ITEM 1. BUSINESS
General
We are a blank check
company incorporated on March 15, 2016 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. We will
not generate any operating revenues until after completion of an initial business combination, at the earliest. We will generate
non-operating income in the form of interest income from the proceeds derived from our initial public offering.
In October 2016, our
Sponsor, Legacy Acquisition Sponsor I, LLC, purchased 5,750,000 shares of Class F common stock for $25,000, or approximately
$0.00333 per share. The Sponsor had agreed to forfeit up to 750,000 Founder Shares to the extent that the overallotment option
granted to the underwriters in our IPO was not exercised in full by the underwriters, so that our Sponsor would own 20% of the
Company’s issued and outstanding shares immediately after our initial public offering. During September 2017, the Company
effected a 1.5 for 1 stock dividend of 2,875,000 shares of Class F common stock, resulting in our Sponsor holding an aggregate
of 8,625,000 shares of Class F common stock. The stock dividend also adjusted the shares of Class F common stock subject to forfeiture
from 750,000 to 1,125,000, to the extent that the overallotment option was not exercised in full by the underwriters, so that the
shares of Class F common stock would represent 20.0% of the Company’s issued and outstanding shares immediately after our
initial public offering.
On November 16, 2017,
our registration statement (File No. 333-221116) for our initial public offering was declared effective by the SEC pursuant to
which we sold an aggregate of 30,000,000 Units at a price to the public of $10.00 per Unit, generating gross proceeds of $300,000,000.
Each Unit consisted of one share of Class A common stock and one public warrant to purchase one-half of one share of Class A common
stock. Each public warrant entitles the holder to purchase one-half of one share of Class A common stock at an exercise price of
$5.75 per half share ($11.50 per whole share). Warrants may be exercised only for a whole
number of shares of Class A common stock. No fractional shares will be issued upon exercise of the public warrants. If, upon exercise
of the public 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. Each public warrant
will become exercisable 30 days after the completion of the Company’s business and will expire five years after the completion
of our business combination or earlier upon redemption or liquidation. However, if we do not complete our business combination
on or prior to the Outside Extended Date, the public warrants will expire. If we are unable to deliver registered shares of Class
A common stock to the holder upon exercise of the public warrants issued in connection with the 30,000,000 Units during the exercise
period, there will be no net cash settlement of these public warrants and the public warrants will expire worthless, unless they
may be exercised on a cashless basis in the circumstances described in the warrant agreement. Once the warrants become exercisable,
we may redeem the outstanding warrants in whole and not in part at a price of $0.01 per warrant upon a minimum of 30 days’
prior written notice of redemption, only in the event that the last sale price of the Company’s shares of common stock equals
or exceeds $18.00 per share for any 20 trading days within the 30-trading day period ending on the third trading day before the
Company sends the notice of redemption to the warrant holders. Our Units began trading on the NYSE under the symbol “LGC.U”
on November 16, 2017.
On November 21, 2017,
we closed our IPO and sale of 30,000,000 units at a price to the public of $10.00 per unit, generating gross proceeds of $300,000,000.
Each Unit consists of one share of the Company’s Class A common stock and one redeemable common stock purchase warrant. Each
Warrant entitles the holder to purchase one half of one share of Class A common stock at a price of $5.75 ($11.50 per whole share).
No fractional shares will be issued upon exercise of the warrants. Simultaneously with the closing of our initial public offering
on November 21, 2017, the Sponsor paid us $8,750,000 for the private placement purchase from the Company of 17,500,000 warrants
at $0.50 per warrant, or the “private placement warrants”. Each private placement warrant entitles the holder to purchase
one half of one share of Class A common stock at $5.75 ($11.50 per whole share). The private placement warrants are identical to
the public warrants except that, so long as they are held by the Sponsor and its permitted transferees, (i) the private placement
warrants will not be redeemable by us, and (ii) the private placement warrants (including the Class A common stock issuable upon
exercise of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after
the completion of the business combination. If we do not complete a business combination, then the proceeds will be part of the
liquidating distribution to the public stockholders and the warrants issued to the Sponsor will expire worthless. On November 27,
2017, the Company was advised by the underwriters’ that the overallotment option would not be exercised. As such, the 1,125,000
shares of Class F common stock subject to forfeiture were forfeited. At December 31, 2019, there were 7,500,000 shares of Class
F common stock issued and outstanding and 29,305,180 shares of Class A common stock outstanding.
Net
proceeds of $300,000,000 from our initial public offering and the sale of the private placement warrants were placed in a trust
account established for the benefit of the Company’s public stockholders with Continental Stock Transfer & Trust Company
acting as trustee. As of January 31, 2020, we had approximately $303,724,819 in
the trust account.
On August 23, 2019,
we entered into the Share Exchange Agreement with the Blue Valor Limited, a company incorporated in Hong Kong and an indirect,
wholly-owned subsidiary of Blue Focus Intelligent Communications Group (“Blue Valor” or the “Seller”),
which was subsequently amended by that First Amendment to Share Exchange Agreement dated as of September 27, 2019, and further
amended and restated on December 2, 2019 pursuant to which, subject to the satisfaction or waiver of certain conditions set forth
therein, we have agreed, among other things, to purchase from the Seller, all of the issued and outstanding shares of a wholly
owned holding company of Seller, which we refer to herein as “Blue Impact Target,” and following which Blue Impact
Target will become a wholly owned direct subsidiary of Legacy. Under the terms of the Share Exchange Agreement, we have agreed
to issue to the Seller, at the Closing, 30,000,000 shares of Class A common stock (the “Closing Payment Shares”), in
full payment for all of the issued and outstanding ordinary shares of Blue Impact Target (the “Purchased Shares”).
In addition, we have agreed to pay to the Seller the Earnout Payment (defined herein), in accordance with the terms and subject
to the conditions of the Share Exchange Agreement. Pursuant to the Share Exchange Agreement, the consideration to be paid to Legacy
at the Closing will be comprised of all of the Purchased Shares, all free and clear of all Liens. At the Closing, in addition to
the issuance of the Closing Payment Shares in consideration for the Purchased Shares, we have agreed to assume up to an aggregate
of $48 million of contingent liabilities of the business conducted by the Seller’s subsidiaries Vision 7, We Are Social,
Indigo Social, LLC, Metta and Fuseproject family of agencies, comprising a digital-first, intelligent and integrated, global advertising
& marketing services group (the “Blue Impact business”), and the assumption of up to $40 million of existing debt
of the Blue Impact business. The Seller is eligible to receive, under the Share Exchange Agreement, a potential one time earn out
payment of up to $222 million (the “Earnout Payment”), based on the Madhouse EBITDA Average Annual Growth Rate (as
defined in the Share Exchange Agreement) for the three year earn out period which runs for the calendar years 2020 through 2022.
The Share Exchange Agreement provides that the Earnout Payment will be payable at Legacy’s option in cash, stock or a combination
thereof if Legacy’s common stock share price at the time of payment is at least $10 per share. If not, then dependent upon
Legacy’s then available cash, the earn out will be payable in cash, subordinated notes or a combination thereof. Under the
Share Exchange Agreement, the Seller has partially and irrevocably assigned a portion of any Earnout Payment to fund a long-term
incentive plan to be established for the benefit of designated individuals employed or associated with the Blue Impact business.
Initial Business Combination
NYSE rules require
that the business combination must be with one or more target businesses that together have a fair market value equal to at least
80% of the balance in the trust account (less any deferred underwriting commissions and taxes payable on interest earned) at the
time of signing a definitive agreement in connection with the business combination. Legacy’s board of directors has determined
that the fair market value of the business combination meets this test.
Redemption Rights for Holders of Public
Shares
We are providing our
public stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion
of the business combination at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account
as of two business days prior to the Closing of the initial business combination, including interest (which interest shall be net
of taxes payable and up to $750,000 released to us annually to fund working capital requirements) divided by the number of then
outstanding public shares, subject to the limitations described herein. As of January 27, 2020, the fair market value of the marketable
securities held in the trust account, net of taxes payable and any interested that we may withdraw for working capital purposes,
is approximately $10.36 per share. Our initial stockholders have entered into a letter agreement with us, pursuant to which they
have agreed to waive their redemption rights with respect to their Founder Shares and any public shares they may hold in connection
with the completion of our business combination. The shares of Class F common stock will be excluded from the pro rata calculation
used to determine the per share redemption price.
Submission of the Business Combination
to a Stockholder Vote
Legacy will hold a
special meeting of our stockholders to solicit their approval of the business combination. Unlike many other blank check companies,
our public stockholders are not required to vote against the business combination in order to exercise their redemption rights.
If the business combination is not completed, then public stockholders electing to exercise their redemption rights will not be
entitled to receive such payments. Our Sponsor has agreed to vote any shares of common stock owned by them in favor of the business
combination.
Redemption rights for public stockholders
upon completion of our initial business combination
Our public stockholders will have the opportunity
to redeem all or a portion of their shares of common stock upon the completion of our initial business combination at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the
consummation of the initial business combination, including interest (which interest shall be net of taxes payable and up to $750,000
released to us annually to fund working capital requirements) divided by the number of then outstanding public shares, subject
to the limitations described herein. The amount deposited in the trust account is initially $300,000,000 (or approximately $10.00
per public share). The per-share amount we will distribute to investors who properly redeem their shares will not be reduced by
the deferred underwriting commissions we will pay to the underwriters. Our initial stockholders have entered into a letter agreement
with us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and any public
shares they may hold in connection with the completion of our business combination.
Limitation on Redemption Rights
Our Charter 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 an aggregate of 15% or more of the shares of Class A common stock sold in our IPO.
Permitted purchases of our securities
Once we seek stockholder approval of our
business combination, our sponsor, directors, officers, advisors or their affiliates may purchase shares in privately negotiated
transactions or in the open market, pursuant to Rule 10b5-1 plans or otherwise, either prior to or following the completion of
our initial business combination. However, our sponsor, directors, officers, advisors or affiliates do not have no current commitments,
plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions. None
of the funds in the trust account will be used to purchase shares in such transactions. Such persons will not make any such purchases
when they are in possession of any material non-public information not disclosed to the Seller or if such purchases are prohibited
by Regulation M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder, although
still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption
rights. We have adopted an insider trading policy which requires our insiders to: (i) refrain from purchasing shares during certain
blackout periods and when they are in possession of any material non-public information and (ii) to clear all trades with our legal
counsel prior to execution.
In the event that our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated transactions from public stockholders who have already
elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem
their shares. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act; however,
if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will
comply with such rules.
The purpose of any such purchases would
be to (i) vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval
of the business combination or (ii) to satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our business combination, where it appears that such requirement would
otherwise not be met. This may result in the completion of our business combination that may not otherwise have been possible.
In addition, if such purchases are made,
the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may be
reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities
exchange.
