ITEM 1. BUSINESS
In
this Annual Report on Form 10-K (the “Form 10-K”), references to the “Company” and to “we,”
“us,” “our” and “Northern Star” refer to Northern Star Investment Corp. III
We
are a blank check company incorporated Delaware on November 30, 2020 for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with one or more businesses or entities (the “Business
Combination”).
While
we may pursue an acquisition in any business industry or sector, we are currently focusing our efforts identifying businesses primarily
in the direct-to-consumer and digitally-disruptive e-commerce spaces. We have been concentrating on companies founded with vision, run
by smart teams who value diversity in all aspects of decision-making. We are focusing on companies which have powerful relationships
with their consumers, value their input and communicate with them effectively.
We
also are looking for businesses which create, produce, own, distribute and/or market content, products and services or facilitate the
sharing economy. These companies may serve both domestic and international audiences. Growth in these sectors has been driven by new
technologies, the expansion of emerging markets, and new consumption habits lead by Millennials and “Gen Z” who value experiences
as much as “stuff,” health over wealth and transparency in how something is produced. Some of these sectors may also reflect
trends accelerated by the Covid 19 pandemic.
We
believe the use of technology to drive adoption of emerging brands online, together with the ongoing seismic shift in retail sales from
physical stores to e-commerce and online activities, makes our target sectors even more ripe for attractive business combination opportunities.
Our acquisition and value creation strategy will be to identify, acquire and, after our initial business combination, build a company
in one of these sectors that complements the experience of our management team and can benefit from their operational expertise. Our
business combination strategy will be to leverage our management team’s network of relationships, knowledge and experience in these
sectors to locate and consummate an initial business combination.
We
believe that given our management team’s operational and investment experience in the sectors we are focusing on, we are well positioned
to identify a target business with an operating model that can create strong value for its customers by improving customer experiences
including utilizing technology to enhance convenience, speed, personalization or other similar factors. Such companies may benefit from
our management team’s extensive operational experience and relationships in these sectors to assist in further expanding the company’s
operations and growth prospects.
On
March 1, 2021, the Registration Statements on Form S-1 (SEC File Nos. 333-252728 and 333-253757) (collectively
the “Registration Statement”) for our initial public offering of units (“Initial Public Offering”) was declared
effective. On March 4, 2021, we consummated the initial public offering of 40,000,000 units (each, a “Unit” and collectively,
the “Units”) including 5,000,000 units subject to the underwriters’ over-allotment option. Each Unit consists of one
share of Class A common stock, $.0001 par value (“Common Stock”), and one-sixth of one redeemable warrant
(each, a “Public Warrant”), with each whole Public Warrant entitling the holder to purchase one share of Common Stock at
a price of $11.50 per share, subject to adjustment. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds
of $400,000,000.
Simultaneously
with the closing of the Initial Public Offering, we consummated the private placement (the “Private Placement”) of 9,750,000
warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price
of $1.00 per Private Placement Warrant, generating gross proceeds of $9,750,000. The Private Placement Warrants were purchased by the
Company’s sponsor, Northern Star IIII Sponsor LLC (“Sponsor”), an entity affiliated with certain of our officers and
directors. The Private Placement Warrants are identical to the Public Warrants included in the Units sold in the IPO, except that the
Private Placement Warrants are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue
to be held by the Sponsor or its permitted transferees. The Sponsor has agreed not to transfer, assign, or sell any of the Private Placement
Warrants or Common Stock underlying the Private Placement Warrants (except to certain transferees) until thirty days after the completion
of the Company’s initial business combination.
Transaction
costs amounted to $22,531,113, consisting of $8,000,000 of underwriting fees, $14,000,000 of deferred underwriting fees and $531,113
of other offering costs.
$400,000,000
($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Warrants
was placed in a trust account (“Trust Account”) located in the United States and held as cash items or invested only in U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days
or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions
of paragraph (d) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the
completion of a business combination and (ii) the distribution of the assets held in the Trust Account, as described below.
Effecting a Business
Combination
General
We
are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time. The Company
will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company
will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from
the Initial Public Offering. We intend to utilize cash derived from the proceeds of our initial public offering and the private placement
of Private Placement Warrants, our capital stock, debt or a combination of these in effecting a business combination. Although substantially
all of the net proceeds of the Initial Public Offering and the Private Placement of Private Placement Warrants are intended to be applied
generally toward effecting a business combination, the proceeds are not otherwise being designated for any more specific purposes. A
business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but
which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking
a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal
and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially
unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than
one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination.
Sources of Target
Businesses
We
anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers
and private investment funds. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited
by us through calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on
an unsolicited basis, since many of these sources will have read the prospectus for our Initial Public Offering and know what types of
businesses we are targeting. Our officers and directors, as well as their affiliates, and our other stockholders may also bring to our
attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries
or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary
deal flow opportunities that would not otherwise necessarily be available to us as a result of the track record and business relationships
of our officers and directors. We may also determine to engage the services of professional firms or other individuals that specialize
in business acquisitions on a formal basis, in which event we may pay a finder’s fee, consulting fee or other compensation to be
determined in an arm’s length negotiation based on the terms of the transaction. If we decide to enter into a business combination
with a target business that is affiliated with our officers, directors or initial stockholders, we will do so only if we have obtained
an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that the
business combination is fair to our unaffiliated stockholders from a financial point of view.
Selection of a Target
Business and Structuring of a Business Combination
Subject
to the limitations that a target business have a fair market value of at least 80% of the balance in the Trust Account (excluding deferred
underwriting fees and taxes payable) at the time of the execution of a definitive agreement for our initial business combination, as
described below in more detail, our management will have virtually unrestricted flexibility in identifying and selecting a prospective
target business. We have not established any other specific attributes or criteria (financial or otherwise) for prospective target businesses.
In evaluating a prospective target business, our management may consider a variety of factors, including one or more of the following:
| ● | financial
condition and results of operation; |
| ● | brand
recognition and potential; |
| ● | experience
and skill of management and availability of additional personnel; |
| ● | stage
of development of the products, processes or services; |
| ● | existing
distribution and potential for expansion; |
| ● | degree
of current or potential market acceptance of the products, processes or services; |
| ● | proprietary
aspects of products and the extent of intellectual property or other protection for products
or formulas; |
| ● | impact
of regulation on the business; |
| ● | regulatory
environment of the industry; |
| ● | costs
associated with effecting the business combination; |
| ● | industry
leadership, sustainability of market share and attractiveness of market industries in which
a target business participates; and |
| ● | macro
competitive dynamics in the industry within which the company competes. |
These
criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based,
to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business
combination consistent with our business objective. In evaluating a prospective target business, we will conduct an extensive due diligence
review which will encompass, among other things, meetings with incumbent management and inspection of facilities, as well as review of
financial and other information which is made available to us. This due diligence review will be conducted either by our management or
by unaffiliated third parties we may engage, although we have no current intention to engage any such third parties.
The
time and costs required to select and evaluate a target business and to structure and complete the business combination cannot presently
be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target
business with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available
to otherwise complete a business combination.
Fair Market Value
of Target Business
Pursuant
to NYSE listing rules, the target business or businesses that we acquire must collectively have a fair market value equal to at least
80% of the balance of the funds in the trust account (excluding deferred underwriting fees and taxes payable) at the time of the execution
of a definitive agreement for our initial business combination, although we may acquire a target business whose fair market value significantly
exceeds 80% of the trust account balance. We currently anticipate structuring a business combination to acquire 100% of the equity interests
or assets of the target business or businesses. We may, however, structure a business combination where we merge directly with the target
business or where we acquire less than 100% of such interests or assets of the target business in order to meet certain objectives of
the target management team or stockholders or for other reasons, but we will only complete such business combination if the post-transaction
company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest
in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as
amended. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target, our stockholders prior
to the business combination may collectively own a minority interest in the post-transaction company, depending on valuations ascribed
to the target and us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial
number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% controlling
interest in the target. However, as a result of the issuance of a substantial number of new shares, our stockholders immediately prior
to our initial business combination could own less than a majority of our outstanding shares subsequent to our initial business combination.
If less than 100% of the equity interests or assets of a target business or businesses are owned or acquired by the post-transaction
company, only the portion of such business or businesses that is owned or acquired is what will be valued for purposes of the 80% fair
market value test. In order to consummate such an acquisition, we may issue a significant amount of our debt or equity securities to
the sellers of such businesses and/or seek to raise additional funds through a private offering of debt or equity securities. Since we
have no specific business combination under consideration, we have not entered into any such fund-raising arrangement and have no current
intention of doing so. The fair market value of the target will be determined by our board of directors based upon one or more standards
generally accepted by the financial community (such as actual and potential sales, earnings, cash flow and/or book value). If our board
is not able to independently determine that the target business has a sufficient fair market value, we will obtain an opinion from an
unaffiliated, independent investment banking firm, or another independent entity that commonly renders valuation opinions, with respect
to the satisfaction of such criteria. We will not be required to obtain an opinion from an independent investment banking firm, or another
independent entity that commonly renders valuation opinions, as to the fair market value if our board of directors independently determines
that the target business complies with the 80% threshold.
Lack of Business
Diversification
Our
business combination must be with a target business or businesses that collectively satisfy the minimum valuation standard at the time
of such acquisition, as discussed above, although this process may entail the simultaneous acquisitions of several operating businesses
at the same time. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance
of a single business. Unlike other entities which may have the resources to complete several business combinations of entities operating
in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single entity,
our lack of diversification may:
| ● | subject
us to numerous economic, competitive and regulatory developments, any or all of which may
have a substantial adverse impact upon the particular industry in which we may operate subsequent
to a business combination, and |
| ● | result
in our dependency upon the performance of a single operating business or the development
or market acceptance of a single or limited number of products, processes or services. |
If
we determine to simultaneously acquire several businesses and such businesses are owned by different sellers, we will need for each of
such sellers to agree that our purchase of its business is contingent on the simultaneous closings of the other acquisitions, which may
make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also
face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations
(if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the operations and services or
products of the acquired companies in a single operating business.
Limited Ability to
Evaluate the Target Business’ Management
Although
we intend to scrutinize the management of a prospective target business when evaluating the desirability of effecting a business combination,
we cannot assure you that our assessment of the target business’ management will prove to be correct. In addition, we cannot assure
you that the future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the
future role of our officers and directors, if any, in the target business following a business combination cannot presently be stated
with any certainty. While it is possible that some of our key personnel will remain associated in senior management or advisory positions
with us following a business combination, it is unlikely that they will devote their full-time efforts to our affairs subsequent to a
business combination. Moreover, they would only be able to remain with the company after the consummation of a business combination 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 them to receive compensation in the form
of cash payments and/or our securities for services they would render to the company after the consummation of the business combination.
Additionally, our officers and directors may not have significant experience or knowledge relating to the operations of the particular
target business.
Following
a business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We
cannot assure you that we will have the ability to recruit additional managers, or that any such additional managers we do recruit will
have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Stockholders May
Not Have the Ability to Approve an Initial Business Combination
In
connection with any proposed business combination, we will either (1) seek stockholder approval of our initial business combination
at a meeting called for such purpose at which stockholders may seek to convert 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
(net of taxes payable), or (2) provide our stockholders with the opportunity to sell 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 (net of taxes payable), in each case subject to the limitations described herein. If we determine
to engage in a tender offer, such tender offer will be structured so that each stockholder may tender all of his, her or its shares rather
than some pro rata portion of his, her or its shares. The decision as to whether we will seek stockholder approval of
a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us, solely in
our discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction
would otherwise require us to seek stockholder approval. In the case of a tender offer, we will file tender offer documents with the
SEC which will contain substantially the same financial and other information about the initial business combination as is required under
the SEC’s proxy rules. We will consummate our initial business combination only if we have net tangible assets of at least $5,000,001
upon such consummation and, if we seek stockholder approval, a majority of the outstanding shares of common stock voted are voted in
favor of the business combination.
