Item 1. Business.
Overview
We are a blank check company
incorporated in October 2020 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout
this Report as our initial business combination.
While we may pursue an acquisition
opportunity in any business, industry, sector or geographical location, we have focused and will continue to focus on industries that
complement our management team’s background, and to capitalize on the ability of our management team to identify and acquire a business,
focusing on sustainable industrial technology and infrastructure sectors in the United States (which may include a business based
in the United States which has operations or opportunities outside of the United States). We seek to acquire one or more businesses
with an aggregate enterprise value of $1 billion or greater.
Initial Public Offering
On January 20, 2021, we consummated
our initial public offering of 34,500,000 units. Each unit consists of one share of Class A common stock and one-fourth of one redeemable
warrant, with each warrant entitling the holder thereof to purchase one share of common stock for $11.50 per whole share. The units were
sold at a price of $10.00 per unit, generating gross proceeds to us of $345,000,000.
Simultaneously with the closing
of the initial public offering, we completed the private sale of an aggregate of 6,933,333 warrants to our sponsor and the direct anchor
investors at a purchase price of $1.50 per private placement warrant, generating gross proceeds of $10,400,000.
A total of $345,000,000, comprised
of $338,100,000 of the proceeds from the initial public offering and $6,900,000 of the proceeds of the sale of the private placement warrants
was placed in the trust account maintained by Continental, acting as trustee.
It is the job of our sponsor
and management team to complete our initial business combination. Our management team is led by Daniel J. Hennessy, our Chairman and Chief
Executive Officer, who has many years of experience in SPAC sponsor management. We must complete our initial business combination by January
20, 2023, which is 24 months from the closing of our initial public offering. If our initial business combination is not consummated by
such date, then our existence will terminate, and we will distribute all amounts in the trust account.
Business Opportunity Overview
Our strategy has been and
will continue to be to identify, acquire and, after our initial business combination, build and grow, a U.S. sustainable industrial technology
and infrastructure business. As an example, amongst other types of business activities, these types of companies develop or manufacture
advanced mobility or renewable fuel technologies, they innovate on energy conservation or work to modernize the electrical grid, they
combat pollution or find new applications for recycled materials, they develop technologies to conserve or treat water, or they work to
reduce the world’s dependence on fossil fuels by generating renewable energy. We believe the sectors and sub-sectors summarized
below offer significant opportunity for growth, and we have used and will continue to use these sectors to guide our target identification
process.
![](https://content.edgar-online.com/edgar_conv_img/2022/03/30/0001213900-22-016254_image_001.jpg)
We believe that
every facet of the industrial value chain, from shipping and freight to process engineering and manufacturing, stands to benefit, financially
and otherwise, from efficiency improvements offered by sustainable industrial technology and infrastructure technologies. We believe
one of many examples of areas impacted by sustainability is the future state of manufacturing, which will be supported and augmented
by technologies such as carbon capture, closed-loop recycling, renewable energy, and additive/3D manufacturing. Currently, according
to industry sources, industrial companies’ production and logistics operations contribute >50% of global CO2 equivalent
emissions from fuel combustion. In short, we believe that the green factory of the future has net-zero emissions.
Our assessment of the data
leads us to believe that the current economic environment is quite supportive of our investment strategy. We believe a sustainable revolution
is underway globally, incentivizing corporates and investors alike to transition industrial operations and products to a green future.
Hennessy Capital Has a Proven Track Record
of Being a Sustainable Growth Partner
As a continuous independent
SPAC sponsor, Hennessy Capital believes it has demonstrated that a partnership through one of its SPAC vehicles is a catalyst for “Sustainable
Growth”.
Hennessy Capital has focused
and will continue to focus on opportunities that it believes will deliver outsized growth to its investors. It believes its prior business
combinations have enabled its business targets to accelerate their growth through more efficient access to capital. We believe our sponsor’s
history of providing access to growth capital via an accelerated public listing supports our investment thesis and strategy and has helped
our sponsor’s partner companies deliver operational and financial growth and create value for stockholders.
Competitive Strengths
Our Investment Thesis and Strategy
We believe that a sustainable
“revolution” is underway globally, driven by efficiencies created by industrial technology adoption and infrastructure investment.
In the last 15 years, the actual decrease in levelized costs of renewable energy has far outpaced initial estimates, which in turn
has driven corporations and investors alike to realign their strategy with the fiduciary and moral imperative to pursue more efficient,
sustainable technologies. Early movers are winning and legacy firms are scrambling to catch up through investments in emerging sustainable
technology. In short, we believe sustainable industrial technology and infrastructure offers outsized growth potential. We believe that
the metrics below, which are based on industry sources, illustrate the vast business opportunity for certain of our target sectors:
![](https://content.edgar-online.com/edgar_conv_img/2022/03/30/0001213900-22-016254_image_002.jpg)
Selected Sustainability Drivers
Investing in sustainable industrial
technology and infrastructure attracts ESG investors, capitalizes on regulatory changes, and drives valuation upside through outsized
growth.
| ● | ESG Investment. Sustainability
garners interest from ESG investors, with an estimated $40 trillion globally of AUM in 2020 per an industry source — a 15% CAGR
from 2018-2020. Sustainable industrial technology and infrastructure companies qualifying as ESG investment opportunities attract a deep
pocket of capital. In addition to investing new capital into ESG, funds are increasingly getting mandates to exit certain other sectors
to increase investments in ESG opportunities. Furthermore, European players’ particular emphasis on ESG opportunities broadens
the footprint of capital opportunities, expanding our potential reach. |
|
● |
Regulatory Tailwinds. Globally, governments are increasing environmental regulations, a secular tailwind to sustainability-focused assets. Climate Action Tracker rates U.S. climate action “Critically Insufficient” — and with a renewed interest in meeting Paris Agreement goals, we believe government policy will push corporates toward more sustainable practices. As U.S. regulation lags other countries, the Biden administration is expected to make significant investment in sustainable practices, having outlined a $2 trillion economic recovery plan focused on clean energy investments and the creation of green jobs as a vehicle to pull the country out of the COVID-induced economic crisis. A focus on reaching Paris Climate Agreement goals will require a 45% decrease in industrial companies’ CO2 footprints by 2030, staging growth for sustainable companies at every level of the value chain per an industry source. |
|
● |
Outsized Growth. Dual-sided pressure from corporates and consumers alike solidifies the importance of sustainability in future business. According to Accenture, 99% of CEOs from companies with more than $1 billion in annual revenue believe sustainability will be important to the future success of their business. Likewise, from a consumer perspective, a recent industry report found that upwards of 70% of consumers in the automotive, building, electronics, and packaging industries surveyed said they would pay an additional 5% for a green alternative if it met the same performance standards as a nongreen product. In addition to charging consumers a premium for ESG, corporates can combat rising operating expenses through implementing ESG changes (e.g. raw-material costs, the true cost of water or carbon), affecting operating profit by up to 60% and driving margin expansion. Furthermore, corporates are incentivized from an environmental and financial standpoint to decarbonize their entire supply chain, leading to preferred supplier status of sustainable companies – we are seeing large multinationals “scoring” suppliers on sustainability credentials, penalizing those that do not align to their targets by renegotiating supply chain finance terms. Consequently, we believe sustainable industrial players are poised to outpace the growth of their peers across the supply chain. |
| ● | Defensible Market Position. Driven by increased focus
on sustainable manufacturing and energy by corporates, investors, governments, consumers, and other stakeholders, sustainable businesses
are positioned to capture, expand, and retain market share. We seek to identify sustainable businesses with differentiated, green-future technologies/solutions
and resilient business models that outpace peers, enabling stakeholders to participate in the sustainable revolution. |
Capital Markets Experience
The Hennessy Capital team believes it has substantial capital markets
expertise which will make us an attractive business combination partner to target businesses. As examples of this, the Hennessy Capital
team has completed SPAC business combinations with a combined total enterprise value of $4.4 billion (at the time of the initial
business combination), completed SPAC IPOs for a total of about $1.8 billion and raised over $850 million of PIPE and backstop
capital to support its business combinations.