Our sponsor, officers, directors and/or
their affiliates anticipate that they may identify the stockholders with whom our sponsor, officers, directors or their affiliates
may pursue privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of proxy materials in connection with our initial business combination. To the
extent that our sponsor, officers, directors, advisors or their affiliates enter into a private purchase, they would identify and
contact only potential selling stockholders who have expressed their election to redeem their shares for a pro rata share of the
trust account or vote against the business combination. Our sponsor, officers, directors, advisors or their affiliates will only
purchase shares if such purchases comply with Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor, officers,
directors and/or their affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange Act will only be made to the
extent such purchases are able to be made in compliance with Rule 10b-18, which is a safe harbor from liability for manipulation
under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical requirements that must be complied
with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors and/or their affiliates will
not make purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Manner of Conducting Redemptions
We will provide our public stockholders
with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial business
combination either in connection with a stockholder meeting called to approve the business combination. Under NYSE rules, any transactions,
such as those contemplated under the Share Exchange Agreement, where we have agreed to issue more than 20% of our outstanding common
stock or seek to amend our amended and restated certificate of incorporation require stockholder approval. We may also choose to
seek stockholder approval for business or other legal reasons. So long as we obtain and maintain a listing for our securities on
the NYSE, we would be required to comply with such rules.
If, for some reason, a stockholder vote
is not required for the business combination and we do not decide to hold a stockholder vote for business or other legal reasons,
we will, pursuant to our amended and restated certificate of incorporation:
|
●
|
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers,
and
|
|
●
|
file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the
same financial and other information about the initial business combination and the redemption rights as is required under Regulation
14A of the Exchange Act, which regulates the solicitation of proxies.
|
Upon the public announcement of our business
combination, we or our sponsor will terminate any plan established in accordance with Rule 10b5-1 to purchase shares of our Class
A common stock in the open market if we elect to redeem our public shares through a tender offer, to comply with Rule 14e-5 under
the Exchange Act. As of the date of this Form 10-K, our sponsor has not established a Rule 10b-5 plan.
In the event we conduct redemptions pursuant
to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender
offer period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number
of public shares which are not purchased by our sponsor, which number will be based on the requirement that we may not redeem public
shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon the consummation of our initial business
combination (so that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or
cash requirement which may be contained in the agreement relating to our initial business combination. If public stockholders tender
more shares than we have offered to purchase, we will withdraw the tender offer and not complete the initial business combination.
Assuming that we seek stockholder approval
of the business combination under applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval
for business or other legal reasons, we will, pursuant to our amended and restated certificate of incorporation:
|
●
|
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates
the solicitation of proxies, and not pursuant to the tender offer rules, and
|
|
●
|
file proxy materials with the SEC.
|
Accordingly, we will distribute proxy materials
and, in connection therewith, provide our public stockholders with the redemption rights described above upon completion of the
initial business combination.
If we seek stockholder approval, we will
complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor
of the business combination and the other proposals contemplated by the Share Exchange Agreement receive their respective requisite
votes in favor thereof. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding
capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company
entitled to vote at such meeting. Our initial stockholders will count toward this quorum and have agreed to vote their founder
shares and any public shares purchased during or after our initial public offering in favor of our initial business combination.
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. In addition, our initial stockholders have entered into a letter agreement with
us, pursuant to which they have agreed to waive their redemption rights with respect to their founder shares and public shares
in connection with the completion of a business combination.
Our amended and restated certificate of
incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001 upon the consummation of our initial business combination (so that we do not become subject to the SEC’s
“penny stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash
requirement pursuant to an agreement relating to our initial business combination. For example, the proposed business combination
requires that we have a minimum of $120 million in the Trust Account at the closing of the business combination. In the event the
aggregate cash consideration we would be required to pay for all shares of Class A common stock that are validly submitted for
redemption plus any amount required to satisfy such cash condition pursuant to the terms of the Share Exchange Agreement exceed
the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and all shares
of Class A common stock submitted for redemption will be returned to the holders thereof.
Tendering stock certificates in connection
with a tender offer or redemption rights
We may require our public stockholders seeking
to exercise their redemption rights, whether they are record holders or hold their shares in “street name,” to either
tender their certificates to our transfer agent prior to the date set forth in the tender offer documents mailed to such holders,
or up to two business days prior to the vote on the proposal to approve the business combination, or to deliver their shares to
the transfer agent electronically using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the
holder’s option. The proxy materials that we will furnish to holders of our public shares in connection with our initial
business combination will indicate whether we are requiring public stockholders to satisfy such delivery requirements. Accordingly,
a public stockholder would have from the time we send out our proxy materials until up to two days prior to the vote on the business
combination to tender its shares if it wishes to seek to exercise its redemption rights.
There is a nominal cost associated with
the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost
on to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise
redemption rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless
of the timing of when such delivery must be effectuated.
The foregoing is different from the procedures
used by many blank check companies. In order to perfect redemption rights in connection with their business combinations, many
blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and
a holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was
seeking to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder
to arrange for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option
window” after the completion of the business combination during which he or she could monitor the price of the company’s
stock in the market. If the price rose above the redemption price, he or she could sell his or her shares in the open market before
actually delivering his or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders
were aware they needed to commit before the stockholder meeting, would become “option” rights surviving past the completion
of the business combination until the redeeming holder delivered its certificate. The requirement for physical or electronic delivery
prior to the meeting ensures that a redeeming holder’s election to redeem is irrevocable once the business combination is
approved.
Any request to redeem such shares, once
made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder meeting
set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights,
such holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated
that the funds to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after
the completion of our business combination.
If our initial business combination is not
approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any
certificates delivered by public holders who elected to redeem their shares.
Redemption of public shares and liquidation
if no initial business combination
At a special meeting held on October 22,
2019, our stockholders approved an amendment to our Charter (the “Extension Amendment”), extending the date by which
we have to complete a business combination from November 21, 2019 to December 21, 2019 (subject to up to five extensions, initially
to January 21, 2020, and thereafter by up to four additional 30-day periods ending on May 20, 2020 (the initial extension to December
21, 2019, and any subsequent 30-day periods, the “Outside Extended Date”). We have so far exercised our first three
extensions through March 21, 2020. Therefore, we will have up to two additional 30-day extension periods by which we may have
to complete the business combination. In connection with the Extension Amendment, and pursuant to the company’s amended
and restated certificate of incorporation, the stockholders elected to redeem 694,820 shares of the Company’s Class A common
stock, par value $0.0001 per share, issued in the Company’s IPO (the “public shares”), and 29,305,180 public
shares remain issued and outstanding following such redemptions. In the proxy materials issued in connection with the special
meeting to approve the Extension Amendment, Legacy confirmed it would make a cash contribution (“Contribution”) to
the Trust Account in an amount equal to $0.03 for each public share that is not redeemed in connection with the stockholder approval
of the Extension Amendment for the initial extension through December 21, 2019, and thereafter for each subsequent extension.
Accordingly, as a result of the 29,305,180 public shares that were not redeemed following the approval of the Extension Amendment
and the initial extension, the Company made a Contribution to the Trust Account for the total aggregate amount of approximately
$879,000. Subsequently, the Company elected to exercise the second extension through January 21, 2020, the third extension through
February 20, 2020, and the fourth extension to March 21, 2020. For each of these extensions, the Company has made a Contribution
to the Trust Account of $879,000.
Under the terms of the Share Exchange Agreement, the Seller
agreed to loan (each, a “Seller Loan”) to the Company the amount of the Contributions to be made by Legacy in connection
with the initial extension to December 21, 2019, and for each extension thereafter; provided, however, that the Seller is not required
to make any loan to Legacy with respect to any extension for the purpose of consummating an initial business combination other
than the business combination contemplated by the Company and the Seller. In addition, the Seller agreed that the Seller Loans
may include additional amounts to cover certain costs and expenses that Legacy will reasonably incur in connection with the continuation
of operations until the earlier of the consummation of the business combination or the Outside Extended Date, and the total of
all such costs and expenses shall not exceed a total of $300,000 in the aggregate for all extensions through the Outside Extended
Date. The initial Seller Loan was delivered to the Company in connection with the initial extension through December 21, 2019,
in the aggregate principal amount of approximately $979,000 (including $100,000 for working capital). In connection with the initial
Seller Loan, the Company issued a note (the “Seller Note”) for the aggregate amount of approximately $979,000, to the
Seller. Borrowings under the Seller Note will bear interest at a rate equal to the 1-month USD LIBOR interest rate, plus 1.5%.
On December 17, 2019, in connection with the Company’s extension of the date by which the Company has to consummate a business
combination from December 21, 2019, to January 21, 2020, the Company issued an amended and restated note (the “Amended Seller
Note”) to the Seller that amended and restated the Seller Note and received the second Seller Loan from the Seller. Borrowings
under the Amended Seller Note will continue to bear interest at a rate equal to the 1 month USD LIBOR interest rate, plus 1.5%
accruing from the date of the applicable borrowings. Subsequent to December 31, 2019, the Company has extended the date by which it has to consummate
a business combination from January 21, 2020 to February 20, 2020, and from February 20, 2020 to March 21, 2020. In connection
with these extensions, the Seller loaned approximately $979,000 and $879,000, respectively, to the Company under the Amended Seller
Note. As a result of the extensions, the Seller has loaned to the Company a total aggregate amount of approximately $3,817,000.
If we are unable to complete our business
combination by the Outside Extended Date, 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 (less up to $50,000 of interest
to pay dissolution expenses (which interest shall be net of taxes payable and up to $750,000 released to us annually to fund working
capital requirements) divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to our warrants, which will expire worthless if we fail to complete our business combination by the
Outside Extended Date.
Our initial stockholders 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 their founder shares if we fail to complete our initial business combination by the Outside Extended Date. However,
if our initial stockholders acquire public shares after our initial public offering, they will be entitled to liquidating distributions
from the trust account with respect to such public shares if we fail to complete our initial business combination by the Outside
Extended Date.
Our sponsor, executive officers and directors
have agreed, pursuant to a written letter agreement with us, that they will not propose any amendment to our amended and restated
certificate of incorporation (i) that would 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 the Outside Extended Date or (ii) with respect to any other provision
relating to stockholders’ rights or pre-business combination activity, unless we provide our public stockholders with the
opportunity to redeem their shares of Class A common stock upon approval of any such amendment at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes
payable and up to $750,000 released to us annually to fund working capital requirements) divided by the number of then outstanding
public shares. However, we may not redeem our public shares in an amount that would cause our net tangible assets to be less than
$5,000,001 upon the consummation of our initial business combination (so that we are not subject to the SEC’s “penny
stock” rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that
we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the amendment or the related
redemption of our public shares at such time.
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
$1,750,000 of proceeds initially 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 and up to $750,000
to fund working capital requirements annually, we may request the trustee to release to us an additional amount of up to $50,000
of such accrued interest to pay those costs and expenses.
Following the Contributions to the Trust
Account pursuant to the initial extension of the date by which the Company must consummate a business combination to December 21,
2019, the second extension through January 21 2020, the third extension through February 20, 2020, and the fourth extension through
March 21, 2020, if we were to expend all of the net proceeds of our initial public offering, other than the proceeds deposited
in the Trust Account, and without taking into account interest, if any, earned on the Trust Account, the per-share redemption amount
received by stockholders upon our dissolution would be approximately $10.36. 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 $10.36.
