any claim we may make against them for such reason.
Changes in the market for directors’
and officers’ liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business
combination.
In recent months, the market for directors’
and officers’ liability insurance for special purpose acquisition companies has changed. Fewer insurance companies are offering
quotes for directors and officers liability coverage, the premiums charged for such policies have generally increased and the terms of
such policies have generally become less favorable. There can be no assurance that these trends will not continue.
The increased cost and decreased availability
of directors’ and officers’ liability insurance could make it more difficult and more expensive for us to negotiate an initial
business combination if we are unable to consummate the proposed Business Combination with Falcon’s. In order to obtain directors
and officers liability insurance or modify its coverage as a result of becoming a public company, the post-business combination entity
might need to incur greater expense, accept less favorable terms or both. However, any failure to obtain adequate directors and officers
liability insurance could have an adverse impact on the post-business combination’s ability to attract and retain qualified officers
and directors.
In addition, even after we were to complete
an initial business combination, our directors and officers could still be subject to potential liability from claims arising from conduct
alleged to have occurred prior to the initial business combination. As a result, in order to protect our directors and officers, the post-business
combination entity may need to purchase additional insurance with respect to any such claims (“run-off insurance”). The need
for run-off insurance would be an added expense for the post-business combination entity, and could interfere with or frustrate our ability
to consummate an initial business combination on terms favorable to our investors.
We may engage in a business combination
with one or more target businesses that have relationships with entities that may be affiliated with our sponsor, officers, directors
or existing holders which may raise potential conflicts of interest.
In light of the involvement of our sponsor,
officers and directors with other entities, we may decide to acquire one or more businesses affiliated with our sponsor, officers, directors
or existing holders. Our directors also serve as officers and board members for other entities. Such entities may compete with us for
business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities for us to
complete our initial business combination with any entities with which they are affiliated, and there have been no substantive discussions
concerning a business combination with any such entity or entities. Although we will not be specifically focusing on, or targeting, any
transaction with any affiliated entities, we would pursue such a transaction if we determined that such affiliated entity met our criteria
for a business combination and such transaction was approved by a majority of our independent and disinterested directors. Despite our
agreement to obtain an opinion from an independent investment banking firm which is a member of FINRA or an independent accounting firm
regarding the fairness to our company from a financial point of view of a business combination with one or more domestic or international
businesses affiliated with our sponsor, executive officers, directors or existing holders, potential conflicts of interest still may exist
and, as a result, the terms of the business combination may not be as advantageous to our public stockholders as they would be absent
any conflicts of interest.
Since our sponsor, officers and directors
will lose their entire investment in us if our initial business combination is not completed (other than with respect to public shares
they may acquire during or after the initial public offering), a conflict of interest may arise in determining whether a particular business
combination target is appropriate for our initial business combination.
On January 6, 2021, our sponsor purchased an aggregate
of 5,750,000 founder shares in exchange for a capital contribution of $25,000, or approximately $0.004 per share. On March 26, 2021, in
connection with the partial exercise of the underwriters’ over-allotment option, the Sponsor forfeited 191,578 shares of Class B
common stock. Prior to the initial investment in the company of $25,000 by the sponsor, the company had no assets, tangible or intangible.
The purchase price of the founder shares was determined by dividing the amount of cash contributed to the company by the number of founder
shares issued. The founder shares will be worthless if we do not complete an initial business combination. In addition, our Sponsor purchased
an aggregate of 4,297,825 private placement warrants, each exercisable for one share of Class A common stock at $11.50 per share, for
an aggregate purchase price of $6,446,738, or $1.50 per warrant, that will also be worthless if we do not complete our initial business
combination. The personal and financial interests of our officers and directors may influence their motivation in identifying and selecting
a target business combination, completing an initial business combination and influencing the operation of the business following the
initial business combination. This risk may become more acute as the window to complete the initial public offering nears.
Risks Relating to our Securities
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment, you may be forced
to sell your public shares or warrants, potentially at a loss.