In August 2020, Hennessy IV announced its initial business combination
with Canoo Holdings Ltd., or Canoo, which closed in December 2020. The transaction valued Canoo at approximately $2.4 billion and
provided over $600 million in gross proceeds to support Canoo’s rapid growth. Hennessy IV’s management secured all financing
required to close the transaction prior to announcement including a common stock PIPE of approximately $325 million, which was meaningfully
oversubscribed and subsequently upsized from its initial $200 million target, and was supported by investments from multiple institutional
investors, including investments from funds and accounts managed by BlackRock.
Initial Business Combination
Nasdaq rules require that
we must complete one or more business combinations having an aggregate fair market value of at least 80% of the value of the assets held
in the trust account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the trust account) at
the time of our signing a definitive agreement in connection with our initial business combination. Our board of directors will make the
determination as to the fair market value of our initial business combination. If our board of directors is not able to independently
determine the fair market value of our initial business combination, we will obtain an opinion from an independent investment banking
firm that is a member of FINRA or an independent accounting firm with respect to the satisfaction of such criteria. While we consider
it unlikely that our board of directors will not be able to make an independent determination of the fair market value of our initial
business combination, it may be unable to do so if it is less familiar or experienced with the business of a particular target or if there
is a significant amount of uncertainty as to the value of a target’s assets or prospects. Additionally, pursuant to Nasdaq rules,
any initial business combination must be approved by a majority of our independent directors.
We anticipate structuring
our initial business combination either (i) in such a way so that the post-transaction company in which our public stockholders
own shares will own or acquire 100% of the equity interests or assets of the target business or businesses, or (ii) in such a way
so that the post-transaction company owns or acquires less than 100% of such interests or assets of the target business in order
to meet certain objectives of the target management team or stockholders, or for other reasons. However, we will only complete an initial
business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target
or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under
the Investment Company Act. Even if the post-transaction company owns or acquires 50% or more of the voting securities of the target,
our stockholders prior to the initial business combination may collectively own a minority interest in the post-transaction company,
depending on valuations ascribed to the target and us in the initial business combination. For example, we could pursue a transaction
in which we issue a substantial number of new shares in exchange for all of the outstanding capital stock of a target. In this case, we
would acquire a 100% controlling interest in the target. However, as a result of the issuance of a substantial number of new shares, our
stockholders immediately prior to our initial business combination could own less than a majority of our outstanding shares subsequent
to our initial business combination. If less than 100% of the equity interests or assets of a target business or businesses are owned
or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be
taken into account for purposes of Nasdaq’s 80% of net assets test. If the initial business combination involves more than one target
business, the 80% of net assets test will be based on the aggregate value of all of the transactions, and we will treat the target businesses
together as the initial business combination for purposes of a tender offer or for seeking stockholder approval, as applicable.
Consistent with this strategy,
we have identified the following general criteria and guidelines that we believe are important in evaluating prospective target businesses.
We have used and will continue to use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter
into our initial business combination with a target business that does not meet these criteria and guidelines.
| ● | $1 billion+ Target Business Size. We seek to acquire
one or more businesses with an aggregate enterprise value of $1 billion or greater, determined in the sole discretion of our officers
and directors according to reasonably accepted valuation standards and methodologies. |
| ● | Large Addressable Market. We target companies that operate
in large addressable markets in the sustainable industrial technology and infrastructure sectors, which together are expected to represent
approximately $3.9 trillion of annual business activity by 2025. We believe our management team and our board are skilled in analyzing
and evaluating companies in these markets based on their significant past SPAC execution, investing, and operating experience. |
| ● | Scalable and Sustainable Growth Platform. We are focused
on segments and businesses within our target sectors that are poised for scalable, sustainable growth due to shifting customer preferences
in favor of products and technologies that enable improvements in automation, efficiency, customer experience, and environmental sustainability. |
| ● | Strong Competitive Positioning and Differentiated Technology.
We are focused on attractive companies with differentiated technology aimed at solving critical challenges in their areas of focus.
Companies with unique and disruptive platforms and product offerings, including technology innovators, will be at the forefront of our
evaluation process. Our management team and our board have extensive operational, commercial and transactional experience with technology-driven companies
in our target sectors, and we intend to use these skills to identify market leaders. |
| ● | Benefits from Environmentally Sustainable Business Practices.
We seek to acquire a business that is an active market participant in the global development of the clean energy industry, continued
decarbonization of the industrial, government and consumer spaces, and/or broader transition toward a sustainable economic model and
that has existing operating practices that promote and profit from environmental sustainability. |
| ● | Experienced Management Team. We seek to acquire one or
more businesses with a complete, experienced management team that provides a platform for us to further develop the acquired business’s
management capabilities. We seek to partner with a potential target’s management team and expect that the operating and financial
abilities of our executive team and board will complement management’s capabilities. |
| ● | Partnership Approach. We are pursuing a partnership approach
to working with a management team that shares our strategic vision and believes we can help them achieve the full potential of their
business. Our management team and our board have a long history of starting and growing businesses, and we will use our collective experience
to help guide management teams of target businesses. |
| ● | Benefit from Being a Public Company. We intend to acquire
one or more businesses that will benefit from being publicly traded and can effectively utilize the broader access to capital and public
profile that are associated with being a publicly traded company. |
These criteria are not intended to be exhaustive.
Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant.
Sourcing of Potential Initial Business Combination
Targets
We believe certain non-public companies
and their stockholders can benefit from a transaction with us. Acquisition candidates are entities that may need stable, permanent equity
financing, but may currently have limited access to the public markets. Targets may be either independent entities or divisions of larger
organizations. We believe we are ideally positioned to identify and source attractive acquisition opportunities capitalizing on our strengths:
| 1) | Proprietary Relationships and Network — Our
accomplished and proven network of advisors and proprietary relationships assists with target company origination. This group includes
our board of directors, specifically lead independent director, Jeffrey Immelt, and directors Nora Mead Brownell, Barbara Byrne, Dr. Kurt
Lauk and Tanguy Serra. Our Strategic Advisory Council members include Brad Buss, Gretchen McClain, Lee McIntire, Manish Nayar, Jim O’Neil,
and Ashley Zumwalt-Forbes. Hennessy Capital has leveraged a broad base of advisors, cultivating its network since 2013. We believe that
our network of established third party advisors and relationships represents an attractive and differentiated value proposition for investors,
sellers, and current owners of potential targets through its broad reach across funds and corporates alike. |
| 2) | Access to Private Equity and Venture Capital Portfolio Companies — Substantial
amounts of capital have been invested by private equity and venture capital firms. According to PitchBook Data, Inc., U.S. private equity
funds raised close to $2.0 trillion from 2008 through 2019 in almost 2,500 different funds. Venture capital funds raised over $250 billion
in the U.S. during the same period. From 2008 through 2019, the median hold time of companies held by private equity funds increased
from approximately 3.3 years to 4.9 years. Therefore, we believe that there should be a significant number of portfolio companies
available for sale from private equity firms in the coming years as they seek liquidity. These funds have an ongoing need for investment
realizations, particularly in older vintage portfolios. Hennessy is ideally positioned to be aware of these targets due to proprietary
relationships of senior management and advisor networks. |
| 3) | Relationships with Large Conglomerates — Certain multi-unit companies may need to
rationalize their business by sale or spin-off of operating units or divestiture of non-core assets due to pressures from
lenders, customers, suppliers, or stockholders. |
We may or may not consummate
our initial business combination with a company that falls into one of these categories.