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 (except for our independent registered public accounting firm), prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies
held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements
or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but
not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including
the funds held in the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held
in the trust account, our management will perform an analysis of the alternatives available to it and will only enter into an agreement
with a third party that has not executed a waiver if management believes that such third party’s engagement would be significantly
more beneficial to us than any alternative. Examples of possible instances where we may engage a third party that refuses to execute
a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to
be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable
to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive
any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and
will not seek recourse against the trust account for any reason. In order to protect the amounts held in the trust account, our
sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor for services rendered or products sold
to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of
funds in the trust account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the
amount of interest which may be withdrawn to pay taxes and up to $750,000 to fund working capital requirements annually, except
as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as
to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, then our sponsor
will not be responsible to the extent of any liability for such third-party claims. We cannot assure you, however, that our sponsor
would be able to satisfy those obligations. We believe that our sponsor’s only assets are securities of our company. None
of our other officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective
target businesses.
In the event that the proceeds in the trust
account are reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account as
of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the amount
of interest which may be withdrawn to pay taxes and up to $750,000 to fund working capital requirements annually, 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 substantially 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,
prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title,
interest or claim of any kind in or to monies held in the trust account. Our sponsor will also not be liable as to any claims under
our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. We will have access to up to $1,750,000 from the proceeds of our initial public offering with which to pay any such potential
claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately
$50,000). 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. In the event that our offering
expenses exceed our estimate of $1,000,000, we may fund such excess with funds from the funds not to be held in the trust account.
In such case, the amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely,
in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside
the trust account would increase by a corresponding amount.
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 business combination by the Outside Extended Date may be considered a liquidation distribution under Delaware
law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes
reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought
against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day
waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our business combination by the Outside Extended Date, is not considered a liquidation distribution under Delaware law, and such
redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings that a party may bring
or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the statute of limitations
for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case
of a liquidation distribution. If we are unable to complete our business combination by the Outside Extended Date , 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 (net of the amount of interest which may be withdrawn to pay taxes and up to $750,000
to fund our working capital requirements annually, and less up to $50,000 of interest to pay dissolution expenses), divided by
the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as
stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board
of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably
possible following the Outside Extended Date and, therefore, we do not intend to comply with those procedures. As such, our stockholders
could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our
stockholders may extend well beyond the third anniversary of such date.
Because we will not be complying with Section
280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years.
However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment
bankers, etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement,
we will seek to have all vendors, service providers, prospective target businesses or other entities with which we do business
execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account.
As a result of this obligation, the claims
that could be made against us are significantly limited and the likelihood that any claim that would result in any liability extending
to the trust account is remote. Further, our sponsor may be liable only to the extent necessary to ensure that the amounts in the
trust account are not reduced below (i) $10.00 per public share or (ii) such lesser amount per public share held in the trust account
as of the date of the liquidation of the trust account, due to reductions in value of the trust assets, in each case net of the
amount of interest withdrawn to pay taxes and up to $750,000 to fund our working capital requirements annually, and will not be
liable as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including
liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party,
our sponsor will not be responsible to the extent of any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary
bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the
claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able
to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable
debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, our board may be viewed
as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders are entitled to
receive funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business combination,
(ii) the redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated
certificate of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we
do not complete our initial business combination by the Outside Extended Date or (B) with respect to any other provision relating
to stockholders’ rights or pre-business combination activity, and (iii) the redemption of all of our public shares if we
are unable to complete our business combination by the Outside Extended Date, subject to applicable law. In no other circumstances
will a stockholder have any right or interest of any kind to or in the trust account. In the event we seek stockholder approval
in connection with our initial business combination, a stockholder’s voting in connection with the business combination alone
will not result in a stockholder’s redeeming its shares to us for an applicable pro rata share of the trust account. Such
stockholder must have also exercised its redemption rights described above.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate of
incorporation contains certain requirements and restrictions relating to our initial public offering that apply to us until the
consummation of our initial business combination. If we seek to amend any provisions of our amended and restated certificate of
incorporation relating to stockholders’ rights or pre-business combination activity, we will provide dissenting public stockholders
with the opportunity to redeem their public shares in connection with any such vote. Our initial stockholders have agreed to waive
any redemption rights with respect to their founder shares and public shares in connection with the completion of our initial business
combination. Specifically, our amended and restated certificate of incorporation provides, among other things, that:
|
●
|
prior to the consummation of our initial business combination, we shall either (1) seek stockholder approval of our initial
business combination at a meeting called for such purpose at which stockholders may seek to redeem their shares, regardless of
whether they vote for or against the proposed business combination, into their pro rata share of the aggregate amount then on deposit
in the trust account, including interest (which interest shall be net of taxes payable and up to $750,000 released to us annually
to fund working capital requirements) or (2) provide our public stockholders with the opportunity to tender their shares to us
by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the
aggregate amount then on deposit in the trust account, including interest (which interest shall be net of taxes payable and up
to $750,000 released to us annually to fund working capital requirements) in each case subject to the limitations described herein;
|
|
●
|
we will consummate our initial business combination only if we have net tangible assets of at least $5,000,001 upon such consummation
and, solely if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in favor of the
business combination;
|
|
●
|
pursuant to the Extension Amendment, if our initial business combination is not consummated by the Outside Extended Date, then
our existence will terminate and we will distribute all amounts in the trust account; and
|
|
●
|
prior to our initial business combination, we may not issue additional shares of capital stock that would entitle the holders
thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination.
|
These provisions cannot be amended without
the approval of holders of 65% of our common stock. In the event we seek stockholder approval in connection with our initial business
combination, our amended and restated certificate of incorporation provides that we may consummate our initial business combination
only if approved by a majority of the shares of common stock voted by our stockholders at a duly held stockholders meeting.
Competition
In identifying, evaluating and selecting
a target business for our business combination, we encountered, from time to time, intense competition from other entities have
a business objective similar to ours, including other blank check companies, private equity groups and leverage buyout funds, and
operating businesses seeking strategic acquisitions. Many of these entities were well established and had extensive experience
identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possessed greater
financial, technical, human and other resources than us.
Our obligation to pay cash in connection
with out public stockholders who exercise their redemption rights may reduce the resources available to us for our 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 executing our business combination.
Employees
We currently have three executive officers.
Members of our management team are not obligated to devote any specific number of hours to our matters but they intend to devote
as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount
of time that Mr. Rigaud, Mr. McCall, Mr. Finn or any other members of our management team will devote in any time period will vary
based on whether a target business has been selected for our initial business combination and the current stage of the business
combination process.
Available Information
Our Corporate Governance Guidelines, code
of ethics, and the charters of the committees of our board of directors are available on our corporate website at www.legacyacquisition.com/investor-resources.html#governance,
and printed copies are available upon request. The information contained on our corporate website is not part of this Form 10-K.
Periodic Reporting and Financial Information
Our Units, Class A common stock and warrants
are registered under the Exchange Act and as a result we have reporting obligations, including the requirement that we file annual,
quarterly and current reports with the SEC. The public may read and copy any material we file with the SEC at the SEC’s Public
Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC at: http://www.sec.gov. The contents of these websites
are not incorporated into this filing. Further, the Company’s references to the uniform resource locators (“URLs”)
for these websites are intended to be inactive textual references only.
We will provide stockholders with audited
financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials sent
to stockholders to assist them in assessing the target business. In all likelihood, these financial statements will need to be
prepared in accordance with GAAP. We cannot assure you that any particular target business identified by us as a potential acquisition
candidate will have financial statements prepared in accordance with GAAP or that the potential target business will be able to
prepare its financial statements in accordance with GAAP. To the extent that this requirement cannot be met, we may not be able
to acquire the proposed target business. While this may limit the pool of potential acquisition candidates, we do not believe that
this limitation will be material.
We are required to evaluate our internal
control procedures for the fiscal year ending December 31, 2019 as required by the Sarbanes-Oxley Act. For as long as we remain
an emerging growth company, we will not be required to comply with the auditor attestation requirement on our internal control
over financial reporting. A target company may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of their internal controls. The development of the internal controls of any such entity to achieve compliance with the Sarbanes-Oxley
Act may increase the time and costs necessary to complete any such acquisition.
We are an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth
companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section
404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy
statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result,
there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act
also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth
company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company
until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the Close Date, (b) in which we
have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which
means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2)
the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act.
ITEM 1A. RISK FACTORS
You should consider carefully all of
the risks described below, together with the other information contained in this Form 10-K, before making a decision to invest
in our securities. This Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in the forward-looking statements as a result of specific factors, including the
risks described below.
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 with no operating results to date. Because we lack an operating history, you have no basis upon which to evaluate
our ability to achieve our business objective of completing our initial business combination with Blue Valor, or any other potential
target company. If we fail to complete our business combination, we will never generate any operating revenues.
The report of our independent registered
public accounting firm expresses substantial doubt about our ability to continue as a going concern.
Following the approval of the Extension Amendment,
we have only until the Outside Extended Date to complete our initial business combination. If we are unable to complete our business
combination by the Outside Extended Date, 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 (less up to $50,000 of interest
to pay dissolution expenses (which interest shall be net of taxes payable and up to $750,000 released to us annually to fund working
capital requirements) divided by the number of then outstanding public shares, which redemption will completely extinguish public
stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject
to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. We have determined that such mandatory liquidation
and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments
to our financial statements contained in this Form 10-K have been made to the carrying amounts of assets or liabilities should
the Company be required to liquidate after the Outside Extended Date.
Legacy will not obtain
an opinion from an unaffiliated third party as to the fairness of the business combination to its stockholders.
Legacy is not required
to obtain an opinion from an unaffiliated third party that the price it is paying to consummate the business combination is fair
to its public stockholders from a financial point of view. Legacy’s public stockholders must therefore rely solely on the
judgment of Legacy’s board of directors for such assessment.
Legacy’s initial
stockholders have agreed to vote in favor of the business combination, regardless of how Legacy’s public stockholders vote.
Legacy’s initial
stockholders have agreed to vote their Founder Shares, as well as any public shares purchased during or after Legacy’s IPO,
in favor of an initial business combination. Legacy’s initial stockholders own approximately 20.4% of Legacy’s outstanding
shares of stock. As a result, in addition to the Founder Shares, Legacy would need a total of 10,902,590, or approximately 37.2%,
of the outstanding 29,305,180 public shares to be voted in favor of a transaction (assuming all outstanding shares are voted) in
order to have the business combination approved. Accordingly, it is more likely that the necessary stockholder approval will be
received for the business combination than would be the case if Legacy’s initial stockholders agreed to vote their Founder
Shares in accordance with the majority of the votes cast by Legacy’s public stockholders.
Furthermore, assuming
only the minimum number of stockholders required to be present at the stockholders’ meeting held to approve the business
combination are present at such meeting, Legacy would need only 10,902,591 of the outstanding 29,305,180 public shares, or approximately
37.2% of the outstanding public shares, to be voted in favor of the business combination in order to have it approved.
Since Legacy’s
Sponsor, executive officers and directors will lose their entire investment in Legacy if a business combination is not completed
in time, a conflict of interest may arise in determining whether a particular business combination target is appropriate for Legacy’s
initial business combination.
In October 2016, Legacy’s
Sponsor purchased an aggregate of 5,750,000 Founder Shares for an aggregate purchase price of $25,000, or approximately $0.003
per share. On September 18, 2017, Legacy effectuated a 1.5-for-1 stock split in the form of a dividend, resulting in 8,625,000
Founder Shares outstanding and held by the Sponsor (up to 1,125,000 of which are subject to forfeiture). The Founder Shares will
be worthless if Legacy does not complete an initial business combination. In addition, the Sponsor purchased 17,500,000 private
placement warrants, each exercisable for one-half of one share of Legacy’s stock at $5.75 per half share, for a purchase
price of $8.75 million that will also be worthless if Legacy does not complete a business combination.