Redemption Rights
At
any meeting called to approve an initial business combination, public stockholders may seek to redeem their shares, regardless of whether
they vote for or against the proposed business combination or do not vote at all, for their pro rata share of the aggregate
amount then on deposit in the trust account as of two business days prior to the consummation of the initial business combination, less
any taxes then due but not yet paid. Alternatively, we may provide our public stockholders with the opportunity to sell their shares
of common stock to us through 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, less any taxes then due but not yet paid.
Notwithstanding
the foregoing, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a
“group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption rights with
respect to 20% or more of the shares sold in the Initial Public Offering. Such a public stockholder would still be entitled to vote against
a proposed business combination with respect to all shares owned by him or his affiliates.
Our
initial stockholders, officers and directors will not have redemption rights with respect to any shares of common stock owned by them,
directly or indirectly.
We
may also require public stockholders, whether they are a record holder or hold their shares in “street name,” to either tender
their certificates to our transfer agent at any time through the vote on 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.
Any proxy solicitation materials that we furnish to stockholders in connection with the vote for any proposed business combination will
indicate whether we are requiring stockholders to satisfy such delivery requirements. Accordingly, a stockholder would have from the
time the stockholder received our proxy statement through the vote on the business combination to deliver his shares if he wishes to
seek to exercise his redemption rights. Under Delaware law and our amended and restated bylaws, we are required to provide at least 10
days advance notice of any stockholder meeting, which would be the minimum amount of time a stockholder would have to determine whether
to exercise redemption rights.
There
is a nominal cost associated with this 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, 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 prior to a specified date. The need to deliver shares is a requirement of exercising redemption
rights regardless of the timing of when such delivery must be effectuated. However, in the event we require stockholders seeking to exercise
redemption rights to tender their shares prior to the consummation of the proposed business combination and the proposed business combination
is not consummated, this may result in an increased cost to stockholders.
Any
request to redeem such shares once made, may be withdrawn at any time up to the vote on the proposed business combination. Furthermore,
if a holder of a public share delivers his certificate in connection with an election of their redemption and subsequently decides prior
to the vote on the business combination not to elect to exercise such rights, he may simply request that the transfer agent return the
certificate (physically or electronically).
If
the 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 shares delivered by public holders.
Liquidation if No
Business Combination
Our amended and restated certificate of incorporation provides that
we will have only until March 4, 2023 to complete our initial business combination. If we do not complete a business combination by such
date and our stockholders do not otherwise approve an extension of time to consummate an initial business combination, 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 100% of the outstanding public shares 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 the case of (ii) and
(iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In
connection with our redemption of 100% of our outstanding public shares for a portion of the funds held in the trust account, each holder
will receive a full pro rata portion of the amount then in the trust account, plus any pro rata interest
earned on the funds held in the trust account and not previously released to us to pay our taxes payable on such funds, less up to $100,000
of interest to pay liquidation expenses and which interest shall be net of taxes payable (subject in each case to our obligations under
Delaware law to provide for claims of creditors). At such time, the warrants will expire, holder of warrants will receive nothing upon
a liquidation with respect to such warrants and the warrants will be worthless.
Under
the Delaware General Corporation Law, 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 100% of our outstanding public shares in the event we do not complete our initial business combination
within the required time period may be considered a liquidation distribution under Delaware law. If the corporation complies with certain
procedures set forth in Section 280 of the Delaware General Corporation Law 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 100% of our
public shares in the event we do not complete our initial business combination within the required time period is not considered a liquidation
distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the Delaware
General Corporation Law, 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 a business combination within the
prescribed time frame, 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 100% of the 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 the case of (ii) and (iii) above) 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 our deadline 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 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation
Law 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.
We
will seek to have all third parties (including any vendors or other entities we engage) and any prospective target businesses enter into
valid and enforceable agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held
in the trust account. As a result, the claims that could be made against us will be limited, thereby lessening the likelihood that any
claim would result in any liability extending to the trust. We therefore believe that any necessary provision for creditors will be reduced
and should not have a significant impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless,
there is no guarantee that vendors, service providers and prospective target businesses will execute such agreements. In the event that
a potential contracted party was to refuse to execute such a waiver, we will execute an agreement with that entity only if our management
first determines that we would be unable to obtain, on a reasonable basis, substantially similar services or opportunities from another
entity willing to execute such a waiver. Examples of instances where we may engage a third party that refused to execute a waiver would
be the engagement of a third party consultant who cannot sign such an agreement due to regulatory restrictions, such as our auditors
who are unable to sign due to independence requirements, the underwriters, who have not waived their rights to indemnification provided
by us under the underwriting agreement, or other third parties whose particular expertise or skills are believed by management to be
superior to those of other consultants that would agree to execute a waiver or a situation in which management does not believe it would
be able to find a provider of required services willing to provide the waiver. There is also no guarantee that, even if they execute
such agreements with us, they will not seek recourse against the trust account. Our Sponsor has agreed that it will be liable to pay
debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted
for or products sold to us. However, the agreement entered into by our Sponsor specifically provides for two exceptions to the indemnity
given: it will have no liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed
an agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account,
or (2) as to any claims for indemnification by the underwriters of our Initial Public Offering against certain liabilities, including
liabilities under the Securities Act. As a result, we cannot assure you that the per-share distribution from the trust account,
if we liquidate the Trust Account because we have not completed a business combination within the required time period, will not be less
than $10.00.
In
the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per public share and (ii) the actual
amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per share
due to reductions in the value of the trust assets, in each case less taxes payable, and our Sponsor asserts that it is unable to satisfy
its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors
would determine whether to take legal action against our Sponsor to enforce such indemnification obligations. While we currently expect
that our independent directors would take legal action on our behalf to enforce these indemnification obligations, it is possible that
our independent directors in exercising their business judgment may choose not to do so in any particular instance. Accordingly, we cannot
assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.00
per share.
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 shareholders. To the extent any bankruptcy claims deplete the trust account, we cannot
assure you we will be able to return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, any distributions received by stockholders could be viewed
under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.”
As a result, a bankruptcy court could seek to recover some or all amounts received by our stockholders. Furthermore, our board of directors
may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself
and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of
creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account only (i) in the event of the redemption of our public
shares if we do not complete our initial business combination within the required time period, (ii) in connection with a stockholder
vote to amend our amended and restated certificate of incorporation to modify the substance or timing of our obligation to redeem 100%
of our public shares if we do not complete our initial business combination within the required time period or in connection with certain
amendments to our charter prior thereto or (iii) if they redeem their respective shares for cash upon the completion of our initial
business combination. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account.
In the event we seek stockholder approval in connection with our initial business combination, a stockholder’s voting in connection
with the 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 and followed the procedures
described above and as detailed in the applicable proxy or tender offer materials.
Competition
In
identifying, evaluating and selecting a target business, we may encounter intense competition from other entities having a business objective
similar to ours. Many of these entities are well established and have extensive experience identifying and effecting business combinations
directly or through affiliates. Many of these competitors possess greater technical, human and other resources than us and our financial
resources will be relatively limited when contrasted with those of many of these competitors. Our ability to compete in acquiring certain
sizable target businesses may be limited by our available financial resources.
The
following also may not be viewed favorably by certain target businesses:
| ● | our
obligation to seek stockholder approval of a business combination or engage in a tender offer
may delay the completion of a transaction; |
| ● | our
obligation to convert or repurchase shares of common stock held by our public stockholders
may reduce the resources available to us for a business combination; |
| ● | our
obligation to pay the underwriters in our Initial Public Offering deferred underwriting commissions
of an aggregate fee of $14,000,000 upon consummation of our initial business combination;
and |
| ● | our
outstanding warrants, and the potential future dilution they represent. |
In
addition, since the fourth quarter of 2020, the number of special purpose acquisition companies that have been formed has increased substantially.
Many potential targets for special purpose acquisition companies have already entered into an initial business combination, and there
are still many special purpose acquisition companies seeking targets for their initial business combination, as well as many such companies
currently in registration. As a result, at times, fewer attractive targets may be available, and it may require more time, more effort
and more resources to identify a suitable target and to consummate an initial business combination.
If
we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target
business. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively.
Employees
We
have three executive officers. These individuals are not obligated to devote any specific number of hours to our matters and intend to
devote only as much time as they deem necessary to our affairs. The amount of time they will devote in any time period will vary based
on whether a target business has been selected for the business combination and the stage of the business combination process the company
is in. Accordingly, once management locates a suitable target business to acquire, they will spend more time investigating such target
business and negotiating and processing the business combination (and consequently spend more time to our affairs) than they would prior
to locating a suitable target business. We presently expect each of our executive officers to devote such amount of time as they reasonably
believe is necessary to our business. We do not intend to have any full-time employees prior to the consummation of a business combination.
Facilities
Our
executive offices are located at c/o Graubard Miller, The Chrysler Building, 405 Lexington Avenue, 44th Floor, New York, New
York 10174, and our telephone number is (212) 818-8800. Since inception, the Company has utilized office space provided by
its counsel at no cost. We consider our current office space, combined with the other office space otherwise available to our executive
officers, adequate for our current operations.
ITEM 1A. RISK
FACTORS
An investment in
our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other
information contained in this Annual Report on Form 10-K, the prospectus associated with our Initial Public Offering and the
registration statement of which such prospectus forms a part before making a decision to invest in our securities. If any of the following
events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading
price of our securities could decline, and you could lose all or part of your investment. The risk factors described below are not necessarily
exhaustive and you are encouraged to perform your own investigation with respect to us and our business.
Risks Relating to
Searching for and Consummating a Business Combination
Our stockholders
may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business
combination even though a majority of our stockholders do not support such a combination.
We may choose not to
hold a stockholder vote before we complete our initial business combination if the business combination would not require stockholder
approval under applicable law or stock exchange listing requirement. For instance, if we were seeking to acquire a target business where
the consideration we were paying in the transaction was all cash, we would not be required to seek stockholder approval to complete such
a transaction. Except for as required by applicable law or stock exchange requirement, the decision as to whether we will seek stockholder
approval of a proposed business combination or will allow stockholders to sell their shares to us in a tender offer will be made by us,
solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the
transaction would otherwise require us to seek stockholder approval. Accordingly, we may complete our initial business combination even
if holders of a majority of our shares of common stock do not approve of the business combination we complete. Please see the section
of the prospectus associated with our Initial Public Offering and the registration statement of which such prospectus forms a part entitled
“Proposed Business—Stockholders May Not Have the Ability to Approve Our Initial Business Combination” for additional
information.
Your only opportunity
to affect the investment decision regarding a potential business combination may be limited to the exercise of your right to convert
your shares to cash.
At the time of your
investment in us, you will not be provided with an opportunity to evaluate the specific merits or risks of our initial business combination.