Our Initial Business Combination Process
In evaluating prospective
business combinations, we conduct a thorough due diligence review process that encompasses, among other things, a review of historical
and projected financial and operating data, meetings with management and their advisors (if applicable), on-site inspection of facilities
and assets, discussion with customers and suppliers, legal reviews and other reviews as we deem appropriate. We also utilize our expertise
analyzing companies in the sustainable industrial technology and infrastructure sectors in evaluating operating projections, financial
projections and determining the appropriate return expectations given the risk profile of the target business.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor, officers or directors. In the event we seek
to complete our initial business combination with a company that is affiliated with our sponsor, officers or directors, we, or a committee
of independent directors, will obtain an opinion from an independent investment banking firm that is a member of FINRA or an independent
accounting firm that our initial business combination is fair to our company from a financial point of view.
Our officers and directors
directly or indirectly own founder shares and/or private placement warrants following our initial public offering. Because of this ownership,
our officers and directors may have a conflict of interest in determining whether a particular target business is an appropriate business
with which to effectuate our initial business combination. Further, each of our officers and directors may have a conflict of interest
with respect to evaluating a particular business combination if the retention or resignation of any such officers and directors were to
be included by a target business as a condition to any agreement with respect to our initial business combination.
Each of our officers and directors presently has, and any of them in
the future may have additional, fiduciary, contractual or other obligations or duties to one or more other entities pursuant to which
such officer or director is or will be required to present an initial business combination opportunity. Accordingly, if any of our officers
or directors becomes aware of an initial business combination opportunity which is suitable for one or more entities to which he or she
has fiduciary, contractual or other obligations or duties, he or she will honor these obligations and duties to present such initial business
combination opportunity to such entities first, and only present it to us if such entities reject the opportunity and he or she determines
to present the opportunity to us (including as described in “Business — Sourcing of Potential Business Combination Targets”).
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.
We do not believe, however,
that the fiduciary, contractual or other obligations or duties of our officers or directors will materially affect our ability to complete
our initial business combination. Our amended and restated certificate of incorporation provides that we renounce our interest in any
corporate opportunity offered to any director or officer unless (i) such opportunity is expressly offered to such person solely in
his or her capacity as a director or officer of our company, (ii) such opportunity is one we are legally and contractually permitted
to undertake and would otherwise be reasonable for us to pursue and (iii) the director or officer is permitted to refer the opportunity
to us without violating another legal obligation.
Our sponsor, officers and
directors may participate in the formation of, or become an officer or director of, any other blank check company prior to completion
of our initial business combination, including Hennessy Capital Investment Corp. VI (“Hennessy VI”). As a result, our sponsor,
officers or directors could have conflicts of interest in determining whether to present business combination opportunities to us or to
any other blank check company with which they may become involved. For example, each of Mr. Hennessy, Mr. Ethridge and Mr. Petruska is
currently an officer of Hennessy VI and owes fiduciary duties to Hennessy VI, which may compete with us for acquisition opportunities.
Although we have no formal policy in place for vetting potential conflicts of interest, our board of directors will review any potential
conflicts of interest on a case-by-case basis. In particular, affiliates of our sponsor are currently sponsoring one other blank check
company, Hennessy VI. Any such companies, including Hennessy VI, may present additional conflicts of interest in pursuing an acquisition
target. However, we do not believe that any potential conflicts with Hennessy VI would materially affect our ability to complete our initial
business combination, because our management team has significant experience in identifying and executing multiple acquisition opportunities
simultaneously and we are not limited by industry or geography in terms of the acquisition opportunities we can pursue. We also expect
that we will have priority over Hennessy VI with respect to acquisition opportunities until we complete an initial business combination.
In addition, all of our independent directors are not directors of Hennessy VI, and all of the independent directors of Hennessy VI do
not serve on our board of directors.
Our Management Team
Members of our management team are not obligated to devote any specific
number of hours to our matters, but they intend to devote as much of their time as they deem necessary to our affairs until we have completed
our initial business combination. The amount of time that any member of our management team devotes in any time period varies based on
whether a target business has been selected for our initial business combination and the current stage of the initial business combination
process.
We believe our management
team’s operating and transaction experience and relationships with companies will provide us with a substantial number of potential
business combination targets. Over the course of their careers, the members of our management team have developed a broad network of contacts
and corporate relationships in various industries in connection with sustainable industrial technology and infrastructure investing. This
network has grown through the activities of our management team sourcing, acquiring and financing businesses, our management team’s
relationships with sellers, financing sources and target management teams and the experience of our management team in executing transactions
under varying economic and financial market conditions.
This network has provided
our management team with a flow of referrals that have resulted in numerous transactions. We believe that the network of contacts and
relationships of our management team will provide us with an important source of acquisition opportunities. In addition, target business
candidates may also be brought to our attention from various unaffiliated sources, including investment bankers, private investment funds
and other intermediaries. 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 our prospectus in connection with our initial public offering or this
Report and know the types of businesses we are targeting. Our officers and directors, as well as their affiliates, may also bring to our
attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries
or discussions they may have, as well as attending trade shows or conventions. In addition, we expect to receive a number of proprietary
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, and the success of Hennessy I, Hennessy II, Hennessy III, and Hennessy IV, which are well-known to many market
participants. In connection with their duties with Hennessy I, Hennessy II, Hennessy III, and Hennessy IV, our executive officers have
reviewed nearly 700 potential targets over the course of Hennessy I, Hennessy II, Hennessy III, and Hennessy IV.
Status as a Public Company
We believe our status as a public company makes us an attractive business
combination partner to target businesses. As a public company, we offer a target business an alternative to the traditional initial public
offering through a merger or other business combination with us. Following an initial business combination, we believe the target business
would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’
interests than it would have as a private company. A target business can further benefit by augmenting its profile among potential new
customers and vendors and aid in attracting talented employees. In an initial business combination transaction with us, the owners of
the target business may, for example, exchange their shares of stock in the target business for our shares of Class A common stock
(or shares of a new holding company) or for a combination of our shares of Class A common stock and cash, allowing us to tailor the
consideration to the specific needs of the sellers.
Although there are various costs and obligations associated with being
a public company, we believe target businesses will find this a more expeditious and cost effective method to become a public company
than the typical initial public offering. The typical initial public offering process takes a significantly longer period of time than
most business combination transaction processes, and there are significant expenses in the initial public offering process, including
underwriting discounts and commissions, marketing and road show efforts that may not be present to the same extent in connection with
an initial business combination with us. Furthermore, once a proposed initial business combination is completed, the target business will
have effectively become public, whereas an initial public offering is always subject to the underwriters’ ability to complete the
offering, as well as general market conditions, which could delay or prevent the offering from occurring or could have negative valuation
consequences.
While we believe that our structure and our management team’s
backgrounds will make us an attractive business partner, some potential target businesses may view our status as a blank check company,
such as our lack of an operating history, our need to seek stockholder approval of any proposed initial business combination and the potential
redemptions of our public shares in connection with an initial business combination, negatively.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies” including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive
compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities
less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more
volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion
of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our Class A common stock that is held by non-affiliates exceeds
$700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt
securities during the prior three-year period.