The Founder Shares are
identical to the shares of Legacy’s stock except that (i) the Founder Shares are subject to certain transfer restrictions,
(ii) Legacy’s initial stockholders, officers, directors and director nominees entered into a letter agreement with Legacy,
pursuant to which they agreed (a) to waive their redemption rights with respect to their Founder Shares and public shares in connection
with the completion of Legacy’s initial business combination, (b) to waive their rights to liquidating distributions from
the trust account with respect to their Founder Shares if Legacy fails to complete an initial business combination before the deadline
for the completion of an initial business combination (although they will be entitled to liquidating distributions from the trust
account with respect to any public shares they hold if Legacy fails to complete a business combination within the prescribed time
frame); (iii) the Founder Shares will automatically convert into shares of Legacy’s stock at the time of its initial business
combination on a one for one basis, subject to adjustment pursuant to certain anti-dilution rights, as described herein; and (iv)
the Founder Shares are subject to registration rights.
The personal and financial
interests of Legacy’s executive officers and directors may influence their motivation in approving, promoting and completing
the business combination, especially as the deadline imposed pursuant to the Extension Amendment nears.
The exercise of Legacy’s
initial stockholders’ discretion in agreeing to changes or waivers in the terms of the business combination may result in
a conflict of interest when determining whether such changes to the terms of the business combination or waivers of conditions
are appropriate and in the best interests of Legacy’s stockholders.
In the period leading
up to the closing of the business combination, events may occur that, pursuant to the Share Exchange Agreement, would require Legacy
to agree to amend the Share Exchange Agreement, to consent to certain actions taken by the Seller, or to waive rights that Legacy
is entitled to under the Share Exchange Agreement. Such events could arise because of changes in the course of the Blue Impact
business, a request by the Seller to undertake actions that would otherwise be prohibited by the terms of the Share Exchange Agreement,
or the occurrence of other events that would have a material adverse effect on the Blue Impact business and would entitle Legacy
to terminate the Share Exchange Agreement. In any such circumstances, it would be at Legacy’s discretion, acting through
its board of directors, to grant its consent or waive those rights. The existence of the financial and personal interests of Legacy’s
officers and directors described in the preceding risk factors may result in a conflict of interest on the part of one or more
of the directors between what they may believe is best for Legacy and what they may believe is best for themselves in determining
whether or not to take the requested action.
Legacy does not have
a specified maximum redemption threshold and, subject to limited exceptions, its public stockholders may redeem all of their shares.
However, pursuant to its charter, Legacy will not redeem its public shares in an amount that would cause its net tangible assets
to be less than $5,000,001 and, under the Share Exchange Agreement, if the funds in Legacy’s trust account are less than
$120 million upon the consummation of the business combination, Legacy may not be able to complete the business combination. These
thresholds may make it possible for Legacy to complete the business combination even though a substantial majority of its stockholders
redeem their shares or do not agree with the business combination.
Legacy’s amended
and restated certificate of incorporation does not provide a specified maximum redemption threshold and, subject to limited exceptions,
its public stockholders may redeem all of their shares. However, (i) pursuant to its charter, in no event will Legacy redeem
its public shares in an amount that would cause its net tangible assets to be less than $5,000,001 upon the consummation of the
business combination (such that it becomes subject to the SEC’s “penny stock” rules) and (ii) the Share Exchange
Agreement includes as a condition to Closing that the funds contained in the trust account must equal or exceed $120,000,000 plus
all accrued interest available to Legacy as of Closing such that if redemptions cause this condition to not be satisfied, Legacy
may not be able to complete the business combination. As a result, Legacy may be able to complete the business combination even
though a substantial majority of its public stockholders redeem their shares or do not agree with the business combination or have
entered into privately negotiated agreements to sell their shares to Legacy’s sponsor, officers, directors, advisors or their
affiliates. In the event the aggregate cash consideration that Legacy would be required to pay for all shares of stock that are
validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the Share Exchange
Agreement exceed the aggregate amount of cash available to Legacy, it will not complete the business combination or redeem any
shares, all shares of stock submitted for redemption will be returned to the holders thereof, and Legacy would instead have to
search for an alternate business combination or liquidate.
If the benefits of
the business combination do not meet the expectations of investors, stockholders or financial analysts, the market price of Blue
Impact’s shares may decline.
If the benefits of the
business combination do not meet the expectations of investors, stockholders or financial analysts, the market price of Blue Impact’s
shares may be materially adversely affected. The market values of Blue Impact’s shares at the time of the Closing may vary
significantly from the prices of Legacy’s securities on the date the Share Exchange Agreement was executed, the date of this
proxy statement or the date on which Legacy’s stockholders vote on the business combination. In addition, following the business
combination, fluctuations in the price of Blue Impact’s securities could contribute to the loss of all or part of your investment.
Prior to the business combination, there has not been a public market for Blue Impact’s stock and trading in Legacy’s
shares has not been active. Accordingly, the valuation ascribed to Blue Impact in the business combination may not be indicative
of the price that will prevail in the trading market following the business combination. If an active market for Blue Impact’s
securities develops and continues, the trading price of Blue Impact’s securities following the business combination could
be volatile and subject to wide fluctuations in response to various factors, some of which will be beyond Blue Impact’s control.
Any of the factors listed below could have a material adverse effect on your investment.
Factors affecting the
trading price of Blue Impact’s securities following the business combination may include:
|
●
|
the Blue Impact’s ability to attract and retain senior management or key operating personnel;
|
|
●
|
quarterly variations in the Blue Impact’s results of operations;
|
|
●
|
changes in government regulations;
|
|
●
|
the announcement of acquisitions by Blue Impact or its competitors;
|
|
●
|
changes in general economic and political conditions;
|
|
●
|
volatility in the financial markets;
|
|
●
|
results of Blue Impact’s operations and the operations of others in its industry;
|
|
●
|
threatened or actual litigation and government investigations;
|
|
●
|
the addition or departure of key personnel;
|
|
●
|
actions taken by Blue Impact’s stockholders, including the sale or disposition of their shares;
and
|
|
●
|
differences between Blue Impact’s actual financial and operating results and those expected
by investors and analysts and changes in analysts’ recommendations or projections.
|
Additionally, broad
market and industry factors may materially harm the market price of Blue Impact’s securities irrespective of its operating
performance. The stock market in general, and NYSE in particular, have experienced price and volume fluctuations that have often
been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations
of these stocks, and of Blue Impact’s securities, may not be predictable. A loss of investor confidence in the market for
advertising & marketing services stocks or the stocks of other companies which investors perceive to be similar to Blue Impact
could depress Blue Impact’s stock price regardless of its business, prospects, financial conditions, or results of operations.
A decline in the market price of Blue Impact’s securities also could adversely affect its ability to issue additional securities
and its ability to obtain additional financing in the future, further adversely affecting Blue Impact’s financial condition,
or prospects.
Following the business
combination, if securities or industry analysts do not publish or cease publishing research or reports about the Blue Impact business,
its business or its market, or if they change their recommendations regarding Blue Impact’s stock adversely, the price and
trading volume of Blue Impact’s stock could decline.
The trading market
for Blue Impact’s stock will be influenced by the research and reports that industry or securities analysts may publish about
the Blue Impact business, its business, market or competitors. Securities and industry analysts may never publish research on the
Blue Impact business. If no securities or industry analysts commence coverage of the Blue Impact business, its stock price and
trading volume would likely be negatively impacted. If any of the analysts who may cover the Blue Impact business change their
recommendation regarding its stock adversely, or provide more favorable relative recommendations about its competitors, the price
of its stock would likely decline. If any analyst who may cover the Blue Impact business were to cease coverage of the Blue Impact
business or fail to regularly publish reports on it, it could lose visibility in the financial markets, which could cause Blue
Impact’s stock price or trading volume to decline.
Blue Impact will not
have operations of its own and will conduct all of its operations through its subsidiaries.
Upon consummation of
the business combination, Blue Impact will derive all of its operating income from its subsidiaries. Other than any cash that Blue
Impact may retain following the business combination, all of its assets will be held by its direct and indirect subsidiaries. Blue
Impact will rely on the earnings and cash flows of its subsidiaries for its cash and financing requirements, including the provision
of funds necessary to repay any debt it may incur, which will be paid to Blue Impact by its subsidiaries, if and only to the extent
available. The ability of Blue Impact’s subsidiaries to pay dividends or make other payments or distributions to it will
depend on their respective operating results and may be restricted by, among other things, the laws of their jurisdiction of organization
(which may limit the amount of funds available for the payment of dividends and other distributions to Blue Impact), the terms
of existing and future indebtedness and other agreements of Blue Impact’s subsidiaries and the covenants of any future outstanding
indebtedness that Blue Impact or its subsidiaries incur. Any limitation on the ability of Blue Impact’s subsidiaries to distribute
dividends or other payments to their respective stockholders could materially adversely limit the Blue Impact business’ ability
to grow, make investments or acquisitions that could be beneficial to its businesses or otherwise fund and conduct its business,
any of which could materially adversely affect the Blue Impact business’, financial condition, results of operations and
prospects.
Subsequent to the
Closing, the Blue Impact business may be required to take writedowns or writeoffs, restructuring and impairment, or other charges
that could materially adversely affect its financial condition, results of operations and stock price, which could cause you to
lose some or all of your investment.
Legacy cannot assure
you that the due diligence it conducted on the Blue Impact business revealed all material issues that may be present in the Blue
Impact business, that it would uncover all material issues through customary due diligence, or that factors outside of Legacy’s
and the Blue Impact business’ control will not later arise. As a result, the Blue Impact business may be forced to later
write down or write off assets, restructure its operations, or incur impairment or other charges that could result in losses. Unexpected
risks may arise and previously known risks may materialize in a manner not consistent with Legacy’s preliminary risk analyses.
Even though these charges may be noncash items and not have an immediate impact on the liquidity of the Blue Impact business, the
incurrence of charges of this nature could contribute to negative market perceptions about the Blue Impact business or its securities.
In addition, charges of this nature may cause the Blue Impact business to be unable to obtain future financing on favorable terms,
or at all.
The Blue Impact business’
ability to utilize net operating loss carryforwards and certain other tax attributes may be limited.
Under Section 382 of
the Code, if a corporation undergoes an “ownership change” (generally defined as a greater than 50% change (by value)
in the ownership of its equity over a three year period), the corporation’s ability to use its pre-change net operating loss
carryforwards and certain other pre-change tax attributes to offset its post-change income may be limited. It is expected that
Legacy will experience such an ownership change related to the business combination, and the Blue Impact business may experience
ownership changes in the future as a result of changes in the ownership of its stock, which may be outside the Blue Impact business’
control. the Blue Impact business’ ability to utilize these net operating loss carryforwards could be limited by an “ownership
change,” which could result in increased tax liability to the Blue Impact business, potentially decreasing the value of its
stock. There are additional limitations found under Sections 269, 383, and 384 of the Code that may also limit the use of net operating
loss carryforwards that may apply and result in increased tax liability to the Blue Impact business, potentially decreasing the
value of its stock. In addition, a “Separate Return Limitation Year” (“SRLY”) generally encompasses all
separate return years of a member (or predecessor in a Section 381 or other transaction), including tax years in which it joins
a consolidated return of another group. According to Treasury Regulation Section 1.1502-21, a net operating losses of a member
that arises in a SRLY may be applied against consolidated taxable income only to the extent of the loss member’s cumulative
contribution to the consolidated taxable income. As a result, this SRLY limitation may also increase the tax liability to the Blue
Impact business (by reducing the carryforward of certain net operating losses that otherwise might be used to offset the amount
of taxable gain), potentially decreasing the value of Blue Impact’s stock.