Since our board of directors may complete a business combination without seeking stockholder approval, public stockholders may not have
the right or opportunity to vote on the business combination, unless we seek such stockholder vote. Accordingly, your only opportunity
to affect the investment decision regarding our initial business combination may be limited to exercising your conversion rights within
the period of time (which will be at least 20 business days) set forth in our tender offer documents mailed to our public stockholders
in which we describe our initial business combination.
If we seek stockholder
approval of our initial business combination, our initial stockholders and management team have agreed to vote in favor of such initial
business combination, regardless of how our public stockholders vote.
Our Sponsor, initial
stockholders, officers and directors have agreed to vote their founder shares, as well as any public shares purchased during or after
our Initial Public Offering (including in open market and privately-negotiated transactions), in favor of our initial business combination.
As a result, in addition to our initial stockholders’ founder shares, we would need 15,000,001, or 37.5%, of the 40,000,000 public
shares sold in the Initial Public Offering to be voted in favor of an initial business combination in order to have our initial business
combination approved (assuming all outstanding shares are voted) in order to have such initial business combination approved (or, if
the applicable rules of the NYSE then in effect require approval by a majority of the votes cast by public stockholders, we would need
20,000,001 of public shares sold in the Initial Public Offering to be voted in favor of a transaction (assuming all outstanding stock
is voted) in order to have such initial business combination approved). Accordingly, if we seek stockholder approval of our initial business
combination, the agreement by our initial stockholders and management team to vote in favor of our initial business combination will
increase the likelihood that we will receive the requisite stockholder approval for such initial business combination.
Our initial stockholders
control a substantial interest in us and thus may exert a substantial influence on actions requiring a stockholder vote, potentially
in a manner that you do not support.
Our initial stockholders
own 20% of our issued and outstanding shares of common stock. Accordingly, they may exert a substantial influence on actions requiring
a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of
incorporation. If our initial stockholders purchase any additional shares of Class A common stock in the aftermarket or in privately
negotiated transactions, this would increase their control. Neither our initial stockholders nor, to our knowledge, any of our officers
or directors, have any current intention to purchase additional securities. 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 initial stockholders, is and will be divided into three classes, each of which will generally serve
for a term for three years with only one class of directors being elected in each year. We may not hold an annual meeting of stockholders
to elect new directors prior to the completion of our initial business combination, in which case all of the current directors will continue
in office until at least the completion of the business combination. If there is an annual meeting, as a consequence of our “staggered”
board of directors, only a minority of the board of directors will be considered for election and our initial stockholders, because of
their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial stockholders will continue
to exert control at least until the completion of our initial business combination.
The ability of
our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination
targets, which may make it difficult for us to enter into a business combination with a target.
We may seek to enter
into a business combination transaction agreement with a prospective target business that requires as a closing condition that we have
a minimum net worth or a certain amount of cash. If too many public stockholders exercise their redemptions rights, we may not be able
to meet such closing condition and, as a result, would not be able to proceed with the business combination. Consequently, if accepting
all properly submitted redemption requests would cause our net tangible assets to be less than $5,000,001 either immediately prior to
or upon consummation of the business combination or such greater amount necessary to satisfy a closing condition as described above,
we would not proceed with such redemption and the related business combination and may instead search for an alternate business combination.
Prospective targets will be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
The ability of
our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most
desirable business combination or optimize our capital structure.
At the time we enter
into an agreement for our initial business combination, we will not know how many stockholders may exercise their redemption rights,
and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for
redemption. If our initial business combination agreement requires us to use a portion of the cash in the trust account to pay the purchase
price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the trust account
to meet such requirements, or arrange for third party financing. In addition, if a larger number of shares are submitted for redemption
than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the trust account
or arrange for third party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence
of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision
of the Class B common stock result in the issuance of Class A shares on a greater than one-to-one basis upon
conversion of the Class B common stock at the time of our business combination. The above considerations may limit our ability to
complete the most desirable business combination available to us or optimize our capital structure. The per-share amount we
will distribute to stockholders who properly exercise their redemption rights will not be reduced by the deferred underwriting commission
and after such redemption, the amount held in trust will continue to reflect our obligation to pay the entire deferred underwriting commissions.
The ability of
our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that
our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your shares.
If our initial business
combination agreement requires us to use a portion of the cash in the trust account to pay the purchase price or requires us to have
a minimum amount of cash at closing, the probability that our initial business combination would be unsuccessful is increased. If our
initial business combination is unsuccessful, you would not receive your pro rata portion of the trust account until we liquidate the
trust account. If you are in need of immediate liquidity, you could attempt to sell your shares in the open market; however, at such
time our shares may trade at a discount to the pro rata amount per share in the trust account. In either situation, you may suffer a
material loss on your investment or lose the benefit of funds expected in connection with the redemption until we liquidate or you are
able to sell your shares in the open market.
The requirement
that we complete our initial business combination within 24 months after the closing of the Initial Public Offering may give potential
target businesses leverage over us in negotiating a business combination and may limit the time we have in which to conduct due diligence
on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our
initial business combination on terms that would produce value for our stockholders.
Any potential target
business with which we enter into negotiations concerning a business combination will be aware that we must complete our initial business
combination within 24 months from the closing of the Initial Public Offering. Consequently, such target business may obtain leverage
over us in negotiating a business combination, knowing that if we do not complete our initial business combination with that particular
target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we
get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial
business combination on terms that we would have rejected upon a more comprehensive investigation.
We may not be
able to complete our initial business combination within 24 months after the closing of the Initial Public Offering, in which case we
would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate.
Our amended and restated
certificate of incorporation provides that we must complete our initial business combination within 24 months after the closing of the
Initial Public Offering. Our ability to complete our initial business combination may be negatively impacted by general market conditions,
volatility in the capital and debt markets and the other risks described herein. If we have not completed our initial business combination
within such time period, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account, including interest earned on the trust account not previously
released to us (to pay our tax obligations and less up to $100,000 of interest to pay dissolution expenses), divided by the number of
then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidation distributions, if any) 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 the case of clauses
(ii) and (iii), to our obligations under Delaware law to provide for claims of creditors and in all cases subject to the other requirements
of applicable law.
If we are unable
to consummate our initial business combination within 24 months from the closing of the Initial Public Offering, our public stockholders
may be forced to wait beyond such to 24 months before redemption from our trust account.
If we are unable to
consummate our initial business combination within 24 months from the closing of the Initial Public Offering, the proceeds then on deposit
in the trust account, including interest earned on the trust account not previously released to us (to pay our tax obligations and less
up to $100,000 of interest to pay dissolution expenses), will be used to fund the redemption of our public shares, as further described
herein. Any redemption of public stockholders from the trust account will be effected automatically by function of our amended and restated
certificate of incorporation prior to any voluntary winding up. If we are required to wind-up, liquidate the trust
account and distribute such amount therein, pro rata, to our public stockholders, as part of any liquidation process, such winding up,
liquidation and distribution must comply with the applicable provisions of the DGCL. In that case, investors may be forced to wait beyond
24 months from the closing of the Initial Public Offering before the redemption proceeds of our trust account become available to them,
and they receive the return of their pro rata portion of the proceeds from our trust account. We have no obligation to return funds to
investors prior to the date of our redemption or liquidation unless we seek to amend our certificate of incorporation as described herein
or consummate our initial business combination prior thereto and only then in cases where investors have sought to redeem their Class A
common stock. Only upon our redemption or any liquidation will public stockholders be entitled to distributions if we are unable to complete
our initial business combination.
We do not have
a specified maximum redemption threshold. The absence of such a threshold may make it possible for us to complete our initial 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 consummate an
initial business combination if holders exercising redemption rights would cause our net tangible assets to be less than $5,000,001 either
immediately prior to or upon consummation of the business combination (such that we are not subject to the SEC’s “penny stock”
rules). As a result, we may be able to complete our initial business combination even though a substantial majority of our public stockholders
have redeemed their shares. In the event the aggregate cash consideration we would be required to pay for all shares of Class A
common stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the
proposed business combination exceed the aggregate amount of cash available to us, we will not complete the business combination or convert
any shares, all shares of Class A common stock submitted for redemption will be returned to the holders thereof, and we instead
may search for an alternate business combination.
If we seek stockholder
approval of our initial business combination, our initial stockholders, directors, executive officers, advisors and their affiliates
may elect to purchase shares or public warrants from public stockholders, which may influence a vote on a proposed business combination
and reduce the public float of our Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our initial stockholders, directors, executive officers, advisors or their affiliates may purchase shares
or public warrants in privately negotiated transactions or in the open market either prior to or following the completion of our initial
business combination, although they are under no obligation to do so. However, other than as expressly stated herein, they have no current
commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any such transactions.
None of the funds in the trust account will be used to purchase shares or public warrants in such transactions.
In the event that our
initial stockholders, directors, executive officers, advisors or their affiliates purchase shares in privately negotiated transactions
from public stockholders who have already elected to exercise their conversion rights, such selling stockholders would be required to
revoke their prior elections to convert their shares. The purpose of any such purchases of shares could be to vote such shares in favor
of the business combination and thereby increase the likelihood of obtaining stockholder approval of the business combination or to satisfy
a closing condition in an agreement with a target business that requires us to have a minimum net worth or a certain amount of cash at
the closing of our initial business combination, where it appears that such requirement would otherwise not be met. The purpose of any
such purchases of public warrants could be to reduce the number of public warrants outstanding or to vote such warrants on any matters
submitted to the warrant holders for approval in connection with our initial business combination. Any such purchases of our securities
may result in the completion of our initial business combination that may not otherwise have been possible. Any such purchases will be
reported pursuant to Section 13 and Section 16 of the Exchange Act to the extent such purchasers are subject to such reporting
requirements. See “Proposed Business—Permitted purchases of our securities” for a description of how our initial stockholders,
directors, executive officers, advisors or any of their affiliates will select which stockholders to purchase securities from in any
private transaction.
In addition, if such
purchases are made, the public float of our Class A common stock or public warrants and the number of beneficial holders of our
securities may be reduced, possibly making it difficult to maintain or obtain the quotation, listing or trading of our securities on
a national securities exchange.
In connection
with any stockholder meeting called to approve a proposed initial business combination, we may require stockholders who wish to redeem
their shares in connection with a proposed business combination to comply with specific requirements for conversion that may make it
more difficult for them to exercise their redemption rights prior to the deadline for exercising their rights.
In connection with any
stockholder meeting called to approve a proposed initial business combination, each public stockholder will have the right, regardless
of whether he is voting for or against such proposed business combination, to demand that we redeem his shares for a pro rata share of
the trust account as of two business days prior to the consummation of the initial business combination. We may require public stockholders
who wish to redeem their shares in connection with a proposed business combination to either (i) tender their certificates (if any)
to our transfer agent or (ii) deliver their shares to the transfer agent electronically using the Depository Trust Company’s
DWAC (Deposit/Withdrawal At Custodian) System, at the holders’ option, prior to the vote on the business combination with the specific
deadline set forth in the proxy materials sent in connection with the proposal to approve the business combination. In order to obtain
a physical share certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate
this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from
the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly
longer than two weeks to obtain a physical share certificate. While we have been advised that it takes a short time to deliver shares
through the DWAC System, we cannot assure you of this fact. Accordingly, if it takes longer than we anticipate for stockholders to deliver
their shares, stockholders who wish to convert may be unable to meet the deadline for exercising their redemption rights and thus may
be unable to convert their shares.