Financial Position
With funds available for an initial business combination in the amount
of approximately $332,929,000 as of December 31, 2021, assuming no redemptions and after payment of $12,075,000 of deferred underwriting
fees, we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to complete
our initial business combination using our cash, debt or equity securities, or a combination of the foregoing, we have the flexibility
to use the most efficient combination that will allow us to tailor the consideration to be paid to the target business to fit its needs
and desires. However, we have not taken any steps to secure third party financing and there can be no assurance it will be available to
us.
Effecting Our Initial Business Combination
We are not presently engaged
in, and we will not engage in, any operations until we consummate our initial business combination. We intend to effectuate our initial
business combination using cash from the proceeds of our initial public offering and the private placement of the private placement warrants,
the proceeds of the sale of our shares in connection with our initial business combination (pursuant to backstop agreements we may enter
into following the consummation of our initial public offering or otherwise), shares issued to the owners of the target, debt issued to
bank or other lenders or the owners of the target, or a combination of the foregoing. We may seek to complete our initial business combination
with a company or business that may be financially unstable or in its early stages of development or growth, which would subject us to
the numerous risks inherent in such companies and businesses.
If our initial business combination
is paid for using equity or debt securities, or not all of the funds released from the trust account are used for payment of the consideration
in connection with our initial business combination or used for redemptions of our Class A common stock, we may apply the balance
of the cash released to us from the trust account for general corporate purposes, including for maintenance or expansion of operations
of the post-transaction company, the payment of principal or interest due on indebtedness incurred in completing our initial business
combination, to fund the purchase of other companies or for working capital.
We may seek to raise additional funds through a private offering of
debt or equity securities in connection with the completion of our initial business combination, and we may effectuate our initial business
combination using the proceeds of such offering rather than using the amounts held in the trust account. In addition, we intend to target
businesses larger than we could acquire with the net proceeds of our initial public offering and the sale of the private placement warrants,
and may as a result be required to seek additional financing to complete such proposed initial business combination. Subject to compliance
with applicable securities laws, we would expect to complete such financing only simultaneously with the completion of our initial business
combination. In the case of an initial business combination funded with assets other than the trust account assets, our proxy materials
or tender offer documents disclosing the initial business combination would disclose the terms of the financing and, only if required
by law, we would seek stockholder approval of such financing. There are no prohibitions on our ability to raise funds privately or through
loans in connection with our initial business combination.
We may contact any of the
prospective target businesses that Hennessy I, Hennessy II, Hennessy III and Hennessy IV had considered and rejected while such entities
were searching for target businesses to acquire as well as any prospective target businesses considered and rejected by Hennessy VI. Although
our management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this
assessment will result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside
of our control, meaning that we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
The time required to select
and evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of
a prospective target business with which our initial business combination is not ultimately completed will result in our incurring losses
and will reduce the funds we can use to complete another business combination.
Other Sources of Target Businesses
We may engage the services
of professional firms or other individuals that specialize in business acquisitions, in which event we may pay a finder’s fee, consulting
fee, advisory fee or other compensation to be determined in an arm’s length negotiation based on the terms of the transaction. We
will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not
otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines
is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any
such fee will be paid out of the funds held in the trust account. In no event, however, will our sponsor or any of our existing officers
or directors, or any entity with which our sponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting
fee, monies in respect of any payment of a loan or other compensation by us prior to, or in connection with any services rendered for
any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction
that it is). None of our sponsor, executive officers or directors, or any of their respective affiliates, will be allowed to receive any
compensation, finder’s fees or consulting fees from a prospective business combination target in connection with a contemplated
initial business combination. We agreed to pay an affiliate of our sponsor a total of $15,000 per month for office space, utilities and
secretarial and administrative support. Beginning in December 2021, our sponsor agreed to defer such fee indefinitely. We will reimburse
our sponsor for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination.
Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following
our initial business combination. The presence or absence of any such fees or arrangements will not be used as a criterion in our selection
process of an initial business combination candidate. Commencing on the date the securities were first listed on Nasdaq, we paid each
of Mr. Ethridge, our President and Chief Operating Officer, and Mr. Petruska, our Chief Financial Officer, approximately $29,000
per month for their services prior to the consummation of our initial business combination, of which approximately $14,000 per month is
payable upon the successful completion of our initial business combination. Beginning in November 2021, these officers have agreed to
defer cash payments for an indefinite period.
We are not prohibited from
pursuing an initial business combination with a company that is affiliated with our sponsor, executive officers or directors, or making
the acquisition through a joint venture or other form of shared ownership with our sponsor, executive officers or directors. In the event
we seek to complete an initial business combination with a business that is affiliated with our sponsor, officers or directors, we or
a committee of our independent and disinterested directors, will obtain an opinion from an independent investment banking firm that is
a member of FINRA or from an independent accounting firm, that such initial business combination is fair to our company from a financial
point of view. We are not required to obtain such an opinion in any other context.
If any of our officers or directors becomes aware of an initial business
combination opportunity that falls within the line of business of any entity to which he or she has pre-existing fiduciary or contractual
obligations, he or she may be required to present such initial business combination opportunity to such entity prior to presenting such
initial business combination opportunity to us. Our officers and directors currently have certain relevant fiduciary duties or contractual
obligations that may take priority over their duties to us. Our sponsor, officers and directors may participate in the formation of, or
become an officer or director of, any other blank check company prior to completion of our initial business combination, including Hennessy
VI. As a result, our sponsor, officers or directors could have conflicts of interest in determining whether to present initial business
combination opportunities to us or to any other blank check company with which they may become involved. For example, each of Mr. Hennessy,
Mr. Ethridge and Mr. Petruska is currently an officer of Hennessy VI and owes fiduciary duties to Hennessy VI, which may compete with
us for acquisition opportunities. Although we have no formal policy in place for vetting potential conflicts of interest, our board of
directors will review any potential conflicts of interest on a case-by-case basis. In particular, affiliates of our sponsor are currently
sponsoring one other blank check company, Hennessy VI. Any such companies, including Hennessy VI, may present additional conflicts of
interest in pursuing an acquisition target. However, we do not believe that any potential conflicts with Hennessy VI would materially
affect our ability to complete our initial business combination, because our management team has significant experience in identifying
and executing multiple acquisition opportunities simultaneously and we are not limited by industry or geography in terms of the acquisition
opportunities we can pursue. We also expect that we will have priority over Hennessy VI with respect to acquisition opportunities until
we complete an initial business combination. In addition, all of our independent directors are not directors of Hennessy VI, and all of
the independent directors of Hennessy VI do not serve on our board of directors.
Stockholders May Not Have the Ability to Approve
our Initial Business Combination
We may conduct redemptions
without a stockholder vote pursuant to the tender offer rules of the SEC. However, we will seek stockholder approval if it is required
by applicable law or stock exchange rule, or we may decide to seek stockholder approval for business or other reasons. Presented in the
table below is a graphic explanation of the types of initial business combination we may consider and whether stockholder approval is
currently required under Delaware law for each such transaction.