Legacy will be forced
to liquidate the trust account if it cannot consummate a business combination by the deadline imposed by its amended and restated
certificate of incorporation.
Pursuant to Legacy’s
charter (as amended pursuant to the Extension Amendment), Legacy must complete its initial business combination by March 21, 2020
(subject to up to two remaining extensions to May 20, 2020 in accordance with the Extension Amendment). If Legacy is unable to
timely complete a business combination by the deadline established pursuant to the Extension Amendment, Legacy will be forced to
liquidate and distribute the remaining funds in the trust account to its stockholders pro rata, which may be less than $10 per
share. Furthermore, the Warrants will expire without payment or other value.
The ability of our public stockholders
to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business
combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock.
The Share Exchange Agreement requires us
to have a minimum amount of cash at closing, which increases the probability that our business combination would be unsuccessful.
If our 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 stock in the open market; however,
at such time our stock may trade at a discount to the pro rata amount per share in the trust account. In either situation, you
may suffer a material loss on your investment or lose the benefit of funds expected in connection with our redemption until we
liquidate or you are able to sell your stock in the open market.
Legacy’s Sponsor,
directors, executive officers, advisors and their affiliates may elect to purchase shares from public stockholders, which may influence
the vote on the business combination and reduce the public “float” of Legacy’s stock.
Legacy’s Sponsor,
directors, executive officers, advisors or their affiliates may purchase shares in privately negotiated transactions or in the
open market either prior to or following the completion of the business combination, although they are under no obligation to do
so. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder of Legacy’s
shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In the event that
Legacy’s Sponsor, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required
to revoke their prior elections to redeem their shares. The purpose of such purchases could be to vote such shares in favor of
the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or of
satisfying the minimum cash closing condition in the Share Exchange Agreement, where it appears that such condition would otherwise
not be satisfied. This may result in the completion of the business combination where such completion would not otherwise have
been possible. In addition, if such purchases are made, the public “float” of Legacy’s common stock and the number
of beneficial holders of its securities may be reduced, possibly making it difficult to maintain or obtain the listing or trading
of its securities on a national securities exchange.
There is no guarantee
that a stockholder’s decision whether to redeem its shares in Legacy for a pro rata portion of the trust account will put
the stockholder in a better future economic position.
Legacy can give no assurance
as to the price at which a stockholder may be able to sell its public shares in the future following the completion of the business
combination or any alternative business combination. Certain events following the consummation of any business combination, including
the business combination, may cause an increase in Legacy’s stock price, and may result in a lower value realized now than
a stockholder of Legacy might realize in the future had the stockholder not elected to redeem such stockholder’s shares.
Similarly, if a stockholder does not redeem its shares, the stockholder will bear the risk of ownership of the public shares after
the consummation of any business combination, and there can be no assurance that a stockholder can sell its shares in the future
for a greater amount than the redemption price set forth in this proxy statement.
If a Legacy stockholder
fails to receive notice of Legacy’s offer to redeem its public shares in connection with the business combination, or fails
to comply with the procedures for tendering its shares, such shares may not be redeemed.
Holders of Legacy’s
public shares are required to affirmatively vote either for or against the business combination in order to exercise their rights
to redeem their shares for a pro rata portion of the trust account. In addition, in order to exercise their redemption rights,
they are required to submit a request in writing and deliver their stock (either physically or electronically) to Legacy’s
transfer agent at least two business days prior to the special meeting. If, despite Legacy’s compliance with the proxy rules,
a stockholder fails to receive the proxy materials, such stockholder may not become aware of the opportunity to redeem its public
shares. In addition, the proxy materials that Legacy is furnishing to holders of its public shares in connection with the business
combination describes the various procedures that must be complied with in order to validly redeem public shares. In the event
that a stockholder fails to comply with these procedures, its shares may not be redeemed.
If you are a non-U.S.
Holder, you may be subject to U.S. withholding tax on the redemption.
Legacy stockholders
who exercise their redemption rights to receive cash from the trust account in exchange for their Legacy shares generally will
be required to treat the transaction as a sale of such shares. The redemption, however, may be treated as a distribution if it
does not effect a meaningful reduction in the redeeming stockholder’s percentage ownership in Legacy. It is important to
note that the Section 318 of the Internal Revenue Code (the “Code”) attribution or constructive ownership of stock
rules apply when testing redemption treatment under Section 302(b). If there is attribution sufficient to cause the redemption
to be treated instead under the Section 301 distribution rules which breaks nonliquidating corporate distributions into a dividend
(to the extent of Legacy’s current and accumulated earnings and profits), a nontaxable return of capital, and any remaining
portion treated as a gain from the sale of Legacy shares. If you are a non-U.S. Holder, you may be subject to withholding tax on
any part of the redemption treated as a dividend, which may include the full amount of the redemption.
Legacy’s current
stockholders will experience immediate dilution as a consequence of the issuance of shares in the Blue Impact business as consideration
in the business combination. Having a minority share position may reduce the influence that Legacy’s current stockholders
have on the management of the Blue Impact business following the business combination.
After the business
combination, assuming no redemptions of shares in Legacy for cash and excluding any shares that may be issued pursuant to the Purchase
Price Adjustment, Legacy’s current public stockholders will own approximately 43.87% of the Blue Impact business, Legacy’s
current directors, officers and affiliates will own approximately 11.23% of the Blue Impact business, and BlueFocus will own approximately
44.9% of the Blue Impact business. Assuming redemption by holders of 60.2% of Legacy’s outstanding shares, Legacy’s
current public stockholders will own approximately 25.68% of the Blue Impact business, Legacy’s current directors, officers
and affiliates will own approximately 8.26% of the Blue Impact business, and BlueFocus will own approximately 66.06% of the Blue
Impact business. The minority position of the former Legacy stockholders will give them limited influence over the management and
operations of the Blue Impact business following the business combination.
Legacy’s current
stockholders will experience significant dilution if the public warrants or the private placement warrant are exercised.
After the business combination,
and assuming no redemptions of shares in Legacy for cash, there is no Blue Impact Warrant Tender Offer and excluding any shares
that may be issued pursuant to the Purchase Price Adjustment, Legacy’s current public stockholders will own public warrants
representing approximately 14.04% of Blue Impact on a fully-diluted basis, and the Sponsor will own the private placement warrant
representing approximately 16.38% of Blue Impact on a fully-diluted basis. If the public warrants or the private placement warrant
are exercised, Legacy’s current stockholders will experience significant dilution.
If, after Legacy distributes
the proceeds in the trust account to its public stockholders, it files a bankruptcy petition or an involuntary bankruptcy petition
is filed against it that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of Legacy’s
board of directors may be viewed as having breached their fiduciary duties to Legacy’s creditors, thereby exposing it and
the members of its board of directors to claims of punitive damages.
If, after Legacy distributes
the proceeds in the trust account to its public stockholders, it files a bankruptcy petition or an involuntary bankruptcy petition
is filed against it that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by its stockholders. In addition, Legacy’s board of directors
may be viewed as having breached its fiduciary duty to Legacy’s creditors and/or having acted in bad faith, thereby exposing
Legacy and the board of directors to claims of punitive damages, by paying public stockholders from the trust account prior to
addressing the claims of creditors.
If, before distributing
the proceeds in the trust account to its public stockholders, Legacy files a bankruptcy petition or an involuntary bankruptcy petition
is filed against it that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of Legacy’s
stockholders and the per share amount that would otherwise be received by Legacy’s stockholders in connection with its liquidation
may be reduced.
If, before distributing
the proceeds in the trust account to its public stockholders, Legacy files a bankruptcy petition or an involuntary bankruptcy petition
is filed against it that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law,
and may be included in Legacy’s bankruptcy estate and subject to the claims of third parties with priority over the claims
of its stockholders. To the extent any bankruptcy claims deplete the trust account, the per share amount that would otherwise be
received by Legacy’s stockholders in connection with its liquidation may be reduced.
If third parties bring
claims against Legacy, 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.
Legacy’s placing
of funds in the trust account may not protect those funds from third party claims against Legacy. Although Legacy will seek to
have all vendors, service providers, prospective target businesses or other entities with which it does business execute agreements
waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of Legacy’s
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 Legacy’s 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, Legacy’s 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 Legacy than any alternative.
We are not aware of any product or service providers who have not or will not provide such waiver other than the underwriters of
our initial public offering and our independent public accounting firm WithumSmith+Brown, PC.
Examples of possible
instances where Legacy 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 Legacy’s management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where Legacy’s 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 Legacy and will not seek recourse against the
trust account for any reason. Upon redemption of Legacy’s public shares, if Legacy is unable to complete its business combination
within the prescribed timeframe, or upon the exercise of a redemption right in connection with the business combination, Legacy
will be required to provide for payment of claims of creditors that were not waived that may be brought against it within the ten
years following redemption. Accordingly, the per share redemption amount received by public stockholders could be less than the
$10.00 per share initially held in the trust account, due to claims of such creditors. Legacy’s Sponsor has agreed that it
will be liable to Legacy if and to the extent any claims by a vendor for services rendered or products sold to Legacy, or a prospective
target business with which Legacy has discussed entering into a transaction agreement, reduce the amount of funds in the trust
account to 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 the value of the trust assets, in each case net of the interest which
may be withdrawn to pay taxes and up to $750,000 of interest to fund working capital requirements annually, except as to any claims
by a third party who executed a waiver of any and all rights to seek access to the trust account. Moreover, in the event that an
executed waiver is deemed to be unenforceable against a third party, Legacy’s Sponsor will not be responsible to the extent
of any liability for such third party claims. Legacy has not independently verified whether its Sponsor has sufficient funds to
satisfy its indemnity obligations and believe that its Sponsor’s only assets are securities of Legacy. Legacy has not asked
its Sponsor to reserve for such indemnification obligations. Therefore, Legacy cannot assure you that its Sponsor would be able
to satisfy those obligations.
Legacy’s directors
may decide not to enforce the indemnification obligations of its Sponsor, resulting in a reduction in the amount of funds in the
trust account available for distribution to its public stockholders.
In the event that the
proceeds in the trust account are reduced below the lesser of (i) $10.00 per share or (ii) other than due to the failure to
obtain such waiver, such lesser amount per share held in the trust account as of the date of the liquidation of the trust account
due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes and up
to $750,000 to fund working capital requirements annually, and Legacy’s Sponsor asserts that it is unable to satisfy its
obligations or that it has no indemnification obligations related to a particular claim, Legacy’s independent directors would
determine whether to take legal action against its Sponsor to enforce its indemnification obligations. While Legacy currently expects
that its independent directors would take legal action on its behalf against its Sponsor to enforce its indemnification obligations,
it is possible that Legacy’s independent directors in exercising their business judgment may choose not to do so in any particular
instance. If Legacy’s independent directors choose not to enforce these indemnification obligations, the amount of funds
in the trust account available for distribution to Legacy’s public stockholders may be reduced below $10.00 per share.