Our public stockholders will be entitled to receive
funds from the trust account only upon the earlier to occur of:
(i) our completion of an initial business combination, and then only in connection with those shares of Class A common stock that such
stockholder properly elected to redeem, subject to the limitations described herein, (ii) the redemption of any public shares properly
tendered in connection with a stockholder vote to amend our amended and restated certificate of incorporation 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 June 18, 2023
or during any extension period or with respect to any other material provisions relating to stockholders’ rights or pre-initial
business combination activity, and (iii) the redemption of our public shares if we are unable to complete an initial business combination
by June 18, 2023 or following any extension period, subject to applicable law and as further described herein. In addition, if our plan
to redeem our public shares if we are unable to complete an initial business combination by June 18, 2023 or by the end of any extension
period is not completed for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing
stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be
forced to wait beyond 27 months (31 months if all extensions are exercised) from the closing of the initial public offering before they
receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of any kind in the
trust account. Holders of warrants will not have any right to the proceeds held in the trust account with respect to the warrants. Accordingly,
to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a loss.
Holders of our Class A common
stock will not be entitled to vote on any appointment of directors prior to our initial business combination.
Prior to our initial business combination,
only holders of our founder shares will have the right to vote on the appointment of directors. Holders of our public shares will not
be entitled to vote on the appointment of directors during such time. In addition, prior to the completion of an initial business combination,
holders of a majority of our founder shares may remove a member of the board of directors for any reason. Accordingly, you may not have
any say in the management of our company prior to the completion of an initial business combination.
NYSE may delist our securities from
trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional
trading restrictions.
Our securities are currently listed on
the NYSE. We cannot assure you that our securities will continue to be listed on the NYSE in the future or prior to our initial business
combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain
financial, distribution and share price levels. Generally, we must maintain a minimum average global market capitalization and a minimum
number of holders of our securities. Additionally, in connection with our initial business combination, we will be required to demonstrate
compliance with NYSE’s initial listing requirements, which are more rigorous than NYSE’s continued listing requirements, in
order to continue to maintain the listing of our securities on the NYSE. For instance, our share price would generally be required to
be at least $4.00 per share, our global market capitalization would be required to be at least $150 million, the aggregate market value
of our publicly-held shares would be required to be at least $40 million and we would be required to have a minimum of 400 round lot holders
and 1,100,000 publicly held shares. We cannot assure you that we will be able to meet those initial listing requirements at that time.
If NYSE delists any of our securities
from trading on its exchange and we are not able to list such securities on another national securities exchange, we expect such securities
could be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our securities; |
| ● | reduced liquidity for our securities; |
| ● | a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A
common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market
for our securities; |
| ● | a limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets Improvement
Act of 1996, which is a U.S. federal statute, prevents or preempts the states from regulating the sale of certain securities, which are
referred to as “covered securities.” Because we expect that our units and eventually our Class A common stock and warrants
will be listed on the NYSE, our units, Class A common stock and warrants will qualify as covered securities under the statute. Although
the states are preempted from regulating the sale of our securities, the U.S. federal statute does allow the states to investigate companies
if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered
securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities
issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably
and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.
Further, if we were no longer listed on the NYSE, our securities would not qualify as covered securities under the statute and we would
be subject to regulation in each state in which we offer our securities.
You will not be permitted to exercise
your warrants unless we register and qualify the underlying Class A common stock or certain exemptions are available.
If the issuance of the Class A common
stock upon exercise of the warrants is not registered, qualified or exempt from registration or qualification under the Securities Act
and applicable state securities laws, holders of warrants will not be entitled to exercise such warrants and such warrants may have no
value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full
unit purchase price solely for the Class A common stock included in the units.