Type of Transaction |
|
Whether Stockholder Approval is Required |
Purchase of assets |
|
No |
Purchase of stock of target not involving a merger with the company |
|
No |
Merger of target into a subsidiary of the company |
|
No |
Merger of the company with a target |
|
Yes |
Under Nasdaq’s listing
rules, stockholder approval would be required for our initial business combination if, for example:
| ● | we issue shares of Class A common stock that will be
equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding; |
| ● | any of our directors, officers or substantial stockholders
(as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or
indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could
result in an increase in outstanding common shares or voting power of 5% or more; or |
| ● | the issuance or potential issuance of common stock will result
in our undergoing a change of control. |
The
decision as to whether we will seek stockholder approval of a proposed business combination in those instances in which stockholder approval
is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a
variety of factors, including, but not limited to:
| ● | the timing of the transaction, including in the event we
determine stockholder approval would require additional time and there is either not enough time to seek stockholder approval or doing
so would place the company at a disadvantage in the transaction or result in other additional burdens on the company; |
| ● | the expected cost of holding a stockholder vote; |
| ● | the risk that the stockholders would fail to approve the
proposed business combination; |
| ● | other time and budget constraints of the company; and |
| ● | additional legal complexities of a proposed business combination
that would be time-consuming and burdensome to present to stockholders. |
Permitted Purchases of Our Securities
In the event we seek stockholder
approval of our initial business combination and we do not conduct redemptions in connection with our initial business combination pursuant
to the tender offer rules, our sponsor, directors, officers, advisors or any of their respective affiliates may purchase public shares
or public warrants or a combination thereof in privately negotiated transactions or in the open market either prior to or following the
completion of our initial business combination. There is no limit on the number of shares our initial stockholders, directors, officers,
advisors or their affiliates may purchase in such transactions, subject to compliance with applicable law and Nasdaq rules. However, they
have no current commitments, plans or intentions to engage in such transactions and have not formulated any terms or conditions for any
such transactions. In the event our initial stockholders, directors, officers, advisors or any of their respective affiliates determine
to make any such purchases at the time of a stockholder vote relating to our initial business combination, such purchases could have the
effect of influencing the vote necessary to approve such transaction. None of the funds in the trust account will be used to purchase
public shares in such transactions. If they engage in such transactions, they will be restricted from making any such purchases when they
are in possession of any material non-public information not disclosed to the seller or if such purchases are prohibited by Regulation
M under the Exchange Act. Such a purchase may include a contractual acknowledgement that such stockholder, although still the record holder
of our shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. We have adopted an
insider trading policy which will require insiders to (1) refrain from purchasing securities when they are in possession of any material
non-public information and (2) to clear all trades with our compliance personnel or legal counsel prior to execution. We cannot
currently determine whether our insiders will make such purchases pursuant to a Rule 10b5-1 plan, as it will be dependent upon
several factors, including but not limited to, the timing and size of such purchases. Depending on such circumstances, our insiders may
either make such purchases pursuant to a Rule 10b5-1 plan or determine that such a plan is not necessary.
In the event that our sponsor,
directors, officers, advisors or any of their respective affiliates purchase public shares in privately negotiated transactions from public
stockholders who have already elected to exercise their redemption rights or submitted a proxy to vote against our initial business combination,
such selling stockholders would be required to revoke their prior elections to redeem their shares and any proxy to vote against our initial
business combination. We do not currently anticipate that such purchases, if any, would constitute a tender offer subject to the tender
offer rules under the Exchange Act or a going-private transaction subject to the going-private rules under the Exchange Act;
however, if the purchasers determine at the time of any such purchases that the purchases are subject to such rules, the purchasers will
comply with such rules.
The purpose of such purchases
could be to vote such shares in favor of the business combination and thereby increase the likelihood of obtaining stockholder approval
of our initial business combination or to satisfy a closing condition in an agreement with a target that requires us to have a minimum
net worth or a certain amount of cash at the closing of our initial business combination, where it appears that such requirement would
otherwise not be met. This may result in the completion of our initial business combination that may not otherwise have been possible.
In addition, if such purchases
are made, the public “float” of our common stock may be reduced and the number of beneficial holders of our securities may
be reduced, which may make it difficult to maintain or obtain the quotation, listing or trading of our securities on a national securities
exchange.
Our sponsor, officers, directors,
advisors and/or any of their respective affiliates anticipate that they may identify the stockholders with whom our sponsor, officers,
directors, advisors or any of their respective affiliates may pursue privately negotiated purchases by either the stockholders contacting
us directly or by our receipt of redemption requests submitted by stockholders following our mailing of proxy materials in connection
with our initial business combination. To the extent that our sponsor, officers, directors, advisors or any of their respective affiliates
enter into a private purchase, they would identify and contact only potential selling stockholders who have expressed their election to
redeem their shares for a pro rata share of the trust account or vote against our initial business combination. Such persons would select
the stockholders from whom to acquire shares based on the number of shares available, the negotiated price per share and such other factors
as any such person may deem relevant at the time of purchase. The price per share paid in any such transaction may be different than the
amount per share a public stockholder would receive if it elected to redeem its shares in connection with our initial business combination.
Our sponsor, officers, directors, advisors or any of their respective affiliates will purchase shares only if such purchases comply with
Regulation M under the Exchange Act and the other federal securities laws.
Any purchases by our sponsor,
officers, directors and/or any of their respective affiliates who are affiliated purchasers under Rule 10b-18 under the Exchange
Act will only be made to the extent such purchases are made in compliance with Rule 10b-18, which is a safe harbor from liability
for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Rule 10b-18 has certain technical
requirements that must be complied with in order for the safe harbor to be available to the purchaser. Our sponsor, officers, directors
and/or any of their respective affiliates will be restricted from making purchases of common stock if such purchases would violate Section 9(a)(2)
or Rule 10b-5 of the Exchange Act.
Redemption Rights for Public Stockholders Upon
Completion of our Initial Business Combination
We will provide our public
stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of our initial business combination
at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior
to the consummation of our initial business combination, including interest (net of taxes payable), divided by the number of then outstanding
public shares, subject to the limitations described herein. As of December 31, 2021, the amount in the trust account was approximately
$10.00 per public share. The per share amount we will distribute to investors who properly redeem their shares will not be reduced by
the deferred underwriting commissions we will pay to the underwriters. The redemption right will include the requirement that any beneficial
owner on whose behalf a redemption right is being exercised must identify itself in order to validly redeem its shares. Each public stockholder
may elect to redeem its public shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed
transaction. There will be no redemption rights upon the completion of our initial business combination with respect to our warrants.
Our sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their redemption
rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business
combination.
Manner of Conducting Redemptions
We will provide our public
stockholders with the opportunity to redeem all or a portion of their shares of Class A common stock upon the completion of our initial
business combination either: (1) in connection with a stockholder meeting called to approve the business combination; or (2) by
means of a tender offer. The decision as to whether we will seek stockholder approval of a proposed business combination or conduct a
tender offer will be made by us, solely in our discretion, and will be based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would require us to seek stockholder approval under applicable law or stock exchange listing
requirement. Under Nasdaq rules, asset acquisitions and stock purchases would not typically require stockholder approval while direct
mergers with our company where we do not survive and any transactions where we issue more than 20% of our outstanding common stock or
seek to amend our amended and restated certificate of incorporation would require stockholder approval. If we structure a business combination
transaction with a target company in a manner that requires stockholder approval, we will not have discretion as to whether to seek a
stockholder vote to approve the proposed business combination. We currently intend to conduct redemptions pursuant to a stockholder vote
unless stockholder approval is not required by applicable law or stock exchange listing requirement and we choose to conduct redemptions
pursuant to the tender offer rules of the SEC for business or other reasons. So long as we obtain and maintain a listing for our securities
on Nasdaq, we will be required to comply with such rules.