You will not have any rights or interests
in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be
forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders are entitled to receive
funds from the trust account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the
redemption of any public shares properly tendered in connection with a stockholder vote to amend our amended and restated certificate
of incorporation (A) to modify the substance or timing of our obligation to redeem 100% of our public shares if we do not complete
our initial business combination by the Outside Extended Date or (B) with respect to any other provision relating to stockholders’
rights or pre-business combination activity and (iii) the redemption of all of our public shares if we are unable to complete our
business combination by the Outside Extended Date, subject to applicable law and as further described herein. In no other circumstances
will a public stockholder have any right or interest of any kind in the trust account. Accordingly, to liquidate your investment,
you may be forced to sell your public shares or warrants, potentially at a loss.
The NYSE may delist our securities
from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us
to additional trading restrictions.
Our units are listed on the NYSE and began
trading on November 16, 2017. On November 27, 2017, we announced that holders of our Units could elect to separately trade the
Class A common stock and Warrants included in the Units. On November 30, 2017, our Class A common stock and Warrants began trading
on the NYSE under the symbols “LGC” and “LGC WS,” respectively. 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 stock
price levels. Generally, we must maintain a minimum number of holders of our securities (400 roundlot shareholders). Additionally,
in connection with our initial business combination, we will be required to demonstrate compliance with the NYSE’s initial
listing requirements, which are more rigorous than the NYSE’s continued listing requirements, in order to continue to maintain
the listing of our securities on the NYSE. For instance, our stock price would generally be required to be at least $4 per share.
We cannot assure you that we will be able to meet those initial listing requirements at that time.
If the NYSE delists our securities from trading
on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could
be quoted on an over-the-counter market. If this were to occur, we could face significant material adverse consequences, including:
|
●
|
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 federal statute, prevents or preempts the states from regulating the sale of certain securities, which
are referred to as “covered securities.” Because our units and our Class A common stock and warrants are listed on
the NYSE, our units, Class A common stock and warrants are covered securities. Although the states are preempted from regulating
the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud,
and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular
case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank
check companies, other than the state of Idaho, certain state securities regulators view blank check companies unfavorably and
might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states.
Further, if we were no longer listed on the NYSE, our securities would not be covered securities and we would be subject to regulation
in each state in which we offer our securities.
The Blue Impact business
will be required to meet the initial listing requirements to be listed on the NYSE, which it may not be able to do. Even if Blue
Impact’s securities are so listed, Blue Impact may be unable to maintain the listing in the future.
If, following the business
combination, Blue Impact fails to meet the initial listing requirements and the NYSE does not list its securities on its exchange,
Blue Impact could face significant material adverse consequences, including:
|
●
|
a limited availability of market quotations for its securities;
|
|
●
|
a limited amount of news and analyst coverage for the Blue Impact business; and
|
|
●
|
a decreased ability to issue additional securities or obtain additional financing in the future.
|
Any of the foregoing
could materially adversely affect the Blue Impact business’, financial condition, results of operations and prospects.
You will not be entitled to protections
normally afforded to investors of many other blank check companies.
Since the net proceeds of our initial public
offering and the sale of the private placement warrants are intended to be used to complete the business combination with Blue
Valor, , 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 following the completion of our initial public offering and the sale of the private
placement warrants, 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 business combination than do companies
subject to Rule 419. Moreover, if our 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 are deemed to be an investment
company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities
may be restricted, which may make it difficult for us to complete our business combination.
If we are deemed to be an investment company
under the Investment Company Act, our activities may be restricted, including:
|
●
|
restrictions on the nature of our investments, and
|
|
●
|
restrictions on the issuance of securities each of which may make it difficult for us
to complete our business combination.
|
In addition, we may have imposed upon us
burdensome requirements, including:
|
●
|
registration as an investment company;
|
|
●
|
adoption of a specific form of corporate structure; and
|
|
●
|
reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
|
In order not to be regulated as an investment
company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily
in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting,
owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive
of U.S. government securities and cash items) on an unconsolidated basis. Our business will be to identify and complete a business
combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses
or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive
investor.
We do not believe that our anticipated principal
activities will subject us to the Investment Company Act. The proceeds held in the trust account may be invested by the trustee
only in United States government treasury bills with a maturity of 180 days or less or in money market funds investing solely in
United States Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment
of the proceeds will be restricted to these instruments, we believe we will meet the requirements for the exemption provided in
Rule 3a-1 promulgated under the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance
with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder
our ability to consummate a business combination. If we are unable to complete our initial business combination, our public stockholders
may receive only approximately $10.00 per share on the liquidation of our trust account and our warrants will expire worthless.
Changes in laws or regulations, or
a failure to comply with any laws and regulations, may adversely affect our business, investments 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 and results of operations.
Our stockholders may be held liable
for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the Delaware General Corporation Law,
or DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received
by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption
of our public shares in the event we do not complete our initial business combination by the Outside Extended Date may be considered
a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the
DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which
any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims
brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability
of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share
of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third
anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following
the 24th month from the closing of our initial public offering in the event we do not complete our business combination
and, therefore, we do not intend to comply with those procedures.
Because we will not be complying with Section
280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our
payment of all existing and pending claims or claims that may be potentially brought against us within the 10 years following our
dissolution. However, because we are a blank check company, rather than an operating company, and our operations will be limited
to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers,
investment bankers, etc.) or prospective target businesses. If our plan of distribution complies with Section 281(b) of the DGCL,
any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred
after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially
brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received
by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore,
if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in
the event we do not complete our initial business combination by the Outside Extended Date is not considered a liquidation distribution
under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings
that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the
statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three
years, as in the case of a liquidation distribution.
We did not register, and are not registering,
the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws,
and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being
able to exercise its warrants except on a cashless basis and potentially causing such warrants to expire worthless.
We did not register, and are not registering,
the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws.
However, under the terms of the warrant agreement, we have agreed, as soon as practicable, but in no event later than fifteen (15)
business days after the closing of our initial business combination, we will use our reasonable best efforts to file, and within
sixty (60) business days after the closing of our initial business combination, to have declared effective, a registration statement
relating to the Class A common stock issuable upon exercise of the warrants, and to maintain a current prospectus relating to such
shares of Class A common stock until the expiration of the warrants in accordance with the provisions of the warrant agreement.
We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change
in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by
reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants
are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis.
However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities
laws of the state of the exercising holder or an exemption from registration is available. Notwithstanding the above, if our Class
A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies
the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our option, require
holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9)
of the Securities Act and, in the event we so elect, we will not be required to file or maintain in effect a registration statement,
but we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is
not available. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange
for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state
securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration
or qualification, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value
and expire worthless. In such event, holders who acquired their warrants as part of a purchase of units will have paid the full
Unit purchase price solely for the shares of Class A common stock included in the units. We may not redeem the warrants when a
holder may not exercise such warrants. However, there may be instances in which holders of our public warrants may be unable to
exercise such public warrants but holders of our private warrants may be able to exercise such private warrants.
The grant of registration rights to
our initial stockholders and holders of our private placement warrants may make it more difficult to complete our initial business
combination, and the future exercise of such rights may adversely affect the market price of our Class A common stock.
Pursuant to an agreement entered into concurrently
with the issuance and sale of the securities in our initial public offering, our initial stockholders and their permitted transferees
can demand that we register their founder shares after those shares convert to shares of our Class A common stock at the time of
our initial business combination. In addition, holders of our private placement warrants and their permitted transferees can demand
that we register the private placement warrants and the shares of Class A common stock issuable upon exercise of the private placement
warrants, and holders of warrants that may be issued upon conversion of working capital loans may demand that we register such
warrants or the Class A common stock issuable upon exercise of such warrants. We will bear the cost of registering these securities.
In connection with the Share Exchange Agreement,
Legacy’s registration rights agreement with the Sponsor will be amended and restated (the “Amended and Restated Registration
Rights Agreement”) to provide the Sponsor and the Seller with registration rights with respect to certain shares of their
Blue Impact common stock. The registrable shares will be comprised of Sponsor’s shares of common stock issued or issuable
upon conversion of the founder’s shares, private placement warrants, and working capital loans (if any), or issued or issuable
with respect to the Redemption Side Letter, the Seller’s shares of common stock issued or issuable pursuant to the Share
Exchange Agreement, and any other shares of common stock held respectively by the Sponsor or the Seller as of the date of Amended
and Restated Registration Rights Agreement or issued or issuable in respect of such shares of the Sponsor the Seller pursuant to
a stock split, stock dividend or in connection with a combination, merger, share exchange, consolidation, recapitalization or reorganization.
Pursuant to the terms of the Amended and Restated Registration Rights Agreement, the Sponsor and the Seller will be entitled to
make up to three demands, excluding short form registration demands, “piggy-back” registration rights and Form S-3
registration rights, subject to certain minimum requirements and customary conditions. However, the Amended and Restated Registration
Rights Agreement provides that we will not permit any registration statement filed under the Securities Act to become effective
until termination of the applicable lock-up period under the Investor Rights Agreement. In addition, Blue Impact will be obligated
to file, after it becomes eligible to use Form S-3 or its successor form, a shelf registration statement to register the resale
by the Sponsor or the Seller of their registrable shares. The Sponsor and the Seller will be entitled to assign their registration
rights under the Amended and Restated Registration Rights Agreement to transferees who acquire at least 1% of the outstanding registrable
shares or to Founder Investors or Non-Founder Investors under the investor rights agreement to be entered into at the closing of
the business combination.
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 similar registration rights for their shares.
We are dependent upon our executive
officers and directors and their departure could adversely affect our ability to operate.
Our operations are dependent upon a relatively
small group of individuals. We believe that our success depends on the continued service of our executive officers and directors,
at least until we have completed our business combination. In addition, our executive officers and directors are not required to
commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating management time
among various business activities, including identifying potential business combinations and monitoring the related due diligence.
We do not have an employment agreement with, or key-man insurance on the life of, any of our directors or executive officers. The
unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.
Our ability to successfully effect
our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel,
some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations
and profitability of our post-combination business.
Our ability to successfully effect our business
combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however,
cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or
advisory positions following our business combination, it is likely that some or all of the management of the target business will
remain in place. While we intend to closely scrutinize any individuals we engage after our business combination, we cannot assure
you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar
with such requirements.
Our key personnel may negotiate employment
or consulting agreements with a target business in connection with a particular business combination. These agreements may provide
for them to receive compensation following our business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with
the company after the completion of our business combination only if they are able to negotiate employment or consulting agreements
in connection with the business combination. Such negotiations would take place simultaneously with the negotiation of the business
combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for
services they would render to us after the completion of the business combination. The personal and financial interests of such
individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such
individuals to remain with us after the completion of our business combination will not be the determining factor in our decision
as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key
personnel will remain with us after the completion of our business combination. We cannot assure you that any of our key personnel
will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain
with us will be made at the time of our initial business combination.
The Blue Impact business’
management team has limited experience managing a public company.