We are not registering the Class A common
stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms
of the warrant agreement, we have agreed that, as soon as practicable, but in no event later than 15 business days, after the closing
of our initial business combination, we will use our best efforts to file with the SEC a registration statement covering the registration
under the Securities Act of the Class A common stock issuable upon exercise of the warrants and thereafter will use our best efforts to
cause the same to become effective within 60 business days following our initial business combination and to maintain a current prospectus
relating to the Class A common stock issuable upon exercise of the warrants until the expiration of the warrants in accordance with the
provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which
represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained
or incorporated by reference therein are not current or correct or the SEC issues a stop order.
If the shares of Class A common stock
issuable upon exercise of the warrants are not registered under the Securities Act, under the terms of the warrant agreement, holders
of warrants who seek to exercise their warrants will not be permitted to do so for cash and, instead, will be required to do so on a cashless
basis in accordance with Section 3(a)(9) of the Securities Act or another exemption.
In no event will warrants be exercisable
for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless
the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder,
or an exemption from registration or qualification is available.
If our shares of Class A common stock
are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of “covered
securities” under Section 18(b)(1) of the Securities Act, we may, at our option, not permit holders of warrants who seek to exercise
their warrants to do so for cash and, instead, require them to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities
Act; in the event we so elect, we will not be required to file or maintain in effect a registration statement or register or qualify the
shares underlying the warrants under applicable state securities laws, and in the event we do not so elect, we will use our best efforts
to register or qualify the shares underlying the warrants under applicable state securities laws to the extent an exemption is not available.
In no event will we be required to net
cash settle any warrant, or issue securities (other than upon a cashless exercise as described above) or other compensation in exchange
for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under the Securities Act or
applicable state securities laws.
You may only be able to exercise your
public warrants on a “cashless basis” under certain circumstances, and if you do so, you will receive fewer shares of Class
A common stock from such exercise than if you were to exercise such warrants for cash.
The warrant agreement provides that in
the following circumstances holders of warrants who seek to exercise their warrants will not be permitted to do for cash and will, instead,
be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the shares of Class A common
stock issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the terms of the warrant agreement;
(ii) if we have so elected and the shares of Class A common stock is at the time of any exercise of a warrant not listed on a national
securities exchange such that they satisfy the definition of “covered securities” under Section 18(b)(1) of the Securities
Act; and (iii) if we have so elected and we call the public warrants for redemption. If you exercise your public warrants on a cashless
basis, you would pay the warrant exercise price by surrendering the warrants for that number of shares of Class A common stock equal to
the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied
by the excess of the “fair market value” of our shares of Class A common stock (as defined in the next sentence) over the
exercise price of the warrants by (y) the fair market value. The “fair market value” is the average last reported sales price
of the shares of Class A common stock for the ten trading days ending on the third trading day prior to the date on which the notice of
exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a
result, you would receive fewer shares of Class A common stock from such exercise than if you were to exercise such warrants for cash.
The grant of registration rights to
our initial stockholders and holders of our private placement warrants may make it more difficult to complete our initial business combination,
and the future exercise of such rights may adversely affect the market price of our shares of Class A common stock.
The holders of the founder shares, private
placement warrants and warrants that may be issued upon conversion of working capital loans (and any Class A common stock issuable upon
the exercise of the private placement warrants and warrants that may be issued upon conversion of working capital loans and upon conversion
of the founder shares) are entitled to registration rights pursuant to a registration rights agreement requiring us to register such securities
and any other securities of the company acquired by them prior to the consummation of our initial business combination for resale. The
holders of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities.
In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to our completion of our initial business combination. We will bear the cost of registering these securities. The registration and availability
of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class
A common stock. In addition, the existence of the registration rights may make our initial business combination more costly or difficult
to conclude. This is because the stockholders of the target business may increase the equity stake they seek in the combined entity or
ask for more cash consideration to offset the negative impact on the market price of our Class A common stock that is expected when the
shares of common stock owned by our initial stockholders, holders of our private placement warrants or holders of our working capital
loans or their respective permitted transferees are registered.