If a stockholder vote is not
required and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated
certificate of incorporation:
| ● | conduct the redemptions pursuant to Rule 13e-4 and
Regulation 14E of the Exchange Act, which regulate issuer tender offers; and |
| | |
| ● | file tender offer documents with the SEC prior to completing
our initial business combination which contain substantially the same financial and other information about the initial business combination
and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies. |
Upon the public announcement
of our initial business combination, we and our sponsor will terminate any plan established in accordance with Rule 10b5-1 to
purchase shares of our Class A common stock in the open market if we elect to redeem our public shares through a tender offer, to
comply with Rule 14e-5 under the Exchange Act.
In the event we conduct redemptions
pursuant to the tender offer rules, our offer to redeem will remain open for at least 20 business days, in accordance with Rule 14e-1(a)
under the Exchange Act, and we will not be permitted to complete our initial business combination until the expiration of the tender offer
period. In addition, the tender offer will be conditioned on public stockholders not tendering more than a specified number of public
shares, which number will be based on the requirement that we may not redeem public shares in an amount that would cause our net tangible
assets, after payment of the deferred underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to the
SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement
relating to our initial business combination. If public stockholders tender more shares than we have offered to purchase, we will withdraw
the tender offer and not complete such initial business combination.
If, however, stockholder approval
of the transaction is required by applicable law or stock exchange listing requirement, or we decide to obtain stockholder approval for
business or other reasons, we will, pursuant to our amended and restated certificate of incorporation:
| ● | conduct the redemptions in conjunction with a proxy solicitation
pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer
rules; and |
| | |
| ● | file proxy materials with the SEC. |
We expect that a final proxy
statement would be mailed to public stockholders at least 10 days prior to the stockholder vote. However, we expect that a draft
proxy statement would be made available to such stockholders well in advance of such time, providing additional notice of redemption if
we conduct redemptions in conjunction with a proxy solicitation. Although we are not required to do so, we currently intend to comply
with the substantive and procedural requirements of Regulation 14A in connection with any stockholder vote even if we are not able
to maintain our Nasdaq listing or Exchange Act registration.
In the event that we seek
stockholder approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our
public stockholders with the redemption rights described above upon completion of the initial business combination.
If we seek stockholder approval,
unless otherwise required by applicable law, regulation or stock exchange rules, we will complete our initial business combination only
if a majority of the outstanding shares of common stock voted are voted in favor of the business combination. A quorum for such meeting
will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority
of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting. Our initial stockholders,
officers and directors will count towards this quorum and have agreed to vote any founder shares and any public shares held by them in
favor of our initial business combination. These quorum and voting thresholds and agreements, may make it more likely that we will consummate
our initial business combination. Each public stockholder may elect to redeem its public shares without voting, and if they do vote, irrespective
of whether they vote for or against the proposed transaction. In addition, our sponsor, officers and directors have entered into a letter
agreement with us, pursuant to which they have agreed to waive their redemption rights with respect to any founder shares and any public
shares held by them in connection with the completion of a business combination.
Our amended and restated certificate
of incorporation provides that in no event will we redeem our public shares in an amount that would cause our net tangible assets, after
payment of the deferred underwriting commissions, to be less than $5,000,001 (so that we do not then become subject to the SEC’s
“penny stock” rules). Redemptions of our public shares may also be subject to a higher net tangible asset test or cash requirement
pursuant to an agreement relating to our initial business combination. For example, the proposed business combination may require: (1) cash
consideration to be paid to the target or its owners; (2) cash to be transferred to the target for working capital or other general
corporate purposes; or (3) the retention of cash to satisfy other conditions in accordance with the terms of the proposed business
combination. In the event the aggregate cash consideration we would be required to pay for all shares of Class A common stock that
are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business
combination exceed the aggregate amount of cash available to us, we will not complete the business combination or redeem any shares, and
all shares of Class A common stock submitted for redemption will be returned to the holders thereof.
Limitation on Redemption Upon Completion of
our Initial Business Combination if we Seek Stockholder Approval
Notwithstanding the foregoing,
if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our initial business
combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group”
(as defined under Section 13 of the Exchange Act), will be restricted from seeking redemption rights with respect to more than an
aggregate of 15% of the shares sold in our initial public offering, without our prior consent, which we refer to as the “Excess
Shares.” We believe this restriction will discourage stockholders from accumulating large blocks of shares, and subsequent attempts
by such holders to use their ability to exercise their redemption rights against a proposed business combination as a means to force us
or our affiliates to purchase their shares at a significant premium to the then-current market price or on other undesirable terms.
Absent this provision, a public stockholder holding more than an aggregate of 15% of the shares sold in our initial public offering could
threaten to exercise its redemption rights if such holder’s shares are not purchased by us or our affiliates at a premium to the
then-current market price or on other undesirable terms. By limiting our stockholders’ ability to redeem no more than 15% of
the shares sold in our initial public offering, we believe we will limit the ability of a small group of stockholders to unreasonably
attempt to block our ability to complete our initial business combination, particularly in connection with a business combination with
a target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. However, we would not be restricting
our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination.
Tendering Stock Certificates in Connection
with a Tender Offer or Redemption Rights
We may require our public
stockholders seeking to exercise their redemption rights, whether they are record holders or hold their shares in “street name,”
to either tender their certificates to our transfer agent prior to the date set forth in the tender offer documents or proxy materials
mailed to such holders, or up to two business days prior to the vote on the proposal to approve the business combination in the event
we distribute proxy materials or to deliver their shares to the transfer agent electronically using the DWAC System, rather than simply
voting against the initial business combination at the holder’s option. The tender offer or proxy materials, as applicable, that
we will furnish to holders of our public shares in connection with our initial business combination will indicate whether we are requiring
public stockholders to satisfy such delivery requirements, which will include the requirement that any beneficial owner on whose behalf
a redemption right is being exercised must identify itself in order to validly redeem its shares. Accordingly, a public stockholder would
have from the time we send out our tender offer materials until the close of the tender offer period, or up to two business days prior
to the vote on the business combination if we distribute proxy materials, as applicable, to tender its shares if it wishes to seek to
exercise its redemption rights. Pursuant to the tender offer rules, the tender offer period will be not less than 20 business days and,
in the case of a stockholder vote, a final proxy statement would be mailed to public stockholders at least 10 days prior to the stockholder
vote. However, we expect that a draft proxy statement would be made available to such stockholders well in advance of such time, providing
additional notice of redemption if we conduct redemptions in conjunction with a proxy solicitation. Given the relatively short exercise
period, it is advisable for stockholders to use electronic delivery of their public shares.
There is a nominal cost associated
with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker $80.00 and it would be up to the broker whether or not to pass this cost on
to the redeeming holder. However, this fee would be incurred regardless of whether or not we require holders seeking to exercise redemption
rights to tender their shares. The need to deliver shares is a requirement of exercising redemption rights regardless of the timing of
when such delivery must be effectuated.
The foregoing is different
from the procedures used by many blank check companies. In order to perfect redemption rights in connection with their business combinations,
many blank check companies would distribute proxy materials for the stockholders’ vote on an initial business combination, and a
holder could simply vote against a proposed business combination and check a box on the proxy card indicating such holder was seeking
to exercise his or her redemption rights. After the business combination was approved, the company would contact such stockholder to arrange
for him or her to deliver his or her certificate to verify ownership. As a result, the stockholder then had an “option window”
after the completion of the business combination during which he or she could monitor the price of the company’s stock in the market.
If the price rose above the redemption price, he or she could sell his or her shares in the open market before actually delivering his
or her shares to the company for cancellation. As a result, the redemption rights, to which stockholders were aware they needed to commit
before the stockholder meeting, would become “option” rights surviving past the completion of the business combination until
the redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that
a redeeming holder’s election to redeem is irrevocable once the business combination is approved.