If, in connection
with any stockholder meeting called to approve a proposed business combination, we require public stockholders who wish to redeem their
shares to comply with specific requirements for redemption, such redeeming stockholders may be unable to sell their securities when they
wish to in the event that the proposed business combination is not approved.
If we require public
stockholders who wish to redeem their shares to comply with specific delivery requirements for conversion and such proposed business
combination is not consummated, we will promptly return such certificates to the tendering public stockholders.
Accordingly, investors
who attempted to redeem their shares in such a circumstance will be unable to sell their securities after the failed acquisition until
we have returned their securities to them. The market price for our shares of common stock may decline during this time and you may not
be able to sell your securities when you wish to, even while other stockholders that did not seek redemption may be able to sell their
securities.
If a stockholder
fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply
with the procedures for tendering its shares, such shares may not be converted.
We will comply with
the proxy rules or tender offer rules, as applicable, when conducting conversions in connection with our initial business combination.
Despite our compliance with these rules, if a stockholder fails to receive our proxy solicitation or tender offer materials, as applicable,
such stockholder may not become aware of the opportunity to convert its shares. In addition, the proxy solicitation or tender offer materials,
as applicable, that we will furnish to holders of our public shares in connection with our initial business combination will describe
the various procedures that must be complied with in order to validly convert or tender public shares. In the event that a stockholder
fails to comply with these procedures, its shares may not be converted to cash.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group”
of stockholders are deemed to hold in excess of 20% of our Class A common stock, you will lose the ability to redeem all such shares
in excess of 20% of our Class A common stock.
If we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any
affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined
under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an aggregate
of 20% of the shares sold in the Initial Public Offering without our prior consent, which we refer to as the “Excess Shares.”
However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against
our initial business combination. Your inability to redeem the Excess Shares will reduce your influence over our ability to complete
our initial business combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market
transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we complete our initial
business combination. As a result, you will continue to hold that number of shares exceeding 20% and, in order to dispose of such shares,
would be required to sell your shares in open market transactions, potentially at a loss.
Because of our
limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete
our initial business combination. If we are unable to complete our initial business combination, our public stockholders may receive
only their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our warrants
will expire worthless.
We expect to encounter
intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals
or investment partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses
we intend to acquire. Many of these individuals and entities are well-established and have extensive experience in identifying and effecting,
directly or indirectly, acquisitions of companies operating in or providing services to various industries. Many of these competitors
possess greater technical, human and other resources or more industry knowledge than we do, and our financial resources will be relatively
limited when contrasted with those of many of these competitors. While we believe there are numerous target businesses we could potentially
acquire with the net proceeds of the Initial Public Offering and the sale of the private placement warrants, our ability to compete with
respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Furthermore, we are obligated
to offer holders of our public shares the right to redeem their shares for cash at the time of our initial business combination in conjunction
with a stockholder vote or via a tender offer. Target companies will be aware that this may reduce the resources available to us for
our initial business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business
combination. If we are unable to complete our initial business combination, our public stockholders may receive only their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
If the net proceeds
of the Initial Public Offering not being held in the trust account, together with the interest that may be released to us, are insufficient
to allow us to operate for at least the next 24 months, it could limit the amount available to fund our search for a target business
or businesses and complete our initial business combination, and we will depend on loans from our initial stockholders or management
team to fund our search and to complete our initial business combination.
Because we are
neither limited to evaluating a target business in a particular industry sector nor have we selected any specific target businesses with
which to pursue our initial business combination, you will be unable to ascertain the merits or risks of any particular target business’
operations.
Although we initially
intend to focus our search for a target business in the media, technology, beauty, e-commerce and online sectors,
we are not limited to evaluating a target business in any particular industry sector (except that we will not, under our amended and
restated certificate of incorporation, be permitted to effectuate our initial business combination with another blank check company or
similar company with nominal operations). As a result, there is no current basis to evaluate the possible merits or risks of any particular
target business’ operations, results of operations, cash flows, liquidity, financial condition or prospects. To the extent we complete
our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For
example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be
affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers
and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly
ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some
of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely
impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors
than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any stockholders who choose
to remain stockholders following our initial business combination could suffer a reduction in the value of their securities. Such stockholders
are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the
breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring
a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the business
combination contained an actionable material misstatement or material omission.
We may seek acquisition
opportunities in any industry our management chooses (which industries may be outside of our management’s areas of expertise).
We may consider a business
combination with a target business operating in any industry our management chooses. Although our management will endeavor to evaluate
the risks inherent in any particular business combination candidate, we cannot assure you that we will adequately ascertain or assess
all of the significant risk factors. We also cannot assure you that an investment in our units will not ultimately prove to be less favorable
to investors in the Initial Public Offering than a direct investment, if an opportunity were available, in a business combination candidate.
In the event we elect to pursue a business combination outside of the areas of our management’s expertise, our management’s
expertise may not be directly applicable to its evaluation or operation, and the information contained in this Annual Report regarding
the areas of our management’s expertise would not be relevant to an understanding of the business that we elect to acquire. As
a result, our management may not be able to adequately ascertain or assess all of the significant risk factors. Accordingly, any security
holders who choose to remain security holders following our initial business combination could suffer a reduction in the value of their
securities. Such security holders are unlikely to have a remedy for such reduction in value.
We may seek business
combination opportunities with a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings,
which could subject us to volatile revenues, cash flows or earnings or difficulty in retaining key personnel.
To the extent we complete
our initial business combination with a financially unstable business or an entity lacking an established record of revenues or earnings,
we may be affected by numerous risks inherent in the operations of the business with which we combine. These risks include volatile revenues
or earnings and difficulties in obtaining and retaining key personnel. Although our officers and directors will endeavor to evaluate
the risks inherent in a particular target business, we may not be able to properly ascertain or assess all of the significant risk factors
and we may not have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave
us with no ability to control or reduce the chances that those risks will adversely impact a target business.
We are not required
to obtain an opinion from an independent investment banking firm, or another valuation or appraisal firm that commonly renders fairness
opinions, and consequently, you may have no assurance from an independent source that the price we are paying for the business is fair
to our stockholders from a financial point of view.
Unless we complete our
initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking
firm, or another valuation or appraisal firm that commonly renders fairness opinions that the price we are paying is fair to our stockholders
from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors,
who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed
in our proxy solicitation or tender offer materials, as applicable, related to our initial business combination.
We may issue additional
shares of Class A common stock or preferred stock to complete our initial business combination or under an employee incentive plan
after completion of our initial business combination. We may also issue shares of Class A common stock upon the conversion of the
founder shares at a ratio greater than one-to-one at the time of our initial business combination as a result of
the anti-dilution provisions contained therein. Any such issuances would dilute the interest of our stockholders and likely present other
risks.
Our amended and restated
certificate of incorporation authorizes the issuance of up to 125,000,000 shares of Class A common stock, par value $0.0001 per
share, 25,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, $0.0001
per share. Since immediately after the Initial Public Offering, there have been 85,000,000 and 15,000,000 authorized but unissued shares
of Class A common stock and Class B common stock, respectively, available for issuance, which amount does not take into account
shares issuable upon conversion of the Class B common stock. The Class B common stock is automatically convertible into Class A
common stock at the time of our initial business combination initially at a one-for-one ratio but subject to adjustment
as set forth herein. Immediately after the Initial Public Offering, there will be no shares of preferred stock issued and outstanding.
We may issue a substantial
number of additional shares of Class A common stock or preferred stock to complete our initial business combination or under an
employee incentive plan after completion of our initial business combination. We may also issue shares of Class A common stock upon
conversion of the Class B common stock at a ratio greater than one-to-one at the time of our initial business
combination as a result of the anti-dilution provisions as set forth herein. However, our amended and restated certificate of incorporation
provide, among other things, that prior to our initial business combination, we may not issue additional shares that would entitle the
holders thereof to (i) receive funds from the trust account or (ii) vote on any initial business combination or any amendment
to our amended and restated certificate of incorporation that would affect the rights granted to public stockholders in the Initial Public
Offering, including but not limited to conversion rights. These provisions of our amended and restated certificate of incorporation,
like all provisions of our amended and restated certificate of incorporation, may be amended with a stockholder vote. The issuance of
additional shares of common stock or preferred stock:
| ● | may
significantly dilute the equity interest of investors in the Initial Public Offering; |
| ● | may
subordinate the rights of holders of Class A common stock if shares of preferred stock
are issued with rights senior to those afforded our Class A common stock; |
| ● | could
cause a change in control if a substantial number of shares of Class A common stock
are issued, which may affect, among other things, our ability to use our net operating loss
carry forwards, if any, and could result in the resignation or removal of our present officers
and directors; and |
| ● | may
adversely affect prevailing market prices for our units, shares of Class A common stock
and/or warrants. |
Our initial stockholders
may receive additional shares of Class A common stock if we issue shares to consummate an initial business combination.
The founder shares will
automatically convert into Class A common stock on the first business day following the consummation of our initial business combination
on a one-for-one basis, subject to adjustment as provided herein. In the case that additional shares of Class A
common stock, or equity-linked securities convertible or exercisable for shares of Class A common stock, are issued or deemed issued
in excess of the amounts offered in the prospectus associated with our Initial Public Offering and the registration statement of which
such prospectus forms a part and related to the closing of our initial business combination, the ratio at which founder shares will convert
into shares of Class A common stock will be adjusted (unless the holders of a majority of the founder shares waive this adjustment
for the entire class) so that the number of shares of Class A common stock issuable upon conversion of all founder shares will equal,
in the aggregate 20% of the sum of our shares of common stock outstanding upon completion of the Initial Public Offering plus the number
of shares of Class A common stock and equity-linked securities issued or deemed issued in connection with our initial business combination
(net of conversions), excluding any shares of Class A common stock or equity-linked securities issued, or to be issued, to any seller
in our initial business combination and any private placement warrants issued to our initial stockholders. This is different than many
other similarly structured blank check companies in which the initial stockholders will only be issued an aggregate of 20% of the total
number of shares to be outstanding prior to our initial business combination.
A provision of
our warrant agreement may make it more difficult for us to consummate an initial business combination.
If:
| (i) | we
issue additional shares of Class A common stock or equity-linked securities for capital
raising purposes in connection with the closing of our initial business combination at an
issue price or effective issue price of less than $9.20 per share of common stock (with such
issue price or effective issue price to be determined in good faith by our board of directors,
and in the case of any such issuance to our initial stockholders or their affiliates, without
taking into account any founders’ shares held by them prior to such issuance) (the
“Newly Issued Price”); |
| (ii) | the
aggregate gross proceeds from such issuances represent more than 60% of the total equity
proceeds, inclusive of interest earned on equity held in trust, available for the funding
of our initial business combination on the date of the consummation of our initial business
combination (net of redemptions), and |
| (iii) | the
volume weighted average trading price of our Class A common stock during the 20-trading day
period starting on the trading day prior to the day on which we consummate our initial business
combination (such price, the “Market Value”) is below $9.20 per share, |
then the exercise price
of the warrants will be adjusted to be equal to 115% of the greater of the Market Value and the Newly Issued Price, and the $18.00 per
share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the greater of the Market Value and the
Newly Issued Price. This may make it more difficult for us to consummate an initial business combination with a target business.
We may issue notes
or other debt securities, or otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage
and financial condition and thus negatively impact the value of our stockholders’ investment in us.