We may issue additional shares of
Class A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive plan
after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the
founder shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions
contained in our amended and restated certificate of incorporation. Any such issuances would dilute the interest of our stockholders and
likely present other risks.
Our amended and restated certificate of incorporation
authorizes the issuance of up to 380,000,000 shares of Class A common stock, par value $0.0001 per share, 20,000,000 shares of Class B
common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. Immediately after the
initial public offering, there were 357,766,313 and 14,441,578 authorized but unissued shares of Class A common stock and Class B
common stock, respectively, available for issuance. The Class B common stock is automatically convertible into Class A common
stock initially at a one-for-one ratio but subject to adjustment as set forth herein and in our amended and restated certificate of incorporation.
There are no shares of preferred stock issued and outstanding.
We may issue a substantial number of additional
shares of Class A common stock or shares of preferred stock to complete our initial business combination or under an employee incentive
plan after completion of our initial business combination. We may also issue shares of Class A common stock to redeem the warrants
upon conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business combination as
a result of the anti-dilution provisions as set forth therein. However, our amended and restated certificate of incorporation provides,
among other things, that prior to our initial business combination, we may not issue additional securities that would entitle the holders
thereof to (i) receive funds from the trust account or (ii) vote as a class with our public shares (a) on any initial business
combination or (b) to approve an amendment to our amended and restated certificate of incorporation to (x) extend the time we
have to consummate a business combination beyond 27 months (31 months if all extensions are exercised) from the closing of the initial
public offering or (y) amend the foregoing provisions. 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. The issuance of
additional shares of common stock or shares of preferred stock:
| ● | may significantly dilute the equity interest of investors
in the initial public offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted
in the issuance of Class A common stock on a greater than one-to-one basis upon conversion of the Class B common stock; |
| ● | may subordinate the rights of holders of Class A common
stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock; |
| ● | could cause a change in control if a substantial number of
shares of our Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry
forwards, if any, and could result in the resignation or removal of our present officers and directors; |
| ● | may have the effect of delaying or preventing a change of
control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and |
| ● | may adversely affect prevailing market prices for our Class A
common stock and/or warrants. |
Because
we are not limited to evaluating a target business in a particular industry sector, if we do not complete our proposed Business Combination
with Falcon’s, you will be unable to ascertain the merits or risks of any particular target business’s operations.
Our efforts to identify a prospective initial
business combination target are not limited to a particular industry, sector or geographic region. While we may pursue an initial business
combination opportunity in any industry or sector if our proposed business combination with Falcon’s is not completed, we intend
to capitalize on the ability of our management team to identify, acquire and operate a business or businesses that can benefit from our
management team’s established global relationships and operating experience. Our management team has extensive experience in identifying
and executing strategic investments globally and has done so successfully in a number of sectors, including financial services. Our amended
and restated certificate of incorporation prohibits us from effectuating a business combination solely with another blank check company
or similar company with nominal operations. If our proposed business combination with Falcon’s is not completed, there will be no
basis to evaluate the possible merits or risks of any particular target business’s operations, results of operations, cash flows,
liquidity, financial condition or prospects. To the extent we complete our initial business combination, we may be affected by numerous
risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an
entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of
a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent
in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or
that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us
with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that
an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were
available, in a business combination target. Accordingly, any stockholders or warrant holders who choose to remain stockholders or warrant
holders following the business combination could suffer a reduction in the value of their securities. Such stockholders or warrant holders
are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the
breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring
a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business combination
contained an actionable material misstatement or material omission.
Unlike some other similarly structured
special purpose acquisition companies, our initial stockholders will receive additional shares of Class A common stock if we issue certain
shares to consummate an initial business combination.