Any request to redeem such
shares, once made, may be withdrawn at any time up to the date set forth in the tender offer materials or the date of the stockholder
meeting set forth in our proxy materials, as applicable. Furthermore, if a holder of a public share delivered its certificate in connection
with an election of redemption rights and subsequently decides prior to the applicable date not to elect to exercise such rights, such
holder may simply request that the transfer agent return the certificate (physically or electronically). It is anticipated that the funds
to be distributed to holders of our public shares electing to redeem their shares will be distributed promptly after the completion of
our initial business combination.
If our initial business combination
is not approved or completed for any reason, then our public stockholders who elected to exercise their redemption rights would not be
entitled to redeem their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our initial proposed business
combination is not completed, we may continue to try to complete a business combination with a different target until the end of the completion
window.
Redemption of Public Shares and Liquidation
if no Initial Business Combination
Our amended and restated certificate
of incorporation provides that we will have only the time of the completion window to complete our initial business combination. If we
are unable to complete our initial business combination within such period, we will: (1) cease all operations except for the purpose
of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at
a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest (net of taxes
payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption
will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law; and (3) as promptly as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating
distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination within
the completion window.
Our initial stockholders,
officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions
from the trust account with respect to any founder shares held by them if we fail to complete our initial business combination within
the completion window. However, if our sponsor or any of our officers and directors acquires public shares after our initial public offering,
it will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our
initial business combination within the completion window.
Our sponsor, officers and
directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated certificate
of incorporation to modify the substance or timing of our obligation to provide for the redemption of our public shares in connection
with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination within
the completion window, unless we provide our public stockholders with the opportunity to redeem their shares of Class A common stock
upon approval of any such amendment at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust
account, including interest (net of taxes payable), divided by the number of then outstanding public shares. However, we may not redeem
our public shares in an amount that would cause our net tangible assets, after payment of the deferred underwriting commissions, to be
less than $5,000,001 (so that we do not then become subject to the SEC’s “penny stock” rules).
If we do not consummate our
initial business combination by the deadline set forth in our amended and restated certificate of incorporation, we expect that all costs
and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts held
outside the trust account, although we cannot assure you that there will be sufficient funds for such purpose. However, if those funds
are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any
interest accrued in the trust account not required to pay taxes, we may request the trustee to release to us an additional amount of up
to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of
the net proceeds of our initial public offering and the sale of the private placement warrants, other than the proceeds deposited in the
trust account, and without taking into account interest, if any, earned on the trust account and any tax payments or expenses for the
dissolution of the trust, the per share redemption amount received by stockholders upon our dissolution would be $10.00. The proceeds
deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the
claims of our public stockholders. We cannot assure you that the actual per share redemption amount received by stockholders will not
be substantially less than $10.00. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against
us to be paid in full or make provision for payments to be made in full, as applicable, if there are sufficient assets. These claims must
be paid or provided for before we make any distribution of our remaining assets to our stockholders. While we intend to pay such amounts,
if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we seek to have all
vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or other entities
with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even
if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited
to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability
of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management
will perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed
a waiver if management believes that such third party’s engagement would be significantly more beneficial to us than any alternative.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third party
consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants
that would agree to execute a waiver or in cases where we are unable to find a service provider willing to execute a waiver. In addition,
there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with us and will not seek recourse against the trust account for any reason. In order to protect
the amounts held in the trust account, our sponsor has agreed that it will be liable to us if and to the extent any claims by a third
party (other than our independent registered public accounting firm) for services rendered or products sold to us, or a prospective target
business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the trust account to below
(1) $10.00 per public share or (2) 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 net of taxes payable,
except as to any claims by a third party that executed a waiver of any and all rights to the monies held in the trust account (whether
any such waiver is enforceable) and except as to any claims under our indemnity of the underwriters of our initial public offering against
certain liabilities, including liabilities under the Securities Act. We have not independently verified whether our sponsor has sufficient
funds to satisfy its indemnity obligations and believe that our sponsor’s only assets are securities of our company and, therefore,
our sponsor may not be able to satisfy those obligations. We have not asked our sponsor to reserve for such obligations. Therefore, we
cannot assure you that our sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made
against the trust account, the funds available for our initial business combination and redemptions could be reduced to less than $10.00
per public share. In such event, we may not be able to complete our initial business combination, and you would receive such lesser amount
per share in connection with any redemption of your public shares. None of our officers or directors will indemnify us for claims by third
parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds
in the trust account are reduced below: (1) $10.00 per public share; or (2) 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 net of taxes payable, and our sponsor asserts that it is unable to satisfy its indemnification obligations or that
it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action
against our sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal
action on our behalf against our sponsor to enforce its indemnification obligations to us, it is possible that our independent directors
in exercising their business judgment may choose not to do so in certain instances. For example, the cost of such legal action may be
deemed by the independent directors to be too high relative to the amount recoverable or the independent directors may determine that
a favorable outcome is not likely. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per share
redemption price will not be substantially less than $10.00 per share.
We have sought and will continue
to seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring
to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses or
other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies
held in the trust account. Our sponsor will also not be liable as to any claims under our indemnity of the underwriters of our initial
public offering against certain liabilities, including liabilities under the Securities Act. In the event that we liquidate and it is
subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received funds from our trust account
could be liable for claims made by creditors.
Under the DGCL, stockholders
may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution.
The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event
we do not complete our initial business combination within the completion window may be considered a liquidating distribution under Delaware
law. If the corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting
period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution
is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata
portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not complete
our initial business combination within the completion window, is not considered a liquidating distribution under Delaware law and such
redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims
of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidating
distribution. If we are unable to complete our initial business combination within the completion window, we will: (1) cease all
operations except for the purpose of winding up; (2) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including
interest (net of taxes payable and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive
further liquidating distributions, if any), subject to applicable law; and (3) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each
case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly,
it is our intention to redeem our public shares as soon as reasonably possible following our 24th month and, therefore,
we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of
distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such
date.
Because we will not be complying
with Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will
provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent
ten years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching
for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers,
etc.) or prospective target businesses. As described above, pursuant to the obligation contained in our underwriting agreement, we will
seek to have all vendors, service providers (other than our independent registered public accounting firm), prospective target businesses
or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account.
As a result of this obligation,
the claims that could be made against us are significantly limited and the likelihood that any claim that would result in any liability
extending to the trust account is remote.
Further, our sponsor may be
liable only to the extent necessary to ensure that the amounts in the trust account are not reduced below: (1) $10.00 per public
share; or (2) 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 value of the trust assets, in each case net of taxes payable, and will not be liable
as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities
under the Securities Act.
If we file a bankruptcy petition
or an involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over
the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to
return $10.00 per share to our public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition
is filed against us that is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy
court could seek to recover some or all amounts received by our stockholders. Furthermore, our board 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. Please see “Risk Factors — 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.”
Our public stockholders will
be entitled to receive funds from the trust account only in the event of the redemption of our public shares if we do not complete our
initial business combination within the completion window or if they redeem their respective shares for cash upon the completion of the
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 our initial business combination alone will not result in a stockholder’s redeeming its shares to us for an applicable pro
rata share of the trust account. Such stockholder must have also exercised its redemption rights described above.