Although we have no
commitments as of the date of this Annual Report to issue any notes or other debt securities, or to otherwise incur outstanding debt
following the Initial Public Offering, we may choose to incur substantial debt to complete our initial business combination. We and our
officers have agreed that we will not incur any indebtedness unless we have obtained from the lender a waiver of any right, title, interest
or claim of any kind in or to the monies held in the trust account. As such, no issuance of debt will affect the per share amount available
for redemption from the trust account. Nevertheless, the incurrence of debt could have a variety of negative effects, including:
| ● | default
and foreclosure on our assets if our operating revenues after an initial business combination
are insufficient to repay our debt obligations; |
| ● | acceleration
of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants
that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| ● | our
immediate payment of all principal and accrued interest, if any, if the debt 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 Class A common stock; |
| ● | using
a substantial portion of our cash flow to pay principal and interest on our debt, which will
reduce the funds available for dividends on our Class A common stock if declared, expenses,
capital expenditures, acquisitions and other general corporate purposes; |
| ● | limitations
on our flexibility in planning for and reacting to changes in our business and in the industry
in which we operate; |
| ● | increased
vulnerability to adverse changes in general economic, industry and competitive conditions
and adverse changes in government regulation; and |
| ● | limitations
on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions,
debt service requirements, execution of our strategy and other purposes and other disadvantages
compared to our competitors who have less debt. |
We may be unable
to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business,
which could compel us to restructure or abandon a particular business combination. If we are unable to complete our initial business
combination, our public stockholder may only receive their pro rata portion of the funds in the trust account that are available for
distribution to public stockholders, and our warrants will expire worthless.
Although we believe
that the net proceeds of the Initial Public Offering and the sale of the private placement warrants will be sufficient to allow us to
complete our initial business combination, because we have not yet selected any prospective target business, we cannot ascertain the
capital requirements for any particular transaction. If the net proceeds of the Initial Public Offering and the sale of the private placement
warrants prove to be insufficient, either because of the size of our initial business combination, the depletion of the available net
proceeds in search of a target business, the obligation to redeem for cash a significant number of shares from stockholders who elect
redemption in connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed
business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional
financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure
the transaction or abandon that particular business combination and seek an alternative target business candidate. If we are unable to
complete our initial business combination, our public stockholders may only receive their pro rata portion of the funds in the trust
account that are available for distribution to public stockholders, and our warrants will expire worthless. In addition, even if we do
not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth
of the target business. The failure to secure additional financing could have a material adverse effect on the continued development
or growth of the target business. None of our officers, directors or stockholders is required to provide any financing to us in connection
with or after our initial business combination.
Resources could
be wasted in researching acquisitions that are not completed, which could materially adversely affect subsequent attempts to locate and
acquire or merge with another business. If we are unable to complete our initial business combination, our public stockholders may only
receive their pro rata portion of the funds in the trust account that are available for distribution to public stockholders, and our
warrants will expire worthless.
We anticipate that the
investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys and others.
If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction
likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete
our initial business combination for any number of reasons including those beyond our control. Any such event will result in a loss to
us of the related costs incurred which could materially adversely affect subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our initial business combination, our public stockholders may only receive their pro rata portion
of the funds in the trust account that are available for distribution to public stockholders, and our warrants will expire worthless.
We may only be
able to complete one business combination with the proceeds of the Initial Public Offering and the sale of the private placement warrants,
which will cause us to be solely dependent on a single business which may have a limited number of products or services. This lack of
diversification may negatively impact our operations and profitability.
The net proceeds from
the Initial Public Offering and the private placement of warrants provided us with approximately $400,000,000 that we may use to complete
our initial business combination (not taking into account the approximately $14,000,000 of deferred underwriting commissions being held
in the Trust Account). We may effectuate our initial business combination with a single target business or multiple target businesses
simultaneously or within a short period of time. However, we may not be able to effectuate our initial business combination with more
than one target business because of various factors, including the existence of complex accounting issues and the requirement that we
prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By completing our initial business combination with only a single entity,
our lack of diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able
to diversify our operations or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may
have the resources to complete several business combinations in different industries or different areas of a single industry. Accordingly,
the prospects for our success may be:
| ● | solely
dependent upon the performance of a single business, property or asset; or |
| ● | dependent
upon the development or market acceptance of a single or limited number of products, processes
or services. |
This lack of diversification
may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon
the particular industry in which we may operate subsequent to our initial business combination.
We may attempt
to simultaneously complete business combinations with multiple prospective targets, which may hinder our ability to complete our initial
business combination and give rise to increased costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its
business is contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and
delay our ability, to complete our initial business combination. With multiple business combinations, we could also face additional risks,
including additional burdens and costs with respect to possible multiple negotiations and due diligence (if there are multiple sellers)
and the additional risks associated with the subsequent assimilation of the operations and services or products of the acquired companies
in a single operating business. If we are unable to adequately address these risks, it could negatively impact our profitability and
results of operations.
We may attempt
to complete our initial business combination with a private company about which little information is available, which may result in
a business combination with a company that is not as profitable as we suspected, if at all.
In pursuing our business
combination strategy, we may seek to effectuate our initial business combination with a privately held company. By definition, very little
public information generally exists about private companies, and we could be required to make our decision on whether to pursue a potential
initial business combination on the basis of limited information, which may result in a business combination with a company that is not
as profitable as we suspected, if at all.
We may need additional
funds to consummate an initial business combination.
If we are required to
seek additional capital for working capital purposes prior to the consummation of a business combination, we would need to borrow funds
from our initial stockholders, management team or other third parties to operate or may be forced to liquidate. Neither our initial stockholders,
members of our management team nor any of their affiliates is under any obligation to advance funds to us in such circumstances. Any
such advances would be repaid only from funds held outside the trust account or from funds released to us upon completion of our initial
business combination. Up to $1,500,000 of such loans may be convertible into warrants of the post-business combination entity at a price
of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Prior to the completion
of our initial business combination, we do not expect to seek loans from parties other than our initial stockholders, members of our
management team or an affiliate of our initial stockholders or members of our management team as we do not believe third parties will
be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account. If we are
unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease
operations and liquidate the trust account. Consequently, our public stockholders may only receive an estimated $10.00 per share, or
possibly less, on our redemption of our public shares, and our warrants will expire worthless.
Because we must
furnish our stockholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial
business combination with some prospective target businesses.
The federal proxy rules
require that a proxy statement with respect to a vote on a business combination meeting certain financial significance tests include
historical and/or pro forma financial statement disclosure in periodic reports. We will include the same financial statement disclosure
in connection with our tender offer documents, whether or not they are required under the tender offer rules. These financial statements
may be required to be prepared in accordance with, or be reconciled to, accounting principles generally accepted in the United States
of America, or GAAP, or international financial reporting standards as issued by the International Accounting Standards Board, or IFRS,
depending on the circumstances and the historical financial statements may be required to be audited in accordance with the standards
of the Public Company Accounting Oversight Board (United States), or PCAOB. These financial statement requirements may limit the pool
of potential target businesses we may acquire because some targets may be unable to provide such statements in time for us to disclose
such statements in accordance with federal proxy rules and complete our initial business combination within the prescribed time frame.
Our search for
a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely
affected by the coronavirus (COVID-19) pandemic and other events, and the status of debt and equity markets.
The COVID-19 pandemic has
adversely affected, and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases)
could adversely affect, the economies and financial markets worldwide, and the business of any potential target business with which we
consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination
if concerns relating to COVID-19 continue to restrict travel, limit the ability to have meetings with potential investors
or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in
a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future
developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the
actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other
events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases) continue for an extensive
period of time, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate
a business combination, may be materially adversely affected.
In addition, our ability
to consummate a transaction may be dependent on the ability to raise equity and debt financing which may be impacted by COVID-19 and other
events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases), including as a result of
increased market volatility, decreased market liquidity in third-party financing being unavailable on terms acceptable to us or at all.
Due to the number
of special purpose acquisition companies evaluating target, attractive targets may become scarcer and there may be more competition for
attractive targets. This could increase the cost of our initial business combination and could even result in our inability to find a
target or to consummate an initial business combination.
Since the fourth quarter
of 2020, the number of special purpose acquisition companies that have been formed has increased substantially. Many potential targets
for special purpose acquisition companies have already entered into an initial business combination, and there are still many special
purpose acquisition companies seeking targets for their initial business combination, as well as many such companies currently in registration.
As a result, at times, fewer attractive targets may be available, and it may require more time, more effort and more resources to identify
a suitable target and to consummate an initial business combination.
In addition, because
there are more special purpose acquisition companies seeking to enter into an initial business combination with available targets, the
competition for available targets with attractive fundamentals or business models may increase, which could cause targets companies to
demand improved financial terms. Attractive deals could also become scarcer for other reasons, such as economic or industry sector downturns,
geopolitical tensions, or increases in the cost of additional capital needed to close business combinations or operate targets post-business
combination. This could increase the cost of, delay or otherwise complicate or frustrate our ability to find and consummate an initial
business combination and may result in our inability to consummate an initial business combination on terms favorable to our investors
altogether.
Risks Relating to
the Post-Business Combination Company
Subsequent to
our completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment
or other charges that could have a significant negative effect on our financial condition, results of operations and our share price,
which could cause you to lose some or all of your investment.
Even if we conduct due
diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues with
a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or
that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be
forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges
that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise
and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and
not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions
about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may
be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining post-combination
debt financing. Accordingly, any stockholders who choose to remain stockholders following the business combination could suffer a reduction
in the value of their securities. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to
successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed
to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer
materials, as applicable, relating to the business combination contained an actionable material misstatement or material omission.
We may have a
limited ability to assess the management of a prospective target business and, as a result, may effect our initial business combination
with a target business whose management may not have the skills, qualifications or abilities to manage a public company, which could,
in turn, negatively impact the value of our stockholders’ investment in us.
When evaluating the
desirability of effecting our initial business combination with a prospective target business, our ability to assess the target business’
management may be limited due to a lack of time, resources or information. Our assessment of the capabilities of the target’s management,
therefore, may prove to be incorrect and such management may lack the skills, qualifications or abilities we suspected. Should the target’s
management not possess the skills, qualifications or abilities necessary to manage a public company, the operations and profitability
of the post-combination business may be negatively impacted. Accordingly, any security holders who choose to remain securityholders following
the initial business combination could suffer a reduction in the value of their securities. Such securities are unlikely to have a remedy
for such reduction in value.
There may be tax
consequences to our business combinations that may adversely affect us.
While we expect to undertake
any merger or acquisition so as to minimize taxes both to the owners of the acquired business and us, such business combination might
not meet the statutory requirements of a tax-free reorganization, or the parties might not obtain the intended tax-free treatment upon
a transfer of shares or assets. A non-qualifying reorganization could result in the imposition of substantial taxes.
Additionally, depending on the date and size of our initial business combination, it is possible that at least 60% of our adjusted ordinary
gross income may consist of personal holding company income. In addition, depending on the concentration of our stock in the hands of
individuals, including the members of our initial stockholders and certain tax-exempt organizations, pension funds,
and charitable trusts, it is possible that more than 50% of our stock will be owned or deemed owned (pursuant to the constructive ownership
rules) by such persons during the last half of a taxable year. Thus, no assurance can be given that we will not become a personal holding
company following the Initial Public Offering or in the future. If we are or were to become a personal holding company in a given taxable
year, we would be subject to an additional personal holding company tax, currently 20%, on our undistributed taxable income, subject
to certain adjustments.