The founder shares will automatically convert
into shares of Class A common stock at the time of the closing of the initial business combination on a one-for-one basis, subject to
adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided
herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection
with our initial business combination, the number of shares of Class A common stock issuable upon conversion of all founder shares will
equal, in the aggregate, on an as-converted basis, 43.8% of the total number of shares of Class A common stock outstanding after such
conversion (after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total number
of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or
rights issued or deemed issued, by us in connection with or in relation to the consummation of the initial business combination, excluding
any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common
stock issued, or to be issued, to any seller in the initial business combination and any private placement warrants issued to our sponsor,
officers or directors upon conversion of working capital loans, provided that such conversion of founder shares will never occur on a
less than one-for-one basis. This is different than some other similarly structured special purpose acquisition companies in which the
initial stockholders will only be issued an aggregate of 43.8% of the total number of shares to be outstanding prior to our initial business
combination.
We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of the then outstanding
public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number
of shares of Class A common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants were issued in registered
form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that (a) the terms of the warrants may be amended without the consent of any holder (i) for the purpose of curing any ambiguity,
or curing or, correcting or supplementing any defective provision contained therein or adding or changing any other provisions with respect
to matters or questions arising thereunder as the parties may deem necessary or desirable and that the parties deem shall not adversely
affect the interest of the registered holders of the warrants, and (ii) to provide for the delivery of an alternative issuance described
above and (b) all other modifications or amendments require the vote or written consent of at least 65% of the then outstanding public
warrants and, solely with respect to any amendment to the terms of the private placement warrants or warrants issued upon conversion of
working capital loans or any provision of the warrant agreement with respect to the private placement warrants or warrants issued upon
conversion of working capital loans, at least 65% of the then outstanding private placement warrants and warrants issued upon conversion
of working capital loans. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder if holders of at
least 65% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants
with the consent of at least 65% of the then outstanding public warrants is unlimited, examples of such amendments could be amendments
to, among other things, increase the exercise price of the warrants, convert the warrants into cash or stock (at a ratio different than
initially provided), shorten the exercise period or decrease the number of shares of Class A common stock purchasable upon exercise of
a warrant.
Our warrant agreement designates the
courts of the State of New York or the United States District Court for the Southern District of New York as the sole and exclusive forum
for certain types of actions and proceedings that may be initiated by holders of our warrants, which could limit the ability of warrant
holders to obtain a favorable judicial forum for disputes with our company.
Our warrant agreement provides that,
subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the warrant agreement,
including under the Securities Act, will be brought and enforced in the courts of the State of New York or the United States District
Court for the Southern District of New York, and (ii) that we irrevocably submit to such jurisdiction, which jurisdiction shall be the
exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum.
Notwithstanding the foregoing, these
provisions of the warrant agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any
other claim for which the federal district courts of the United States of America are the sole and exclusive forum. Any person or entity
purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum
provisions in our warrant agreement. If any action, the subject matter of which is within the scope the forum provisions of the warrant
agreement, is filed in a court other than a court of the State of New York or the United States District Court for the Southern District
of New York (a “foreign action”) in the name of any holder of our warrants, such holder shall be deemed to have consented
to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought
in any such court to enforce the forum provisions (an “enforcement action”), and (y) having service of process made upon such
warrant holder in any such enforcement action by service upon such warrant holder’s counsel in the foreign action as agent for such
warrant holder.
This choice-of-forum provision may limit
a warrant holder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with our company, which may
discourage such lawsuits. Alternatively, if a court were to find this provision of our warrant agreement inapplicable or unenforceable
with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving
such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations
and result in a diversion of the time and resources of our management and board of directors.
We may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem the outstanding
public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that
the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for adjustments to the number of shares
issuable upon exercise or the exercise price of a warrant) for any 20 trading days within a 30-trading day period ending on the third
trading day prior to proper notice of such redemption provided on the date we give the notice of such redemption to the warrant holders.