Recent Developments – Termination of
Merger Agreement and Plan of Reorganization
On May 7, 2021, we entered
into a Merger Agreement and Plan of Reorganization (as amended and restated on June 19, 2021, the “Merger Agreement”)
with PlusAI Corp, an exempted company incorporated with limited liability in the Cayman Islands, Plus Inc., an exempted company incorporated
with limited liability in the Cayman Islands, Prime Merger Sub I, Inc., an exempted company incorporated with limited liability in the
Cayman Islands and a direct, wholly-owned subsidiary of PubCo, Prime Merger Sub II, Inc., a Delaware corporation and wholly-owned subsidiary
of PubCo, and Plus Holdings Ltd., an exempted company incorporated with limited liability in the Cayman Islands and wholly-owned subsidiary
of Plus, to effect HCIC’s initial business combination with Plus. The parties agreed to terminate the Merger Agreement effective
as of November 8, 2021.
Amended and Restated Certificate of Incorporation
Our amended and restated certificate
of incorporation contains certain requirements and restrictions relating to our initial public offering that will apply to us until the
consummation of our initial business combination. If we seek to amend any provisions of our amended and restated certificate of incorporation
to modify the substance or timing of our obligation to provide for the redemption of our public shares in complete our initial business
combination within the completion window or with respect to any other material provisions relating to the rights of holders of our Class A
common stock or pre-initial business combination business activity, we will provide public stockholders with the opportunity to redeem
their public shares in connection with any such vote. Our initial stockholders, officers and directors have agreed to waive any redemption
rights with respect to any founder shares and any public shares held by them in connection with the completion of our initial business
combination. Specifically, our amended and restated certificate of incorporation provides, among other things, that:
| ● | prior to the consummation of our initial business combination,
we shall either: (1) seek stockholder approval of our initial business combination at a meeting called for such purpose at which
stockholders may seek to redeem their shares, regardless of whether they vote for or against, or abstain from voting on, the proposed
business combination, into their pro rata share of the aggregate amount on deposit in the trust account as of two business days prior
to the consummation of our initial business combination, including interest (net of taxes payable); or (2) provide our public stockholders
with the opportunity to tender their shares to us by means of a tender offer (and thereby avoid the need for a stockholder vote) for
an amount equal to their pro rata share of the aggregate amount on deposit in the trust account as of two business days prior to the
consummation of our initial business combination, including interest (net of taxes payable), in each case subject to the limitations
described herein; |
| ● | we will consummate our initial business combination only
if we have net tangible assets of at least $5,000,001 upon such consummation and, solely if we seek stockholder approval, a majority
of the outstanding shares of common stock voted are voted in favor of the business combination at a duly held stockholders meeting; |
| ● | if our initial business combination is not consummated within
the completion window, then our existence will terminate and we will distribute all amounts in the trust account; and |
| ● | prior to our initial business combination, we may not issue
additional shares of capital stock that would entitle the holders thereof to (1) receive funds from the trust account or (2) vote
on any initial business combination. |
These provisions cannot be
amended without the approval of holders of 65% of our common stock. In the event we seek stockholder approval in connection with our initial
business combination, our amended and restated certificate of incorporation provides that, unless otherwise required by applicable law
or stock exchange rules, we may consummate our initial business combination only if approved by a majority of the shares of common stock
voted by our stockholders at a duly held stockholders meeting.
Competition
In identifying, evaluating
and selecting a target business for our initial business combination, we have encountered intense competition from other entities having
a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public
companies and operating businesses seeking strategic acquisitions. Many of these entities are well established and have extensive experience
identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial,
technical, human and other resources than us. Our ability to acquire larger target businesses will be limited by our available financial
resources. This inherent limitation gives others an advantage in pursuing the acquisition of a target business. Furthermore, our obligation
to pay cash in connection with our public stockholders who exercise their redemption rights may reduce the resources available to us for
our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably
by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial
business combination.
Sponsor Indemnity
Our sponsor has agreed that
it will be liable to us if and to the extent any claims by a third party (other than our independent registered public accounting firm)
for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below: (1) $10.00 per public share; or (2) 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, net of taxes payable, except as to any claims by a third party that executed a waiver
of any and all rights to the monies held in the trust account (whether any such waiver is enforceable) and except as to any claims under
our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities
Act. We have not independently verified whether our sponsor has sufficient funds to satisfy its indemnity obligations and believe that
our sponsor’s only assets are securities of our company and, therefore, our sponsor may not be able to satisfy those obligations.
We have not asked our sponsor to reserve for such obligations. Therefore, we cannot assure you that our sponsor would be able to satisfy
those obligations. We believe the likelihood of our sponsor having to indemnify the trust account is limited because we will endeavor
to have all vendors and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest
or claim of any kind in or to monies held in the trust account.
Employees
We currently have three officers
(including our President and Chief Operating Officer). These individuals are not obligated to devote any specific number of hours to our
matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business
combination. The amount of time they devote in any time period varies based on whether a target business has been selected for our initial
business combination and the stage of the initial business combination process we are in. We do not intend to have any full-time employees
prior to the completion of our initial business combination.
Periodic Reporting and Financial Information
Our units, Class A common
stock, and warrants are registered under the Exchange Act, and as a result, we have reporting obligations, including the requirement that
we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports,
including this Report, contain financial statements audited and reported on by our independent registered public accounting firm.
We will provide stockholders
with audited financial statements of the prospective target business as part of the tender offer materials or proxy solicitation materials
sent to stockholders to assist them in assessing the target business. These financial statements may be required to be prepared in accordance
with, or be reconciled to, GAAP or IFRS, depending on the circumstances and the historical financial statements may be required to be
audited in accordance with the PCAOB. These financial statement requirements may limit the pool of potential target businesses we may
acquire because some targets may be unable to provide such financial statements in time for us to disclose such financial statements in
accordance with federal proxy rules and complete our initial business combination within the completion window. We cannot assure you that
any particular target business identified by us as a potential business combination candidate will have financial statements prepared
in accordance with GAAP or that the potential target business will be able to prepare its financial statements in accordance with the
requirements outlined above. To the extent that these requirements cannot be met, we may not be able to acquire the proposed target business.
While this may limit the pool of potential business combination candidates, we do not believe that this limitation will be material.
We will be required to evaluate
our internal control procedures for the fiscal year ending December 31, 2022 as required by the Sarbanes-Oxley Act. Only in
the event we are deemed to be a large accelerated filer or an accelerated filer and no longer an emerging growth company will we be required
to have our internal control procedures audited. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development of the internal controls of any such entity to achieve compliance with
the Sarbanes-Oxley Act may increase the time and costs necessary to complete any such acquisition.
We have filed a registration
statement on Form 8-A with the SEC to voluntarily register our securities under Section 12 of the Exchange Act. As a result,
we are subject to the rules and regulations promulgated under the Exchange Act. We have no current intention of filing a Form 15
to suspend our reporting or other obligations under the Exchange Act prior or subsequent to the consummation of our initial business combination.
We are an “emerging
growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. As such, we are eligible to
take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging
growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of
any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be
a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107
of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided
in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging
growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.
We intend to take advantage of the benefits of this extended transition period.
We will remain an emerging
growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion
of our initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which
we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds
$700 million as of the end of the prior fiscal year’s second fiscal quarter; and (2) the date on which we have issued
more than $1.00 billion in non-convertible debt during the prior three-year period. References herein to “emerging
growth company” shall have the meaning associated with it in the JOBS Act.
Additionally, we are a “smaller
reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain
reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain
a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds
$250 million as of the end of the prior June 30th, or (2) our annual revenues exceeded $100 million during such
completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June
30th.