The excise tax included in the Inflation
Reduction Act of 2022 may decrease the value of our securities following a business combination, hinder our ability to consummate a business
combination, and decrease the amount of funds available for distribution in connection with a liquidation.
On August 16, 2022, the Inflation Reduction
Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal
1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries
of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing
corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair
market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax,
repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of
stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the
Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent
the abuse or avoidance of the excise tax. Any share redemption or other share repurchase that occurs after December 31, 2022, in
connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. The investment management
trust agreement that governs the trust account provides that we may use accrued interest earned on the funds held in the trust
account for any tax obligations, which would include any excise tax. Whether and to what extent the Company would be subject to the
excise tax in connection with a Business Combination, extension vote or otherwise will depend on a number of factors, including (i)
the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii)
the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in
connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same
taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition,
because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the
excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business
Combination and in the Company’s ability to complete a Business Combination.
We may reincorporate
in another jurisdiction in connection with our initial business combination and such reincorporation may result in taxes imposed on stockholders.
We may, in connection
with our initial business combination and subject to requisite stockholder approval under the DGCL, reincorporate in the jurisdiction
in which the target company or business is located or in another jurisdiction. The transaction may require a stockholder to recognize
taxable income in the jurisdiction in which the stockholder is a tax resident or in which its members are resident if it is a tax transparent
entity. We do not intend to make any cash distributions to stockholders to pay such taxes. Stockholders may be subject to withholding
taxes or other taxes with respect to their ownership of us after the reincorporation.
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.
Prior to the completion
of an initial business combination, our operations will be dependent upon a relatively small group of individuals and, in particular,
our executive officers and directors. We believe that our success depends on the continued service of our officers and directors, at
least until we have completed our initial 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 their time among various
business activities, including identifying potential business combinations and monitoring the related due diligence. We do not have an
employment agreement with, or key-man insurance on the life of, any of our directors or 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.
The role of our key
personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target
business in senior management or advisory positions following our initial business combination, it is likely that some or all of the
management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial
business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be
unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources
helping them become familiar with such requirements. In addition, the officers and directors of an initial business combination candidate
may resign upon completion of our initial business combination. The departure of an initial business combination target’s key personnel
could negatively impact the operations and profitability of our post-combination business. The role of an initial business combination
candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although
we contemplate that certain members of an initial business combination candidate’s management team will remain associated with
the initial business combination candidate following our initial business combination, it is possible that members of the management
of an initial business combination candidate will not wish to remain in place. The loss of key personnel could negatively impact the
operations and profitability of our post-combination business.
Our management
may not be able to maintain control of a target business after our initial business combination. We cannot provide assurance that, upon
loss of control of a target business, new management will possess the skills, qualifications or abilities necessary to profitably operate
such business.
We may structure our
initial business combination so that the post-transaction company in which our public stockholders own shares will own less than 100%
of the equity interests or assets of a target business, but we will only complete such business combination if the post-transaction company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target
sufficient for us not to be required to register as an investment company under the Investment Company Act. We will not consider any
transaction that does not meet such criteria. Even if the post-transaction company owns 50% or more of the voting securities of the target,
our stockholders prior to our initial business combination may collectively own a minority interest in the post business combination
company, depending on valuations ascribed to the target and us in the business combination. For example, we could pursue a transaction
in which we issue a substantial number of new shares of Class A common stock in exchange for all of the outstanding capital stock
of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number
of new shares of Class A common stock, our stockholders immediately prior to such transaction could own less than a majority of
our outstanding shares of Class A common stock subsequent to such transaction. In addition, other minority stockholders may subsequently
combine their holdings resulting in a single person or group obtaining a larger share of the company’s shares than we initially
acquired. Accordingly, this may make it more likely that our management will not be able to maintain control of the target business.
If we pursue a
target company with operations or opportunities outside of the United States for our initial business combination, we may face additional
burdens in connection with investigating, agreeing to and completing such initial business combination, and if we effect such initial
business combination, we would be subject to a variety of additional risks that may negatively impact our operations.
If we pursue a target
a company with operations or opportunities outside of the United States for our initial business combination, we would be subject to
risks associated with cross-border business combinations, including in connection with investigating, agreeing to and completing our
initial business combination, conducting due diligence in a foreign jurisdiction, having such transaction approved by any local governments,
regulators or agencies and changes in the purchase price based on fluctuations in foreign exchange rates.
If we effect our initial
business combination with such a company, we would be subject to any special considerations or risks associated with companies operating
in an international setting, including any of the following:
| ● | costs
and difficulties inherent in managing cross-border business operations; |
| ● | rules
and regulations regarding currency redemption; |
| ● | complex
corporate withholding taxes on individuals; |
| ● | laws
governing the manner in which future business combinations may be effected; |
| ● | exchange
listing and/or delisting requirements; |
| ● | tariffs
and trade barriers; |
| ● | regulations
related to customs and import/export matters; |
| ● | local
or regional economic policies and market conditions; |
| ● | unexpected
changes in regulatory requirements; |
| ● | tax
issues, such as tax law changes and variations in tax laws as compared to the United States; |
| ● | currency
fluctuations and exchange controls; |
| ● | challenges
in collecting accounts receivable; |
| ● | cultural
and language differences; |
| ● | underdeveloped
or unpredictable legal or regulatory systems; |
| ● | protection
of intellectual property; |
| ● | social
unrest, crime, strikes, riots and civil disturbances; |
| ● | regime
changes and political upheaval; |
| ● | terrorist
attacks and wars; and |
| ● | deterioration
of political relations with the United States. |
We may not be able to
adequately address these additional risks. If we were unable to do so, we may be unable to complete such initial business combination,
or, if we complete such combination, our operations might suffer, either of which may adversely impact our business, financial condition
and results of operations.
If our management
following our initial business combination is unfamiliar with United States securities laws, they may have to expend time and resources
becoming familiar with such laws, which could lead to various regulatory issues.
Following our initial
business combination, our management may resign from their positions as officers or directors of the company and the management of the
target business at the time of the business combination will remain in place. Management of the target business may not be familiar with
United States securities laws. If new management is unfamiliar with United States securities laws, they may have to expend time and resources
becoming familiar with such laws. This could be expensive and time-consuming and could lead to various regulatory issues which may adversely
affect our operations.
If we consummate
a business combination with a target company with operations or opportunities outside of the United States, substantially all of our
assets could be located in a foreign country and substantially all of our revenue could be derived from our operations in such country.
Accordingly, our results of operations and prospects could be subject, to a significant extent, to the economic, political and legal
policies, developments and conditions in the country in which we operate.
The economic, political
and social conditions, as well as government policies, of the country in which our operations are ultimately located could affect our
business. Economic growth could be uneven, both geographically and among various sectors of the economy and such growth may not be sustained
in the future. If in the future such country’s economy experiences a downturn or grows at a slower rate than expected, there may
be less demand for spending in certain industries. A decrease in demand for spending in certain industries could materially and adversely
affect our ability to find an attractive target business with which to consummate our initial business combination and if we effect our
initial business combination, the ability of that target business to become profitable.
Exchange rate
fluctuations and currency policies may cause a target business’ ability to succeed in the international markets to be diminished.
In the event we acquire a non-U.S. target, all
revenues and income would likely be received in a foreign currency, and the dollar equivalent of our net assets and distributions, if
any, could be adversely affected by reductions in the value of the local currency. The value of the currencies in our target regions
fluctuate and are affected by, among other things, changes in political and economic conditions. Any change in the relative value of
such currency against our reporting currency may affect the attractiveness of any target business or, following consummation of our initial
business combination, our financial condition and results of operations. Additionally, if a currency appreciates in value against the
dollar prior to the consummation of our initial business combination, the cost of a target business as measured in dollars will increase,
which may make it less likely that we are able to consummate such transaction.
Risks Relating to
our Management and Directors
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 initial business combination. Each of our executive officers is engaged in
several other business endeavors for which he may be entitled to substantial compensation, and our executive officers are not obligated
to contribute any specific number of hours per week to our affairs. Our independent directors also serve as officers and board members
for other entities. If our executive officers’ and directors’ other business affairs require them to devote substantial amounts
of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which
may have a negative impact on our ability to complete our initial business combination. For a complete discussion of our executive officers’
and directors’ other business affairs, please see “Management.”
Our officers and
directors presently have fiduciary or contractual obligations to other entities and, accordingly, may have conflicts of interest in determining
to which entity a particular business opportunity should be presented.
Following the completion
of the Initial Public Offering and until we consummate our initial business combination, we intend to engage in the business of identifying
and combining with one or more businesses. Each of our officers and directors presently has, and any of them in the future may have,
additional fiduciary or contractual obligations to other entities pursuant to which such officer or director is or will be required to
present a business combination opportunity to such entity. Specifically, and without limitation, each of our officers is an officer and/or
director of other blank check companies like our company, including but not limited to Northern Star Investment Corp. II, Northern Star
Investment Corp. IV and Pivotal Investment Corp. III. Accordingly, they may be required to present suitable business combination opportunities
to such entities prior to presenting them to our company for consideration. Accordingly, our officers and directors may have conflicts
of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved
in our favor and a potential target business may be presented to another entity prior to its presentation to us, subject to their fiduciary
duties under Delaware law. For a complete discussion of our executive officers’ and directors’ business affiliations and
the potential conflicts of interest that you should be aware of, please see “Management—Officers and Directors” and
“Management—Conflicts of Interest.”
Our officers and
directors may in the future become affiliated with entities engaged in business activities similar to those intended to be conducted
by us, including another blank check company, and, accordingly, may have conflicts of interest in determining to which entity a particular
business opportunity should be presented.
Following the completion
of the Initial Public Offering and until we consummate our initial business combination, we intend to engage in the business of identifying
and combining with one or more businesses. It is likely that our officers and directors will in the future become affiliated with entities
that are engaged in a similar business, including other blank check companies that may have acquisition objectives that are similar to
ours. Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
These conflicts may not be resolved in our favor and a potential target business may be presented to other entities prior to its presentation
to us, subject to our officers’ and directors’ fiduciary duties under Delaware law. For a complete discussion of our officers’
and directors’ business affiliations and the potential conflicts of interest that you should be aware of, please see “Management—Directors
and Executive Officers,” “Management—Conflicts of Interest” and “Certain Relationships and Related Party
Transactions.”
We may engage
in a business combination with one or more target businesses that have relationships with entities that may be affiliated with our initial
stockholders, executive officers, directors or existing holders which may raise potential conflicts of interest.
In light of the involvement
of our initial stockholders, executive officers and directors with other entities, we may decide to acquire one or more businesses affiliated
with our initial stockholders, executive officers, directors or existing holders. Our directors also serve as officers and board members
for other entities, including, without limitation, those described under “Management—Conflicts of Interest.” Such entities
may compete with us for business combination opportunities. Our initial stockholders, officers and directors are not currently aware
of any specific opportunities for us to complete our initial business combination with any entities with which they are affiliated, and
there have been no substantive discussions concerning a business combination with any such entity or entities. Although we will not be
specifically focusing on, or targeting, any transaction with any affiliated entities, we would pursue such a transaction if we determined
that such affiliated entity met our criteria for a business combination as set forth in “Proposed Business—Effecting our
initial business combination—Selection of a target business and structuring of our initial business combination” and such
transaction was approved by a majority of our independent and disinterested directors. Despite our agreement to obtain an opinion regarding
the fairness to our company from a financial point of view of a business combination with one or more businesses affiliated with our
initial stockholders, executive officers, directors or existing holders, potential conflicts of interest still may exist and, as a result,
the terms of the business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of
interest.