None of the current
members of the Blue Impact business’ management team have experience managing a U.S. publicly-traded company, and most do
not have experience interacting with public company investors and complying with the complex laws, rules and regulations that govern
public companies. The management team in place following the business combination may not be able to successfully or efficiently
manage the Blue Impact business’ transition to being a public company.
As a public company,
the Blue Impact business will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the NYSE
Rules. The Sarbanes-Oxley Act requires, among other things, that a company maintain effective disclosure controls and procedures
(“DCP”) and internal controls over financial reporting (“ICFR”). The management team’s limited experience
operating a public company may result in operational inefficiencies or errors, or a failure to improve or maintain effective ICFR
and DCP necessary to ensure timely and accurate reporting of operational and financial results. To date, the Blue Impact business’
management team has not had to conduct a review of its DCP and ICFR for the purposes of such reporting requirements, and the Blue
Impact business’ management team will need to devote a substantial amount of time to these compliance initiatives and may
need to add personnel in areas such as accounting, financial reporting, investor relations and legal in connection with operations
as a public company. For example, the Blue Impact business is in discussions with a candidate with public company financial reporting
experience to become its CFO following the Closing. Ensuring that the Blue Impact business has adequate internal financial and
accounting controls and procedures in place is a costly and time consuming effort that needs to be reevaluated frequently. the
Blue Impact business’ compliance with existing and evolving regulatory requirements will result in increased administrative
expenses and a diversion of management’s time and attention.
Additionally, pursuant
to Sections 302 and 404 of the Sarbanes-Oxley Act (“Section 404”), the Blue Impact business will be required to furnish
certain certifications and reports by its management on its ICFR, which, after it is no longer an emerging growth company, must
be accompanied by an attestation report on ICFR issued by its independent registered public accounting firm. To achieve compliance
with Section 404 within the prescribed period, the Blue Impact business will document and evaluate its ICFR, which is both costly
and challenging. Implementing any appropriate changes to its internal controls may require specific compliance training for Blue
Impact’s directors, officers and employees, entail substantial costs to modify its existing accounting systems, and take
a significant period of time to complete. Such changes may not, however, be effective in maintaining the adequacy of its ICFR,
and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis,
could increase its operating costs and could materially impair its ability to operate its business. Moreover, effective internal
controls are necessary for the Blue Impact business to produce reliable and timely financial reports and are important to help
prevent fraud. Any failure by the Blue Impact business to file its periodic reports in a timely manner may cause investors to lose
confidence in its reported financial information and may lead to a decline in the price of its common stock.
Our executive officers and directors
will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to
devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our executive officers and directors are
not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating
their time between our operations and our search for a business combination and their other businesses. We do not intend to have
any full-time employees prior to the completion of our business combination. Each of our executive officers is engaged in several
other business endeavors for which they may be entitled to substantial compensation and our executive officers are not obligated
to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board
members for other entities. If our executive officers’ and directors’ other business affairs require them to devote
substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote
time to our affairs which may have a negative impact on our ability to complete our initial business combination. For a complete
discussion of our executive officers’ and directors’ other business affairs, please see “Item
10. Directors, Executive Officers and Corporate Governance.”
Our executive officers, directors,
security holders and their respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that expressly
prohibits our directors, executive officers, security holders or affiliates from having a direct or indirect pecuniary or financial
interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest.
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.
Since our sponsor, executive officers
and directors will not be eligible to be reimbursed for their out-of-pocket expenses if our business combination is not completed,
a conflict of interest may have arisen in determining whether a Blue Valor is appropriate for our initial business combination.
At the closing of our initial business combination,
our sponsor, executive officers and directors, or any of their respective affiliates, will not be reimbursed for any out-of-pocket
expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due
diligence on suitable business combinations. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred
in connection with activities on our behalf. These financial interests of our sponsor, executive officers and directors may have
influenced their motivation in identifying and selecting Blue Valor as the target for business combination.
We may issue notes or other debt securities,
or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial
condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no commitments as of December
31, 2019 to issue any notes or other debt securities, or to otherwise incur outstanding debt following our initial public offering,
we may choose to incur substantial debt to complete our business combination. We have agreed that we will not incur any indebtedness
unless we have obtained from the lender a waiver of any right, title, interest or claim of any kind in or to the monies held in
the trust account. As such, no issuance of debt will affect the per-share amount available for redemption from the trust account.
Nevertheless, the incurrence of debt could have a variety of negative effects, including:
|
●
|
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 security is payable on demand;
|
|
●
|
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain
such financing while the debt security is outstanding;
|
|
●
|
our inability to pay dividends on our 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 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 our initial public offering and the sale of the private placement warrants, which will
cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
The net proceeds from our initial public
offering and the private placement of warrants provided us with $289,500,000 that we may use to complete our business combination
(excluding up to $10,500,000 of deferred underwriting commissions being held in the trust account).
We may effectuate our business combination
with a single target business or multiple target businesses simultaneously or within a short period of time. However, we may not
be able to effectuate our business combination with more than one target business because of various factors, including the existence
of complex accounting issues and the requirement that we prepare and file pro forma financial statements with the SEC that present
operating results and the financial condition of several target businesses as if they had been operated on a combined basis. By
completing our initial business combination with only a single entity our lack of diversification may subject us to numerous economic,
competitive and regulatory risks. Further, we would not be able to diversify our operations or benefit from the possible spreading
of risks or offsetting of losses, unlike other entities which may have the resources to complete several business combinations
in different industries or different areas of a single industry. Accordingly, the prospects for our success may be:
|
●
|
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 business combination.
The Blue Impact business is a group
of subsidiaries of Blue Focus Intelligent Communications Group, about which little information is available, which may result in
our business combination being not as profitable as we expect it to be.
The Blue Impact business is a group of subsidiaries
of Blue Focus Intelligent Communications Group, a privately held company that is not subject to the same financial disclosure requirements
as a publicly traded company. Consequently, very little public information exists about Blue Focus Intelligent Communications Group
and its subsidiaries, which may mean that the business combination is not as profitable as we expect it to be, if at all.
We do not have a specified maximum
redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001 upon the consummation of our initial business combination. The absence of such a redemption threshold
may make it possible for us to complete a business combination with which a substantial majority of our stockholders do not agree.
Our amended and restated certificate of incorporation
does not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount
that would cause our net tangible assets to be less than $5,000,001 upon the consummation of our initial business combination (such
that we become subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement
which may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our
business combination even though a substantial majority of our public stockholders do not agree with the transaction and have redeemed
their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection
with our business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their
shares to our sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we would
be required to pay for all shares of common stock that are validly submitted for redemption plus any amount required to satisfy
cash conditions pursuant to the terms of the proposed business combination exceed the aggregate amount of cash available to us,
we will not complete the business combination or redeem any shares, all shares of common stock submitted for redemption will be
returned to the holders thereof, and we instead may search for an alternate business combination.
The exercise price for the public
warrants is higher than in many similar blank check company offerings in the past, and, accordingly, the warrants are more likely
to expire worthless.
The exercise price of the public warrants
is higher than is typical in many similar blank check companies in the past. Historically, the exercise price of a warrant was
generally a fraction of the purchase price of the units in the initial public offering. The exercise price for our public warrants
is $5.75 per half share, or $11.50 per whole share. As a result, the warrants are less likely to ever be in the money and more
likely to expire worthless.
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) will provide that it may be amended with the approval of holders
of 65% of our common stock, which is a lower amendment threshold than that of some other blank check companies. It may be easier
for us, therefore, to amend our amended and restated certificate of incorporation to facilitate the completion of an initial business
combination that some of our stockholders may not support.
Some other blank check companies have a provision
in their charter which prohibits the amendment of certain of its provisions, including those which relate to a company’s
pre-business combination activity, without approval by a certain percentage of the company’s stockholders. In those companies,
amendment of these provisions requires approval by between 90% and 100% of the company’s public stockholders. Our amended
and restated certificate of incorporation will provide that any of its provisions related to pre-business combination activity
(including the requirement to deposit proceeds of our initial public offering and the private placement of 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 65% of our common stock, and corresponding provisions of the trust
agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our common stock.
In all other instances, our amended and restated certificate of incorporation will provide that it may be amended by holders of
a majority of our common stock, subject to applicable provisions of the DGCL or applicable stock exchange rules. We may not issue
additional securities that can vote on charter amendments. Our initial stockholders, who will beneficially own 20% of our common
stock upon the closing of our initial public offering, will participate in any vote to amend our amended and restated certificate
of incorporation and/or trust agreement and will have the discretion to vote in any manner they choose. As a result, we may be
able to amend the provisions of our amended and restated certificate of incorporation which will govern our pre-business combination
behavior more easily than some other blank check companies, and this may increase our ability to complete a business combination
with which you do not agree. Our stockholders may pursue remedies against us for any breach of our amended and restated certificate
of incorporation.
Certain agreements related to our
initial public offering may be amended without stockholder approval.
Certain agreements, including the underwriting
agreement relating to our initial public offering, the investment management trust agreement between us and Continental Stock Transfer
& Trust Company, the letter agreement among us and our sponsor, officers, directors and director nominees, the registration
rights agreement among us and our initial stockholders and the administrative services agreement between us and our sponsor, may
be amended without stockholder approval. These agreements contain various provisions that our public stockholders might deem to
be material. For example, the underwriting agreement related to our initial public offering contains (i) a representation that
we will not consummate any public or private equity or debt financing prior to the consummation of a business combination, unless
all investors in such financing expressly waive, in writing, any rights in or claims against the trust account and (ii) a covenant
that the target company that we acquire must have a fair market value equal to at least 80% of the balance in the trust account
at the time of signing the definitive agreement for the transaction with such target business (excluding the deferred underwriting
commissions and taxes payable on the income earned on the trust account) so long as we obtain and maintain a listing for our securities
on the NYSE. While we do not expect our board to approve any amendment to any of these agreements prior to our initial business
combination, it may be possible that our board, in exercising its business judgment and subject to its fiduciary duties, chooses
to approve one or more amendments to any such agreement in connection with the consummation of our initial business combination.
Any such amendment may have an adverse effect on the value of an investment in our securities.
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. Further, certain institutional investors may have different interests than other public stockholders.
Immediately following the closing of our
initial public offering, our initial stockholders owned 20% of our issued and outstanding shares of common stock.
Accordingly, they may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our
amended and restated certificate of incorporation and approval of major corporate transactions. If our initial stockholders purchase
any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would increase their influence.
Neither our initial stockholders nor, to
our knowledge, any of our officers or directors, have any intention as of the date of this Form 10-K to purchase additional securities,
other than as disclosed in this 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 two classes, each of which will generally serve for a term of two years with only one class
of directors being elected in each year. Following our first annual meeting on December 31, 2019, as a consequence of our “staggered”
board of directors, only half of the board of directors was considered for election and our initial stockholders, because of their
ownership position, had considerable influence regarding the outcome. Accordingly, our initial stockholders will continue to exert
control at least until the completion of our business combination.
We may amend the terms of the warrants
in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 65% of the then outstanding
public warrants.
Our warrants will be issued in registered
form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective
provision, but requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change
that adversely affects the interests of the registered holders of public warrants. 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, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.