We will not redeem the warrants unless an effective registration statement under the Securities Act covering the shares of Class A
common stock issuable upon exercise of the warrants is effective and a current prospectus relating to those shares of Class A common
stock is available throughout the 30-day redemption period, except if the warrants may be exercised on a cashless basis and such cashless
exercise is exempt from registration under the Securities Act. If and when the warrants become redeemable by us, we may exercise our redemption
right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. As a
result, we may redeem the warrants as set forth above even if the holders are otherwise unable to exercise the warrants. Redemption of
the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may
be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold
your warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption,
we expect would be substantially less than the market value of your warrants. Except as set forth below, none of the private placement
warrants will be redeemable by us for cash so long as they are held by the initial purchasers or their permitted transferees.
In addition, we have the ability to redeem
the outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.10 per warrant,
upon a minimum of 30 days’ prior written notice of redemption, provided that the closing price of our Class A common stock
equals or exceeds $10.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of
a warrant) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption
and provided that certain other conditions are met, including that holders will be able to exercise their warrants prior to redemption
for a number of shares of Class A common stock determined based on the redemption date and the fair market value of our Class A
common stock. The value received upon exercise of the warrants (i) may be less than the value the holders would have received if
they had exercised their warrants at a later time when the underlying share price is higher and (ii) may not compensate the holders
for the value of the warrants, including because the number of shares of Class A common stock received is capped at 0.361 shares
of Class A common stock per warrant (subject to adjustment) irrespective of the remaining life of the warrants.
Our warrants and founder shares may
have an adverse effect on the market price of our shares of Class A common stock and make it more difficult to effectuate our initial
business combination.
We issued warrants to purchase 5,558,422 shares
of our Class A common stock as part of the units sold in the initial public offering and, simultaneously with the closing of the initial
public offering, we issued in a private placement an aggregate of 4,297,825 private placement warrants, each exercisable to purchase one
share of Class A common stock at $11.50 per share. Our initial stockholders currently own an aggregate of 5,558,422 founder shares. The
founder shares are convertible into shares of Class A common stock on a one-for-one basis, subject to adjustment as set forth herein.
In addition, our Sponsor has made working capital loans and our sponsor or an affiliate of our sponsor or certain of our officers and
directors may make additional working capital loans. Such lender may convert those loans into up to an additional 1,500,000 private placement
warrants, at the price of $1.50 per warrant.
To the extent we issue shares of Class
A common stock for any reason, including to effectuate a business combination, the potential for the issuance of a substantial number
of additional shares of Class A common stock upon exercise of these warrants and conversion rights could make us a less attractive acquisition
vehicle to a target business. Such warrants, when exercised, will increase the number of issued and outstanding shares of Class A common
stock and reduce the value of the Class A common stock issued to complete the business combination. Therefore, our warrants and founder
shares may make it more difficult to effectuate a business transaction or increase the cost of acquiring the target business.
Because each unit contains one-quarter
of one redeemable warrant and only a whole warrant may be exercised, the units may be worth less than units of other special purpose acquisition
companies.
Each unit contains one-quarter of one
warrant. Pursuant to the warrant agreement, no fractional warrants will be issued upon separation of the units, and only whole units will
trade. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise,
round down to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder. This is different
from other offerings similar to ours whose units include one common share and one whole warrant to purchase one whole share. We have established
the components of the units in this way in order to reduce the dilutive effect of the warrants upon completion of a business combination
since the warrants will be exercisable in the aggregate for one-quarter of the number of shares compared to units that each contain a
whole warrant to purchase one share, thus making us, we believe, a more attractive business combination partner for target businesses.
Nevertheless, this unit structure may cause our units to be worth less than if it included a warrant to purchase one whole share.
Our warrants are accounted for as
liabilities and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the staff of the SEC
(the “SEC Staff”) issued the SEC Statement, wherein 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 being treated
as equity. Specifically, the SEC Statement focused on certain settlement terms and provisions related to certain tender offers following
a business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the
SEC Statement, we reevaluated the accounting treatment of our warrants, and pursuant to the guidance in ASC 815, Derivatives and Hedging
(“ASC 815”), determined the warrants should be classified as derivative liabilities measured at fair value on our balance
sheet, with any changes in fair value to be reported each period in earnings on our statement of operations.