Since our initial
stockholders, executive officers and directors will lose their entire investment in us if our initial business combination is not completed
(other than with respect to public shares they may acquire during or after the Initial Public Offering), a conflict of interest may arise
in determining whether a particular business combination target is appropriate for our initial business combination.
On December 18, 2020,
our Sponsor paid $25,000 to cover certain offering and formation costs of the company in exchange for 8,625,000 founder shares, or $0.003
per share. On March 1, 2021, the Company effected a dividend of approximately 0.167 shares for each outstanding share, resulting in there
being an aggregate of 10,062,500 founder shares outstanding. The founder shares will be worthless if we do not complete an initial business
combination. In addition, our Sponsor purchased 9,750,000 warrants simultaneously with the Initial Public Offering at a price of $1.00
per warrant ($9,750,000 in the aggregate). If we do not complete our initial business combination within 24 months from the closing of
the Initial Public Offering, the private placement warrants will expire worthless. In addition, we may obtain loans from our initial
stockholders, our officers or directors, or any of their affiliates. The personal and financial interests of our executive officers and
directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination
and influencing the operation of the business following our initial business combination. This risk may become more acute as the 24-month anniversary of
the closing of the Initial Public Offering nears, which is the deadline for our completion of an initial business combination.
Our initial stockholders paid an aggregate
of $25,000 for the founder shares. As a result, it stands to make a substantial profit even if an initial business combination subsequently
declines in value or is unprofitable for our public stockholders, and may have an incentive to recommend such an initial business combination
to our stockholders.
As a result of the low acquisition cost of our
founder shares, our initial stockholders could make a substantial profit even if we select and consummate an initial business combination
with an acquisition target that subsequently declines in value or is unprofitable for our public stockholders. Thus, they may have more
of an economic incentive for us to enter into an initial business combination with a riskier, weaker-performing or financially unstable
business, or an entity lacking an established record of revenues or earnings, than would be the case if such parties had paid the full
offering price for their founders’ shares.
We may issue our shares to investors in
connection with our initial business combination at a price that is less than the prevailing market price of our shares at that time.
In connection with our initial business combination,
we may issue shares to investors in private placement transactions (so-called PIPE transactions) at a price of $10.00 per share.
The purpose of such issuances will be to enable us to provide sufficient liquidity to the post-business combination entity. The
price of the shares we issue may therefore be less, and potentially significantly less, than the market price for our shares at such
time.
Our key personnel
may negotiate employment or consulting agreements with a target business in connection with a particular business combination, and a
particular business combination may be conditioned on the retention or resignation of such key personnel. These agreements may provide
for them to receive compensation following our initial business combination and as a result, may cause them to have conflicts of interest
in determining whether a particular business combination is the most advantageous.
Our key personnel may
be able to remain with our company after the completion of our initial business combination only if they are able to negotiate employment
or consulting agreements in connection with the business combination. Such negotiations would take place simultaneously with the negotiation
of the business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities
for services they would render to us after the completion of the business combination. Such negotiations also could make such key personnel’s
retention or resignation a condition to any such agreement. The personal and financial interests of such individuals may influence their
motivation in identifying and selecting a target business, subject to their fiduciary duties under Delaware law.
Risks Relating to
our Securities
You will not have
any rights or interests in funds from the trust account, except under certain limited circumstances. Therefore, to liquidate your investment,
you may be forced to sell your public shares or warrants, potentially at a loss.
Our public stockholders
will be entitled to receive funds from the trust account only upon the earlier to occur of: (i) our completion of an initial business
combination, and then only in connection with those shares of Class A common stock that such stockholder properly elected to convert,
subject to the limitations described herein, (ii) the redemption of any public shares properly tendered in connection with a stockholder
vote to amend our amended and restated certificate of incorporation (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 within 24 months from the closing of the Initial Public
Offering or (B) with respect to any other provision relating to stockholders’ rights or pre-initial business combination
activity and (iii) the redemption of our public shares if we are unable to complete an initial business combination within 24 months
from the closing of the Initial Public Offering, 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. Holders of warrants will not have any right to
the proceeds held in the trust account with respect to the warrants. Accordingly, to liquidate your investment, you may be forced to
sell your public shares or warrants, potentially at a loss.
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, Class A
common stock, and warrants were approved for listing on the NYSE on or promptly after the date of the prospectus associated with our
Initial Public Offering and the registration statement of which such prospectus forms a part and our Class A common stock and warrants
on or promptly after their date of separation. Although after giving effect to the Initial Public Offering we expect to meet, on a pro
forma basis, the minimum initial listing standards set forth in the NYSE listing standards, we cannot assure you that our securities
will continue to be listed on the NYSE in the future or prior to our initial business combination. In order to continue listing our securities
on the NYSE prior to our initial business combination, we must maintain certain financial, distribution and share price levels. Generally,
we must maintain a minimum market capitalization (generally $50,000,000) and a minimum number of holders of our securities (generally
300 public holders).
Additionally, in connection
with our initial business combination, we will likely 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 share price would generally be required to be at least $4.00 per share and our stockholders’ equity
would generally be required to be at least $4.0 million. We cannot assure you that we will be able to meet those initial listing
requirements at that time.
If the NYSE delists
any of our securities from trading on its exchange and we are not able to list such securities on another national securities exchange,
we expect such securities could be quoted on an over-the-counter market. If this were to occur, we could face significant
material adverse consequences, including:
| ● | a
limited availability of market quotations for our securities; |
| ● | reduced
liquidity for our securities; |
| ● | a
determination that our Class A common stock are a “penny stock” which will
require brokers trading in our Class A common stock to adhere to more stringent rules
and possibly result in a reduced level of trading activity in the secondary trading market
for our securities; |
| ● | 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 we expect that our units and eventually our Class A common stock
and warrants will be listed on the NYSE, our units, Class A common stock and warrants will qualify as covered securities under the
statute. Although the states are preempted from regulating the sale of our securities, the 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. Further, if we were no longer listed on the NYSE, our securities would not qualify as
covered securities under the statute, and we would be subject to regulation in each state in which we offer our securities.
We have not registered
the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws
at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor
from being able to exercise its warrants and causing such warrants to expire worthless.
We have not registered
the shares of Class A common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws
at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than
15 business days after the closing of our initial business combination, we will use our best efforts to file a registration statement
under the Securities Act covering such shares and maintain a current prospectus relating to the shares of Class A common stock issuable
upon exercise of the warrants until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot
assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information
set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not
current or correct or the SEC issues a stop order. If the shares 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,
unless an exemption is available. Under the terms of the warrant agreement, we have agreed to use our best efforts to take such action
as is necessary to register or qualify for sale the shares of Class A common stock issuable upon exercise of the warrants in such
states, to the extent an exemption is not available. However, we cannot assure you that we will be able to do so. In no event will we
be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that
we are unable to register or qualify the shares underlying the warrants under the Securities Act or applicable state securities laws.
If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification,
the holder of such warrant will 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. If and when the warrants become redeemable by us, we may exercise our
redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities
laws.
If you exercise
your public warrants on a “cashless basis,” you will receive fewer shares of Class A common stock from such exercise
than if you were to exercise such warrants for cash.
There are circumstances
in which the exercise of the public warrants may be required or permitted to be made on a cashless basis. For instance, if we call our
warrants for redemption, we can force all holders to exercise their warrants on a cashless basis. Additionally, If a registration statement
covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the 60th business day after
the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement,
exercise warrants on a cashless basis in accordance with Section 3(a)(9) of the Securities Act or another exemption. In the event
of an exercise on a cashless basis, a holder would pay the warrant exercise price by surrendering the warrants for that number of shares
of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A
common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market
value” (as defined in the next sentence) by (y) the fair market value. The “fair market value” of our Class A
common stock for the above purpose shall mean the volume weighted average price of our Class A common stock during the 10 trading
days immediately following the date on which the notice of redemption is sent to the holders of warrants. We will provide our warrant
holders with the final fair market value no later than one business day after the 10-trading day period described above ends. In no event
will the warrants be exercisable in connection with this redemption feature for more than 0.361 shares of Class A common stock per
warrant (subject to adjustment). As a result, you would receive fewer shares of Class A common stock from such exercise than if
you were to exercise such warrants for cash.
The private placement
warrants may be exercised at a time when the public warrants may not be exercised.
Once the private placement
warrants become exercisable, such warrants may immediately be exercised on a cashless basis, at the holder’s option, so long as
they are held by our sponsor or its permitted transferees. The public warrants, however, will only be exercisable on a cashless basis
at the option of the holders if we fail to register the shares issuable upon exercise of the warrants under the Securities Act within
60 days following the closing of our initial business combination. Accordingly, it is possible that the holders of the private placement
warrants could exercise such warrants at a time when the holders of public warrants could not exercise their 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
that was entered into concurrently with the issuance and sale of the securities in the Initial Public Offering, our initial stockholders
and their permitted transferees can demand that we register the Class A common stock into which founder shares are convertible,
holders of our private placement warrants and their permitted transferees can demand that we register the private placement warrants
and the 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 securities. The registration rights will be exercisable with
respect to the founder shares, the private placement warrants and the Class A common stock issuable upon exercise of such private
placement warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number
of securities for trading in the public market may have an adverse effect on the market price of our 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 shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration
to offset the negative impact on the market price of our Class A common stock that is expected when the securities owned by our
initial stockholders and holders of our private placement warrants or their respective permitted transferees are registered.
The securities
in which we invest the funds held in the trust account could bear a negative rate of interest, which could reduce the value of the assets
held in trust such that the per-share redemption amount received by public stockholders may be less than $10.00 per
share.
The proceeds held in
the trust account will be invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market
funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S.
government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they
have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in
recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt
similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain amendments
to our amended and restated certificate of incorporation, our public stockholders are entitled to receive their pro-rata share
of the proceeds held in the trust account, plus any interest income, net of taxes paid or payable (less, in the case we are unable to
complete our initial business combination, $100,000 of interest). Negative interest rates could reduce the value of the assets held in
trust such that the per-share redemption amount received by public stockholders may be less than $10.00 per share.
We may not have
sufficient funds to satisfy indemnification claims of our directors and executive officers.
We have agreed to indemnify
our officers and directors to the fullest extent permitted by law. However, our officers and directors have agreed to waive any right,
title, interest or claim of any kind in or to any monies in the trust account and to not seek recourse against the trust account for
any reason whatsoever. Accordingly, any indemnification provided will be able to be satisfied by us only if (i) we have sufficient
funds outside of the trust account or (ii) we consummate an initial business combination. Our obligation to indemnify our officers
and directors may discourage stockholders from bringing a lawsuit against our officers or directors for breach of their fiduciary duty.
These provisions also may have the effect of reducing the likelihood of derivative litigation against our officers and directors, even
though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment
may be adversely affected to the extent we pay the costs of settlement and damage awards against our officers and directors pursuant
to these indemnification provisions.
If, after we distribute
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is
filed against us that is not dismissed, a bankruptcy court may seek to recover such proceeds, and the members of our board of directors
may be viewed as having breached their fiduciary duties to our creditors, thereby exposing the members of our board of directors and
us to claims of punitive damages.