We may redeem your unexpired warrants
prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding
warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that
the last reported sales price of our Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day
period ending on the third trading day prior to the date we send the notice of redemption to the warrant holders. We may not redeem
the warrants when a holder may not exercise such warrants. Redemption of the outstanding warrants could force you (i) to exercise
your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your
warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption
price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market
value of your warrants. None of the private placement warrants will be redeemable by us so long as they are held by their initial
purchasers or their permitted transferees.
Our warrants may have an adverse effect
on the market price of our Class A common stock and make it more difficult to effectuate our business combination.
We issued warrants to purchase 15,000,000
shares of our Class A common stock as part of the units offered in our initial public offering and private placement warrants,
exercisable to purchase an aggregate of 8,750,000 shares of our Class A common stock, in a private placement. In addition, if our
sponsor or an affiliate of our sponsor or certain of our officers and directors make any working capital loans, up to $1,500,000
of such loans may be convertible into warrants of the post business combination entity at a price of $0.50 per warrant at the option
of the lender. To the extent we issue shares of Class A common stock to effectuate a business transaction, the potential for the
issuance of a substantial number of additional shares of Class A common stock upon exercise of these warrants could make us a less
attractive acquisition vehicle to a target business. Such warrants, if and when exercised, would increase the number of issued
and outstanding shares of our Class A common stock and reduce the value of the shares of Class A common stock issued to complete
the business transaction. Therefore, our warrants may make it more difficult to effectuate a business transaction or increase the
cost of acquiring the target business.
The private placement warrants are identical
to the warrants sold as part of the units in our initial public offering except that, so long as they are held by our sponsor or
its permitted transferees, (i) they will not be redeemable by us, (ii) they (including the Class A common stock issuable upon exercise
of these warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold by our sponsor until 30 days
after the completion of our initial business combination; (iii) they may be exercised by the holders on a cashless basis; and (iv)
the founder shares are subject to registration rights. In addition, for as long as the private placement warrants are held by Loop
Capital Markets LLC or its designees or affiliates, they may not be exercised after five years from the effective date of the registration
statement for our initial public offering.
Because each warrant is exercisable
for only one-half of one share of our Class A common stock, the units may be worth less than units of other blank check companies.
Each warrant is exercisable for one-half
of one share of Class A common stock. Warrants may be exercised only for a whole number of shares of Class A common stock. No fractional
shares will be issued upon exercise of the warrants. 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. As a result, warrant holders not purchasing an even number of units must sell
any odd number of warrants in order to obtain full value from the fractional interest that will not be issued. Nevertheless, this
Unit structure may cause our units to be worth less than if it included a warrant to purchase one whole share.
The market for our securities is volatile
and may not develop further, which would adversely affect the liquidity and price of our securities.
Following our initial public offering, the
price of our securities has varied significantly. Furthermore, an active trading market for our securities may never develop or,
if developed, it may not be sustained. You may be unable to sell your securities unless a market can be established and sustained.
We are an emerging growth company
and a smaller reporting company, each within the meaning of the Securities Act, and if we take advantage of certain exemptions
from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities
less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company”
within the meaning of the Securities Act, as modified by the JOBS Act. Additionally, we are also a “smaller reporting company”
under the SEC’s amended definition of a “smaller reporting company.” As a result, we may take advantage of certain
exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies
or smaller reporting companies including, but not limited to, not being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved, and not being required to present selected financial data and
only being required to provide two years of audited financial statements in annual reports. 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. Even if we age out of our status as an emerging growth company after five years, we may still qualify as
a smaller reporting company, including if either (a) the market value of our Class A common stock held by non-affiliates falls
below $250 million as of June 30 of any year, or (b) we have less than $80 million of revenues for the prior fiscal year and the
market value of our Class A common stock held by non-affiliates is less than $560 million as of June 30 of such year. We cannot
predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors
find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be
lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our
securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act
exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The
JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply
to non-emerging growth companies but any such 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 accountant standards used.
Compliance obligations under the Sarbanes-Oxley
Act may make it more difficult for us to effectuate our business combination, require substantial financial and management resources,
and increase the time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act requires
that we evaluate and report on our system of internal controls beginning with our Annual Report on Form 10-K for the year ending
December 31, 2019. Only in the event we are deemed to be a large accelerated filer or an accelerated filer 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 company with which we seek to complete our business combination may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal control
of any such entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete any
such acquisition.
Provisions in our amended and restated
certificate of incorporation and Delaware law may inhibit a takeover of us, which could limit the price investors might be willing
to pay in the future for our 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 shares, which may make more difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our securities.
We are also subject to anti-takeover provisions
under Delaware law, which could delay or prevent a change of control. Together these provisions may make more difficult the removal
of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for
our securities.
Provisions in our amended and restated
certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.
Our amended and restated certificate of incorporation
requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers
and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State
of Delaware and, if brought outside of Delaware, the stockholder bringing such suit will be deemed to have consented to service
of process on such stockholder’s counsel. This provision may have the effect of discouraging lawsuits against our directors
and officers.
An investment in our initial public offering
may result in uncertain or adverse United States federal income tax consequences.
An investment in our initial public offering
may result in uncertain United States federal income tax consequences. For instance, because there are no authorities that directly
address instruments similar to the units we issued in our initial public offering, the allocation an investor makes with respect
to the purchase price of a Unit between the share of common stock and the warrant to purchase one share of common stock included
in each Unit could be challenged by the IRS or the courts. Furthermore, the United States federal income tax consequences of a
cashless exercise of a warrant included in the units is unclear under current law. Finally, it is unclear whether the redemption
rights with respect to our shares of common stock suspend the running of a U.S. holder’s holding period for purposes of determining
whether any gain or loss realized by such holder on the sale or exchange of common stock is long-term capital gain or loss and
for determining whether any dividend we pay would be considered “qualified dividends” for federal income tax purposes.
See the section titled “Taxation” for a summary of the principal United States federal income tax consequences of an
investment in our securities. Prospective investors are urged to consult their tax advisors with respect to these and other tax
consequences when purchasing, holding or disposing of our securities.
Global business risks
and costs could materially adversely affect the Blue Impact business.
The Blue Impact business
is a global business that as of September 30, 2019 has operations in 13 countries, spanning across North America, Europe, the Middle
East and Asia Pacific. A global platform subjects the Blue Impact business to many challenges associated with supporting a rapidly
growing business across a multitude of cultures and customs, including:
|
●
|
higher costs and difficulties inherent in managing cross-border business operations and complying
with varying tax, monetary, commercial, legal and regulatory systems and infrastructures;
|
|
●
|
pressure on its ability to efficiently provide its clients with integrated service offerings;
|
|
●
|
laws governing the manner in which future business combinations may be effected;
|
|
●
|
currency fluctuations and exchange controls;
|
|
●
|
cultural and language differences;
|
|
●
|
local labor and employment regulations;
|
|
●
|
tax issues, such as tax law changes and variations in tax laws as compared to the United States;
|
|
●
|
differing protection and enforcement of intellectual property rights;
|
|
●
|
varying social, political and economic conditions;
|
|
●
|
greater exposure to civil disturbances, terrorist attacks, natural disasters and wars; and
|
|
●
|
potential government appropriation of assets.
|
The Blue Impact business’
ability to manage its business and conduct its operations globally thus requires considerable attention and resources. The Blue
Impact business may not be able to adequately address these additional risks. If it is unable to do so, its operations might suffer,
which may adversely impact its business, results of operations, financial condition and prospects.
The Blue Impact business’
global business also subjects it to the impact of global and regional recessions, especially in the regions in which it operates,
and economic and political instability, including those arising as a result of the U.K.’s anticipated exit from the EU (commonly
referred to as “Brexit”), recent political unrest in Hong Kong and trade disputes such as that between the United States
and China. The Blue Impact business is also subject to the costs and difficulties in managing a distributed workforce. The Blue
Impact business’ failure to manage the foregoing risks and challenges successfully could materially adversely affect its
business, financial condition, results of operations and prospects.
Further, uncertainties
with respect to the Chinese legal system could adversely affect the Blue Impact business. The Chinese legal system is based on
written statutes and prior court decisions have limited value as precedents. Since these laws and regulations are relatively new
and the Chinese legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always
uniform and enforcement of these laws, regulations and rules involves uncertainties. Since Chinese administrative and court authorities
have significant discretion in interpreting, implementing and enforcing statutory provisions and contractual terms, it may be more
difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection that Madhouse and the
Blue Impact business’ other operations in China may enjoy than some more developed legal systems. These uncertainties may
affect the Blue Impact business’ decisions on the policies and actions to be taken to comply with Chinese laws and regulations,
and may affect its ability to enforce its contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited
through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from the Blue Impact business.
Furthermore, the Chinese
legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at
all and may have a retroactive effect. As a result, the Blue Impact business may not be aware of its violation of any of these
policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted,
resulting in substantial costs and diversion of resources and management attention.
Additionally, laws regarding
foreign investments may impact the Blue Impact business’ plan to expand its geographic reach. For example, the Regulations
on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “M&A Rules”), adopted by six Chinese
regulatory agencies in 2006 and amended in 2009, and some other regulations and rules concerning mergers and acquisitions established
additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming
and complex. Such regulation requires, among other things, that the competent regulatory authorities such as the Ministry of Commerce
(“MOFCOM”) and the State Administration for Market Regulation (“SAMR”) be notified in advance of any change
of control transaction in which a foreign investor acquires control of a Chinese domestic enterprise, if (i) any important industry
is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction
will lead to a change in control of a domestic enterprise which holds a famous trademark or Chinese time honored brand. In the
future, the Blue Impact business may seek to acquire complementary businesses in China. Complying with the requirements of the
M&A Rules to complete such transactions could be time consuming, and any required approval from MOFCOM and SAMR, may delay
or inhibit the Blue Impact business’ ability to complete such transactions, which could materially adversely affect its ability
to expand its business or maintain its Chinese market share. In addition, antitrust filings with SAMR would also be required for
deals in which the parties involved satisfy reporting threshold under Chinese law and any such filings will also be very time consuming.
Moreover, post-Closing,
Blue Impact’s operations and actions may also be subject to additional restrictions or approval requirements given Blue Valor’s
direct, and in turn BlueFocus’s indirect, post-Closing ownership interest in Blue Impact and ability to nominate Blue Impact
directors. BlueFocus is organized in China and its shares are traded in China on the SSE. As a result, Blue Impact will be considered
a controlled company for the purposes of PRC regulations and the rules of the SSE, and certain corporate actions proposed to be
undertaken by Blue Impact will require reporting to and approval of BlueFocus. For example, in the context of a proposed future
acquisition of a U.S. business, these restrictions or approval requirements may require (i) making specified security filings in
the United States. (ii) obtaining any required clearances or implementing remedial measures or other safeguards as a condition
to receiving any required approval and (iii) for larger acquisitions (in the United States or otherwise) receiving approval from
BlueFocus’s board of directors and, for much larger acquisitions, possibly receiving approval from BlueFocus’s shareholders.
Any failure by Blue Impact to comply with such rules and regulations, or to obtain the required approval from BlueFocus’s
board of directors or shareholders, could prevent or delay Blue Impact from consummating proposed corporate actions.
Any of the foregoing,
to the extent it affects the Blue Impact business, could materially adversely affect the business, financial condition, results
of operations and prospects of the Blue Impact business.