As a result of the recurring fair value
measurement, our financial statements may fluctuate quarterly, based on factors which are outside of our control. Due to the recurring
fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount
of such gains or losses could be material.
General Risk Factors
We are a blank check company with
no operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective.
We are a blank check company incorporated
under the laws of the State of Delaware with no operating results, and we will not have any operations until completing our initial business
combination, other than very limited operations relating to our pursuit of an initial business combination. As a result, you have a very
limited basis upon which to evaluate our ability to achieve our business objective of completing our initial business combination. We
may be unable to complete our initial business combination. If we fail to complete our initial business combination, we will never generate
any operating revenues.
We are an emerging growth company
and a smaller reporting company within the meaning of the Securities Act, and are taking advantage of certain exemptions from disclosure
requirements available to emerging growth companies or smaller reporting companies, which could make our securities less attractive to
investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act, and are entitled to take advantage of certain exemptions from various
reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited
to, not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be
an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market
value of our Class A common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would
no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities
less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance
on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading
market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when
a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company,
can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our
financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has
opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards
used.
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 common stock held by non-affiliates exceeds
$250 million as of the prior June 30th, or (2) our annual revenues exceeded $100 million during such completed fiscal year
and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th. To the extent
we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies
difficult or impossible.
Provisions in our amended and restated
certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing to
pay in the future for our shares of Class A common stock and could entrench management.
Our amended and restated certificate
of incorporation contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their
best interests. These provisions include a staggered board of directors and the ability of the board of directors to designate the terms
of and issue new series of preferred stock, which may make more difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover
provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make the removal of management
more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our
securities.
Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate
of incorporation requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding
brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee
to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any
provision of the DGCL or our amended and restated certificate of incorporation or bylaws, or (iv) any action asserting a claim against
us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the
State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable
party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction
of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or
forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action
arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall
have concurrent jurisdiction. If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented
to service of process on such stockholder’s counsel. Although we believe this provision benefits us by providing increased consistency
in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable,
and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although
our stockholders will not be deemed to have waived our compliance with U.S. federal securities laws and the rules and regulations thereunder.
Notwithstanding the foregoing, our amended
and restated certificate of incorporation provides that the exclusive forum provision will not apply to suits brought to enforce a duty
or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the
Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act
or the rules and regulations thereunder.
Additionally, unless we consent in writing
to the selection of an alternative forum, the federal courts shall be the exclusive forum for the resolution of any complaint asserting
a cause of action arising under the Securities Act against us or any of our directors, officers, other employees or agents, to the extent
permitted by applicable law, including to the extent permitted by the U.S. federal securities laws. However, application of the forum
selection provision may in some instances be limited by applicable law. For example, Section 22 of the Securities Act created concurrent
jurisdiction for U.S. federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or
the rules and regulations thereunder. Accordingly, there is uncertainty as to whether a court would enforce such provisions, and the enforceability
of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings, and our stockholders
cannot waive compliance with the U.S. federal securities laws or the rules and regulations thereunder. While the Delaware courts have
determined that such exclusive forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other
than those designated in the exclusive forum provisions, and there can be no assurance that such provisions will be enforced by a court
in those other jurisdictions. Any person or entity purchasing or otherwise acquiring any interest in our securities shall be deemed to
have notice of and consented to these provisions.
Although we believe this provision benefits
us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may
limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us and may have the effect of discouraging
lawsuits against our directors and officers.
Cyber incidents or attacks directed
at us could result in information theft, data corruption, operational disruption and/or financial loss.
We depend on digital technologies, including
information systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated
and deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or
the cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As
an early stage company without significant investments in data security protection, we may not be sufficiently protected against such
occurrences. We may not have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to,
cyber incidents. It is possible that any of these occurrences, or a combination of them, could have adverse consequences on our business
and lead to financial loss.