If, after we distribute
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is
filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or
bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court
could seek to recover some or all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached
its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by
paying public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is
filed against us that is not dismissed, the claims of creditors in such proceeding may have priority over the claims of our stockholders
and the per-share amount that would otherwise be received by our stockholders in connection with our liquidation
may be reduced.
If, before distributing
the proceeds in the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is
filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may
be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To
the extent any bankruptcy claims deplete the trust account, the per-share amount that would otherwise be received
by our stockholders in connection with our liquidation may be reduced.
Our stockholders
may be held liable for claims by third parties against us to the extent of distributions received by them upon redemption of their shares.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within 24 months from the closing of the Initial Public Offering may be considered
a liquidating distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the
DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period
during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are
made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s
pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after
the third anniversary of the dissolution. However, it is our intention to redeem our public shares as soon as reasonably possible following
the 24th month from the closing of the Initial Public Offering in the event we do not complete our initial business combination and,
therefore, we do not intend to comply with the foregoing procedures.
Because we 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 within 24 months from the closing of the Initial Public Offering is not considered a liquidating distribution
under Delaware law and such redemption distribution is deemed to be unlawful (potentially due to the imposition of legal proceedings
that a party may bring or due to other circumstances that are currently unknown), then pursuant to Section 174 of the DGCL, the
statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years,
as in the case of a liquidating distribution.
Provisions in
our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law may inhibit a takeover of us,
which could limit the price investors might be willing to pay in the future for our common stock and could entrench management.
Our amended and restated
certificate of incorporation and amended and restated bylaws contain provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. Our board of directors is divided into three classes, each of which will generally
serve for a term of three years with only one class of directors being elected in each year. As a result, at a given annual meeting only
a minority of the board of directors may be considered for election. Since our “staggered board” may prevent our stockholders
from replacing a majority of our board of directors at any given annual meeting, it may further entrench management and discourage unsolicited
stockholder proposals that may be in the best interests of stockholders. Moreover, our board of directors has the ability to designate
the terms of and issue new series of preferred stock.
We are also subject
to anti-takeover provisions under Delaware law, which could delay or prevent a change of control. Together these provisions may make
more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing
market prices for our securities.
Our amended and
restated certificate of incorporation will provide, subject to limited exceptions, that the Court of Chancery of the State of Delaware
will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to
obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our certificate of incorporation
will require, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers
and employees for breach of fiduciary duty and certain other actions may be brought only in the Court of Chancery in the State of Delaware,
except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party
not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of
the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or
forum other than the Court of Chancery or (C) for which the Court of Chancery does not have subject matter jurisdiction. Any person
or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented
to the forum provisions in our certificate of incorporation.
This choice of forum
provision may make it more costly, or limit a stockholder’s ability, to bring a claim in a judicial forum that it finds favorable
for disputes with us or any of our directors, officers or employees, which may discourage lawsuits with respect to such claims. We cannot
be certain that a court will decide that this provision is either applicable or enforceable, and if a court were to find the choice of
forum provision contained in our certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional
costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Our certificate of incorporation
will provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain
exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or
liability created by the Exchange Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply
to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive
jurisdiction. In addition, the exclusive forum provision will not apply to actions brought under the Securities Act, or the rules and
regulations thereunder.
We may amend the
terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least 50%
of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could
be shortened and the number of shares of our Class A common stock purchasable upon exercise of a warrant could be decreased, all
without your approval.
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 mistake, including to conform the provisions of the warrant agreement to the description of the terms of the warrants
and the warrant agreement set forth in the prospectus associated with our Initial Public Offering, or defective provision, but requires
the approval by the holders of at least 50% 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 50% of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms
of the public warrants with the consent of at least 50% of the then outstanding public warrants is unlimited, examples of such amendments
could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash, shorten the
exercise period or decrease the number of shares of Class A 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 (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period commencing
once the warrants become exercisable and ending on the third trading day prior to the date on which we send the notice of redemption
to the warrant holders and provided certain other conditions are met. If and when the warrants become redeemable by us, we may exercise
our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities
laws. As a result, we may redeem the public warrants as set forth above even if the holders are otherwise unable to exercise the 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, we expect would be substantially less than the market value of your warrants. None of the private placement warrants
will be redeemable by us (except under certain circumstances) so long as they are held by the Sponsor or its permitted transferees.
In addition, unlike
many other similarly structured blank check companies, we have the ability to redeem outstanding warrants 90 days after they become exercisable
for $0.10 per warrant upon a minimum of 30 days’ prior written notice of redemption provided that holders will be able to exercise
their warrants prior to redemption for a number of Class A common stock determined based on the redemption date and the fair market
value of our Class A common stock and provided certain other conditions are met. We would redeem the warrants in this manner when
we believe it is in our best interest to update our capital structure to remove the warrants and pay fair market value to the warrant
holders. We can also redeem the warrants in this manner if we believe it will provide certainty with respect to our capital structure
and cash position while providing warrant holders with fair market value in the form of shares of Class A common stock. Any such
redemption may have similar consequences to the redemption described in the above paragraph. In addition, such redemption may occur at
a time when the warrants are “out-of-the-money,” in which case you would lose any potential embedded
value from a subsequent increase in the value of the Class A common stock had your warrants remained outstanding. Finally, this
redemption feature provides a ceiling to the value of your warrants since it locks in the redemption price in the number of Class A
common stock to be received if we choose to redeem the warrants for common stock.
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 initial business
combination.
We issued warrants to
purchase 8,000,000 shares of our Class A common stock as part of the units offered by the prospectus associated with our Initial
Public Offering and simultaneously with the closing of the Initial Public Offering, we issued in a private placement an aggregate of
9,750,000 private placement warrants, each exercisable to purchase one share of Class A common stock at $11.50 per share. In addition,
if our initial stockholders, officers, directors or their affiliates make any working capital loans, they may convert those loans into
up to an additional 1,500,000 private placement warrants, at the price of $1.00 per warrant. To the extent we issue 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, when exercised, will
increase the number of issued and outstanding shares of Class A common stock and reduce the value of the Class A common stock
issued to complete the business transaction. Therefore, our warrants may make it more difficult to effectuate a business transaction
or increase the cost of acquiring the target business.
General Risks
We have no revenues,
and you have no basis on which to evaluate our ability to achieve our business objective.
Our only activities
through September 30, 2022 were organizational activities, those necessary to prepare for the Initial Public Offering, and searching
for a target for our Business Combination. We do not expect to generate any operating revenues until after the completion of our Business
Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account.
We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well
as for due diligence expenses. 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 and may be unable to complete our initial business combination.
If we fail to complete our initial business combination, we will never generate any operating revenues.
If we are deemed
to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and
our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to
be an investment company under the Investment Company Act, our activities may be restricted, including:
| ● | 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 initial 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 of securities and that our activities do not include investing,
reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our 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. To this end, the proceeds held in the trust account
may only be held as cash items or invested in United States “government securities” within the meaning of Section 2(a)(16)
of the Investment Company Act having a maturity of 185 days or less or in money market funds meeting the conditions of Rule 2a-7(d) promulgated under
the Investment Company Act which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee
is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by
having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in
the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the
meaning of the Investment Company Act. The trust account is intended as a holding place for funds pending the earliest to occur of either:
(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 within 24 months from the closing
of the Initial Public Offering; or (B) with respect to any other provision relating to stockholder rights or pre-initial business combination
activity; or (iii) absent an initial business combination within 24 months from the closing of the Initial Public Offering, our
return of the funds held in the trust account to our public stockholders as part of our redemption of the public shares. If we do not
invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject
to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have
not allotted funds and may hinder our ability to complete a business combination. If we are unable to complete our initial business combination,
our public stockholders may only receive their pro rata portion of the funds in the trust account that are available for distribution
to public stockholders, and our warrants will expire worthless.
Notwithstanding the
foregoing, on March 30, 2022, the SEC issued proposed rules relating to, among other items, the extent to which SPACs like our
company could become subject to regulation under the Investment Company Act of 1940. The SEC’s proposed rules would provide a
safe harbor for companies like our company from the definition of “investment company” under Section 3(a)(1)(A) of the
Investment Company Act, provided that they satisfy certain conditions that limit a company’s duration, asset composition,
business purpose and activities. The duration component of the proposed safe harbor rule would require the company to file a Current
Report on Form 8-K with the SEC announcing that it has entered into an agreement with the target company (or companies) to engage in
an initial business combination no later than 18 months after the effective date of the company’s registration statement for
its initial public offering. The company would then be required to complete its initial business combination no later than 24 months
after the effective date of its registration statement for its initial public offering. The SEC has indicated that it believes that
there are serious questions concerning the applicability of the Investment Company Act to special purpose acquisition companies,
including a company like ours, that does not complete its initial business combination within the proposed time frame set forth in
the proposed safe harbor rule. As a result, it is possible that a claim could be made in the future that we have been operating as
an unregistered investment company. These rules, if adopted, whether in the form proposed or in revised form, may materially
adversely affect our ability to negotiate and complete our initial business combination and may increase the costs and time related
thereto. It is also possible that the investment of funds from the IPO during our life as a blank check company, and the earning and use of interest
from such investment, both of which will likely continue until we consummate an initial business combination, could increase the likelihood
of us being found to have been operating as an unregistered investment company more than if we sought to potentially mitigate this risk
by holding such funds as cash.
Changes in laws
or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate
and complete our initial business combination, and results of operations.
We are subject to laws
and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and
other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly.
Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a
material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws
or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate
and complete our initial business combination, and results of operations.
On March 30, 2022, the
SEC issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving SPACs
and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies;
effectively limiting the use of projections in SEC filings in connection with proposed business combination transactions; increasing
the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become
subject to regulation under the Investment Company Act of 1940 (as described above). These rules, if adopted, whether in the form proposed
or in revised form, may materially adversely affect our ability to negotiate and complete our initial business combination and may increase
the costs and time related thereto.
We are an emerging
growth company and smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions
from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and
may make it more difficult to compare our performance with other public companies.
We are an “emerging
growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but
not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the
requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments
not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be
an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the
market value of our shares of Class A common stock held by non-affiliates exceeds $700 million as of any
June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot
predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our
securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they
otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more
volatile.
Further, Section 102(b)(1)
of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until
private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class
of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS
Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies
but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that
when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth
company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards
used.
Additionally, we are
a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies
may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial
statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our
common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter,
or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock
held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter. To the
extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public
companies difficult or impossible.
Compliance obligations
under the Sarbanes-Oxley Act may make it more difficult for us to effectuate a 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 this Annual Report on Form 10-K .
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 business with which we
seek to complete our initial business combination may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of its internal controls. The development of the internal control of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such acquisition.
Cyber incidents
or attacks directed at us could result in information theft, data corruption, operational disruption and/or financial loss.
We will likely depend
on digital technologies, including information systems, infrastructure and cloud applications and services, including those of third
parties with which we may deal. Sophisticated and deliberate attacks on, or security breaches in, our systems or infrastructure, or the
systems or infrastructure of third parties or the cloud, could lead to corruption or misappropriation of our assets, proprietary information
and sensitive or confidential data. As an early-stage company without significant investments in data security protection, we may not
be sufficiently protected against such occurrences. We may not have sufficient resources to adequately protect against, or to investigate
and remediate any vulnerability to, cyber incidents. It is possible that any of these occurrences, or a combination of them, could have
adverse consequences on our business and lead to financial loss or inability to consummate an initial business combination.